HMRC Is Shite

Monday, 10 September 2012

HMRC Threaten Tax Avoiders

HMRC continue to push their anti avoidance mantra, with a threat to "customers" and "taxpayers" (even HMRC now seem to be confused as to what we are!) who use avoidance schemes.

The Telegraph quotes an HMRC spokesman:

"It is important that our customers know that if they choose to engage in tax avoidance we will be relentless in pursuing them.

We will challenge tax avoidance and will take legal action against [tax avoidance] schemes whenever possible. Instead of the tax savings they hoped to achieve, people who use tax avoidance schemes run the risk of wasting money on fees for a scheme that does not work, and will have to spend time dealing with an in-depth investigation by us into their tax affairs.

Taxpayers may find themselves being cross-examined before a tax tribunal and having their tax avoidance exposed to public scrutiny when the tribunal's decision is published."

Of course trying to understand what parliament's true intentions are is somewhat muddied by the incredibly complex tax system that we all have to endure.

Much of the time, trouble and expense incurred over "avoidance" by taxpayers and HMRC could be greatly reduced if the tax system were simplified.

That of course requires politicians to actually do something constructive, sadly that is something that is unlikely to occur in the foreseeable future!

Tax does have to be taxing.

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Friday, 7 September 2012

The Joy of Retrospective Taxation

The Treasury, in its infinite "wisdom", has sought to clarify its stance on retrospective taxation in the light of queries raised by the Treasury Select Committee following retrospective taxes being raised on Barclays and new variations of stamp duty land tax (SDLT) which are retrospective.

The Treasury said (as per Step Journal):

"The government agrees that changes to tax legislation where the change is to have effect from a date earlier than the date of announcement should be restricted to wholly exceptional circumstances. The government has made a commitment to this effect in the Protocol on unscheduled announcements, published in ‘Tackling tax avoidance’ at Budget 2011.

By observing the Protocol, the government aims to strike the right balance between the rights of taxpayers affected by the change and the interests of the generality of taxpayers. In doing so we ensure that our response to avoidance risk is proportionate and limited to what is necessary to address that risk. The Forum of Tax Professionals review announcements as a standing agenda item at its regular meetings and provide Ministers with a view on how the Protocol is being observed in practice."

All clear now?

Would anyone care to define what "wholly exceptional circumstances" might actually be?

Tax does have to be taxing.

Thursday, 6 September 2012

HMRC Webinar - Business Expenses For The Self Employed

HMRC will be hosting a webinar this afternoon (14:30-15:30) on Business Expenses For The Self Employed. It aims to:

"- show you what Business Expenses are
- give you a quick guide as to what commonly is & isn't allowable
- give you help on how to easily work out your motoring costs
- and much more!

There will also be the opportunity to ask the presenter questions. "

Those wishing to participate need to register beforehand, via this link Business Expenses For The Self Employed.

Tax does have to be taxing.

Wednesday, 5 September 2012

HMRC Launches "Where's My Reply?"

Stung by criticism that its communications with taxpayers and their agents is shambolic and slow, HMRC have launched (with much fanfare) a tracking service called "Where's My Reply?".

In theory the service will enable taxpayers to:

"Find out when you can expect to get a reply from HM Revenue & Customs (HMRC) to a query or request you've made."

Can the eagle eyed amongst you spot the "catch" in the above?

Yes, that's right, the "tracking" system will not tell you when you WILL receive a reply but only when you can EXPECT to receive a reply; ie it is not a real time tracking system (in fact it isn't a tracking system at all).

Test the "tracker" via this link, and you will be given the following caveat:

"Please note: the date given is for the majority of enquiries and only a guide. It is not a measure of HMRC's performance."

There is also another "catch", the "tracker" is not available for all types of taxpayers. Only the following may use it:

"If you're an employee or you pay tax on a company pension through PAYE (Pay As You Earn - the system used by employers and pension providers to deduct tax from your wages or pension), you can use the tracker to check how long it will take HMRC to:

pay your Income Tax refund

reply to your general Income Tax enquiry

provide a copy of individual information, such as your tax code or pay and tax details

send you HMRC forms or stationery

If you're an agent, you can also check how long it will take HMRC to:

register you as an agent to use HMRC Online Services

process an application for authority to act on behalf of a client

amend your agent details"

Tough luck if you are not on the above list!

To reiterate, this is NOT a tracking service at all.

Tax does have to be taxing.

Tuesday, 4 September 2012

The A19 Petition

At the beginning of July I noted that HMRC had issued a consultation on Extra Statutory Concession AS19, and that:

"HMRC are proposing a significant watering down of ESC A19".

Under ESC A19, which has been a feature of the UK's tax system for around 40 years, tax arrears may be waived when HMRC has failed to use information available to it to assess an individual's tax liabilities on time.

The consultation has prompted Keith Gordon (a tax barrister at Atlas Chambers) to create an online petition opposing the changes.

