My thanks to a loyal reader who pointed out a connection between Tesco (the company that has overstated its profit forecast by at least £250M) and HMRC.
What is that connection?
Sir Richard Broadbent, who is currently Chairman of Tesco (and is currently refusing to resign, despite intense pressure to do so).
Broadbent was Executive Chairman of Her Majesty's Customs and Excise between February 2000 and July 2003. During this time, he was responsible for a programme of change management in tax and law enforcement.
My loyal reader notes the following:
"I'm a little bit surprised that you haven't picked up on the connection between HMRC and the scandal of Tesco overstating their profits by £250 million.How "ironic"!
HMRC uses a concept known as *Future Revenue Benefit to grossly inflate the yield figures it reports from compliance work.
Is it a coincidence that Sir Richard Broadbent was chairman of HMC&E when this concept was introduced and he is now chairman of Tesco?
Somehow, I think not."
The overriding principle for claiming FRB is that it should be only recorded when you believe there will be a future impact on departmental revenues. The key to whether future revenue benefit can be claimed and to what degree, for example, the number of years, will depend on the behaviour that gave rise to the error and the action HMRC are taking to address it. Additionally, FRB is only applicable if the business is likely to continue trading and tax or other duties still remains.
(This text has been withheld because of exemptions in the Freedom of Information Act 2000)
Tax does have to be taxing.
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