It appears that in an attempt to help people, via one of its "nudge" campaigns, HMRC has in fact managed to annoy and confuse a number of people (including the good people of the ICAEW Tax Faculty).
Last week (24 July) HMRC launched one of its ‘nudge’ campaigns, this time about tax paid on a remittance basis, and sent a whole host of people an email on the subject.
The email explained that HMRC would be writing to those taxpayers who had paid the remittance basis charge in 2011/12 to educate them about what was, and what was not, a remittance. The plan was to send these letters in the first instance to taxpayers taxed on the remittance basis and who are liable to pay the remittance basis charge. HMRC would then contact other remittance basis users later in the year.
So far so good.
However, the email also said that the letters would be sent to taxpayers ‘later this month’, not much time really. Certainly not enough time for advisers to warn their clients that they might receive the communication.
The email also had a link to the fact sheet, 130717 Final Fact Sheet v6 5.doc, which the ICAEW note is misleading in at least two aspects:
- ‘You buy an asset abroad with your foreign income and bring the asset to the UK’, ignores the exception for personal chattels until the reader reaches the end of the note, the main body comment should at least reference the note at the end of the factsheet.
- ‘You make a gift of some of your foreign income to your adult son or daughter who lives abroad. Three years later your child gives some of these funds to their 16 year old child (your grandchild), who spends the money during a visit to the UK.’ The explanation should make it clear that if the funds stay with the adult child it is not a remittance even if they bring it on shore.
Aside from the fact that the "fact" sheet is misleading, the ICAEW Tax Faculty is also peeved that HMRC is communicating directly with taxpayers; as this undermines the relationship between client and agent.
The fact that HMRC is approaching taxpayers directly when those taxpayers are likely to have appointed agents to deal with HMRC is of concern, given that the nature of the approach suggests that the taxpayer may not have properly understood the tax system and may have made errors which throws doubt on the competence of their adviser.
This also undermines the taxpayer Right in Your Charter to be able to appoint an agent to represent them.
HMRC has suspended despatch of further letters, and a working party is being set up to consider how best to deal with future situations when HMRC wants to contact the taxpayer direct.
A cynic might wonder aloud if this was an attempt by HMRC to undermine the standing of agents and the ICAEW in the eyes of the taxpayer.
Tax does have to be taxing.
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