HMRC Is Shite

HMRC Is Shite
Dedicated to the taxpayers of Britain, and the employees of Her Majesty's Revenue and Customs (HMRC), who have to endure the monumental shambles that is HMRC.

Friday, 28 October 2011

Public Standards, Private Vices



Now here's a funny old coincidence, and btw there really is such a thing as coincidence!

That ever popular star turn at Parliament, Dave "Jack" Hartnett, was a guest at yesterday's House of Commons Members' Expenses Committee. He spoke about the Parliamentary Standards Act 2009.


Chairman Adam Afriyie asked a rather pertinent question about whether HMRC addresses MPs' taxation in the same manner as they do the wider general public.

Aha!

Jack gave a rather "interestingly" phrased answer, noting that HMRC's objective is to treat all people the same in terms of the quality of their service.

Note, "objective" is not the same as saying that everyone "IS" treated equally.

Jack went on to give the caveat that MPs are clearly unique in their requirements (I bet that stroked a few egos in the HOC) and, as such, require some specific dispensation.

The committee was particularly interested to know as to whether, in the eyes of HMRC, MPs are considered to be self-employed, employees of Parliament or office-holders.

Jack declared that HMRC couldn't think of a group to whom the term ‘self-employed' was less applicable, and that the logical place in HMRC's eyes was to classify MPs was as office-holders.


Anyhoo, this is all very interesting I hear you say, but "what is the coincidence to which you refer Ken?"

Well, I am glad you asked me that; for you see an enquiry about whether HMRC treats MPs differently from the rest of us could not have come at a better time; given what happened to "poor old" Vince Cable (Business Secretary) this week.

Vince (who has a bee in his bonnet about tax avoidance) failed to register freelance earnings for VAT (wrt his publishing, media appearances sidelines) until the error was detected and rectified back in February.

Cable's accountants, once they spotted the £25K VAT error (gross before deduction of charitable gifts) error accountants fessed up to HMRC, and HMRC fined him £500.

I don't doubt that this was a pure and simple "cock up". However, I do wonder about the mechanics of this cock up:

 - If there were no invoices for his fees/royalties, how will he satisfy HMRC as to the adequacy of his financial records?

- If invoices were issued, was VAT added? If so, what VAT registration number did he use? (trick question, because he wasn't registered for VAT)

- If no VAT was added, then his taxable income will have been overstated etc etc.

Anyhoo, whatever the mechanics of this cock up, I do wonder what HMRC's attitude (and size of fine) would have been had "Joe Public" made a similar cock up?

A very harsh, and excessively brutal assessment of this cock up could lead some to treat this as "evasion".

What do you think?

Comments, as ever, very welcome.

Here, btw, is a link to a video of Jack speaking at the committee Jack Speaks.






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9 comments:

  1. I'm assuming that Vince failed to declare £25K for VAT purposes. If so, the tax at 17.5% (old rate) is just over £4K. For a voluntary disclosure, a £500 penalty sounds about right from my experience when I worked for the buggers.

    ReplyDelete
  2. Errm not quite, according to this:

    "Business Secretary Vince Cable was left red-faced today after it was revealed he "forgot" to declare VAT on nearly £200,000 worth of paid media appearances.

    HM Revenue & Customs has fined the Lib Dem deputy leader £500 after tax inspectors learned that Mr Cable - a vocal critic of tax-dodgers - owed up to £25,000 in VAT. "

    http://www.morningstaronline.co.uk/news/content/view/full/111234

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  3. @Ken

    Dear God! Didn't realise the £25K was the tax owing! Failure to notify £200K and just a £500 penalty is laughable. Under the new penalty provisions it should be at least 15% of the tax owing, which would be the thick end of £4K. I was ex-IR but my understanding is that the new penalties apply across the board to all taxes and are MANDATORY as opposed to the previous regime where Inspectors had some discretion. (They have to be calculated in accordance with arcane rules using a calculator which doesn't really work; one of the reasons I left) Old Vince got a proper Jack-style sweetheart deal!

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  4. I would have been more surprised if he had not received a 'sweetheart' deal, such is my cynicism of the whole rotten, corrupt system. The 'old boy' network is as powerful as ever, populated by the usual suspects of two-faced, self-serving mutual back-scratchers.

    ReplyDelete
  5. its a Belated Notification Penalty - ie for registering for VAT late, NOT a penalty for declaring the wrong amount of tax. If the notification was not more than 9 months late the penalty is 5% and can be reduced for reasonable excuse and mitigating factors. I don't like sticking up for HMRC, but this is pretty basic VAT stuff and it seems like Cable has been treated similarly to anyone else - sorry, but there isnt a conspiracy theoy here.

    HMRC Reference:Notice 700/41 (February 2011)

    ReplyDelete
  6. Seems Jacks' Goldman a challenge:


    http://www.ft.com/cms/s/0/5324178a-00b8-11e1-930b-00144feabdc0.html#axzz1c6OCZ1vA

    ReplyDelete
  7. Whoops should have been Jacks' Goldman Deal faces challenge :O(

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  8. Anyhoo... perhaps you can ask their Press Office why the HMRC response rate to the the 2011 People Survey is a whopping 52%..... a full 17% down on last year.

    Therefore 48% of all staff (around 35,000 people) can't be arsed / don't trust ExCom to tell HMRC what it's like working there.

    Looks like the recovery job from Steve Lamey's gaff hasn't worked. Hope nobody has a response rate target in their performance contract...

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  9. So he gets 2% penalty and I got a 15% one. I recovered the VAT in full from my suppliers when I realised the mistake and paid the next quarter in advance. Go figure.

    ReplyDelete