He states on the petition website:

"HMRC’s proposal to “clarify” ESC A19 is misconceived and misleading. The present wording is perfectly clear and HMRC should revert to their former practice of respecting it.

HMRC’s proposal is merely a fig leaf, designed to legitimise their recent practice of denying ESC A19 to the very individuals for whom it was intended to apply."

He is also quoted by Nichola Ross Martin:

“ESC A19 is designed to be a get-out-of-jail free card available to the country’s poorest taxpayers who are told of old tax liabilities several years down the line. It applies when HMRC have simply failed to use the information available to them and the taxpayer could reasonably have believed their tax affairs were up to date.

In the past couple of years, HMRC have attempted to reinterpret their own guidance simply to avoid applying the concession in the very cases for which it was designed. This has caused unnecessary anxiety for thousands of taxpayers, many of whom will find it impossible to fund the unexpected debt.”

The petition is available here, and the HMRC consultation ends 24 September 2012.

Tax does have to be taxing.

Monday, 3 September 2012

HMRC's Tax Return Initiative

In July I wrote about the launch of HMRC's "Tax Return Initiative":

"HMRC have relented a little on their stance wrt late submissions (ie non submissions) of self-assessment forms for tax years 2010 and earlier, and have launched the "Tax Return Initiative".

The Telegraph reports that people who have not completed self-assessment forms will be given three months to declare untaxed income earned before 2010. Those who fess up will be given reduced penalties of £200, plus a fine equivalent to 10% of the unpaid tax.

This is a significant mollification of HMRC's normal stance on late/non submissions. Fines are normally up to 100% of unpaid tax, and spot fines can be more than £1,000.

Taxpayers (not "customers") who do not make use of the amnesty to fess up will face aggressive criminal prosecutions."

The deadline for the initiative (2nd October) is now less than a month away, and today HMRC have issued a press release reminding people to come forward before it is too late.

After 2 October, if taxpayers have not submitted their tax returns and paid what they owe, HMRC will use its legal powers to pursue outstanding returns and any unpaid tax and NICs. Penalties of up to 100 per cent of the tax due, or even criminal investigation, could follow.

Here is the HMRC press release in full, you will notice HMRC uses both the "C" word and the correct form of address (ie "taxpayer") in the same document:

"Thousands of higher rate taxpayers who have failed to submit tax returns will receive letters from HM Revenue & Customs (HMRC) this month, reminding them that they have only one month left to take up a special opportunity being offered by the tax authority.

The Tax Return Initiative is aimed at people liable to pay tax at rates of 40 per cent and above and who have been told to submit a Self Assessment tax return for 2009/10 or earlier, but have not done so. The campaign is also available to anyone who has tax returns to submit for these years.

People have until 2 October to tell HMRC they want to take part, submit completed returns, and pay the tax and National Insurance Contributions (NICs) that they owe. By coming forward voluntarily through the campaign, launched on 3 July, people will receive better terms, and any penalty they pay will be lower than if HMRC comes to them first.

After 2 October, if they have not submitted their tax returns and paid what they owe, HMRC will use its legal powers to pursue outstanding returns and any unpaid tax and NICs. Penalties of up to 100 per cent of the tax due, or even criminal investigation, could follow.

Marian Wilson, head of HMRC Campaigns, said:

“If HMRC has sent you a Self Assessment tax return or notice to complete a tax return for 2009/10 or earlier and you have not yet taken any action, this campaign offers you a quick and straightforward way to bring your tax affairs up to date. But time is running out. You have until 2 October to submit your tax returns and pay the tax you owe.

“If you cannot afford to pay what you owe all at once, don’t worry. If your circumstances warrant it, you will be able to spread the payments.”

People can take part in the campaign by:

Going online and registering: http://www.hmrc.gov.uk/campaigns/tri.htm

Completing any outstanding tax returns and paying any tax and NICs owed by 2 October.

Help is available from HMRC by calling the Tax Return Initiative helpline on 0845 601 8818.

By coming forward voluntarily through the campaign, customers will receive better terms, and any penalty they pay will be lower than if HMRC comes to them first.

HMRC campaigns have so far have collected nearly £510 million from people coming forward, and more than £120 million from HMRC follow-ups, including over 18,000 completed investigations. There are also 23 criminal cases under way. Two plumbers have been jailed and another received a suspended sentence.

Notes for editors
1. The Tax Return Initiative helpline is open Monday to Friday, 9.00am to 5.00pm.

2. Anyone who has tax returns to submit for 2009/10 or earlier, and has not done so, should come forward and make their returns, whether or not they have received a reminder letter about the campaign from HMRC.

3. Previous campaigns have targeted offshore investments, medical professionals, private tutors and coaches, plumbers, electricians, VAT defaulters and online traders. Further information on HMRC campaigns: http://www.hmrc.gov.uk/campaigns/news.htm"

Tax does have to be taxing.