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.

Tuesday, 11 June 2013

Media Pressure

It is regrettable to see that HMRC, in some ways, can act in the same manner as a dodgy private company that seeks to avoid compensating an irate customer; only when enough pressure is applied (often via the media) will the compensation be forthcoming.

Such seems to be the case of Don and Valerie Woodhams who both faced demands for underpaid tax, yet only had one of the demands written off after the intervention of the media (in the case Money Mail).
"Mr Woodhams was sent a £1,200 bill for underpaid tax in 2011/12.

He had received pension income since 2005. HMRC had sent Mr Woodhams a tax code relating to the pensions he drew from the same insurance company. He checked it out and couldn’t see anything untoward.

But the taxman had previously always sent two separate codes for these pensions, and this meant the insurer now applied one code to both payouts.

Amazingly, HMRC says Mr Woodhams should have realised this error himself and declined his application for a special concession from them.

Mr Woodhams says: ‘HMRC has a bullying and defensive culture. The special concession is a cheats’ charter and a get-out-of-jail card for the taxman.

‘I’m convinced that thousands of honest taxpayers are misled and bullied into paying more income tax than they should.’

Mrs Woodhams was wrongly sent duplicate tax-free personal allowances. She has now had the demand she received for £1,600 written off by HMRC."
The link to the Money Mail article mentions other examples of HMRC only relenting after the intervention of the media.

To my humble opinion this is puzzling, either the tax demand is valid (these are after all relatively "simple" personal tax calculations, not the complex calculations of a multi national) and should stand or it isn't; in which case it should not require the intervention of the media to correct the error.

Tax does have to be taxing.

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  1. "this is puzzling, either the tax demand is valid (these are after all relatively "simple" personal tax calculations, not the complex calculations of a multi national) and should stand or it isn't"

    Not so puzzling. These all appear (once you get past the usual Mail sensationalism) to be correct demands. They're getting them cancelled, however, on the basis that HMRC should have demanded them earlier.

    ESC A19 (for it its that which potentially allows the demands to be canceled) doesn't apply if the taxpayer should reasonably have been expected notice the earlier underpayment.

    Actually, these people are in a win:win situation. If ESC A19 applies they end up paying less tax than they should have. If it doesn't apply then they get to pay the right amount of tax much later than they would have, thereby receiving an interest-free loan from the Treasury.

    However, most people don't look at it that way (understandably, as it's complicated); hence the misplaced anger.

    I'm not sure why these cases only go the right way after the media gets involved, though. It could be that, of the ones the Mail takes on, HMRC caves on some and stands firm on others, but the Mail only publishes the latter. Alternatively, it could be that the Mail's people are better at stating the taxpayers' arguments clearly and to more senior people. It's probably a bit of both.

    Stew G

  2. Good old Stew G, riding to the rescue of HMRC yet again. The point is that if HMRC hadn't cocked things up in the first place, the right amount of tax would have been paid and everyone would be happy.

    1. In which part of my message do you feel I was "riding to the rescue of HMRC"? I merely clarified a point that Ken seemed to be struggling with (possibly wrongly, as it happens, given the point the poster at 20:05 on 13 June has raised). At no point did I excuse any of HMRC's actions and my phrase "should have demanded [the payments] earlier refers to exactly "the point" you make, albeit in less colorful language.

      Stew G

  3. Not sure how ESC A19 could apply for a 2011-2012 underpayment, especially if the correct tax had been deducted since 2005?

    If the pension provider (or more likely its payroll provider) operated the same tax code on 2 different pensions shouldn't the finger of blame be pointed at them?

    And if the taxpayer previously received seperate codes for his pensions why didn't he get in touch with HMRC & query why he only received the one coding notice?
    or query the fact that both pensions were using the same tax code, especially if they had previously used different ones against each?

    1. Doesn't A19 potentially apply if the information isn't acted on within 12 months of the tax year in which it was received? If so, and assuming HMRC received the information in 11/12 (which seems likely) and the demand went out after 5/4/13, then wouldn't it be potentially at issue?

      As alluded to in your last paragraph, it would seem to be the Reasonable Belief That Your Tax Affairs Were In Order test that was the determinative issue here.

      Stew G