HMRC Accepts Faster Payments..Sort Of

As from 16th December 2011 HMRC has been accepting Faster Payments (FPS):

"From 16 December 2011 HM Revenue & Customs (HMRC) will be able to accept payments made using the Faster Payments Service. This will allow you to make faster electronic payments, typically via internet or telephone banking, enabling them to be processed on the same or next day."

Hoozah!

Except that, according to the ICAEW Tax Faculty on 4th January:

"When you file a VAT return online, the HMRC website generates an on screen acknowledgement to confirm receipt. The message currently given by this response says:

‘Please note: HMRC does not operate the Faster Payments Service (FPS), which is offered by some banks. Electronic payments will normally take three bank working days to reach the HMRC account.’

The Tax Faculty has been in touch with HMRC about this and we can confirm that our news story is correct, HMRC does now accept Faster Payments. The message in the HMRC website confirmation response will be amended as soon as possible."

Oh well, nearly there!

Tax does have to be taxing.

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What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Labour Endorses Tax Avoidance

Given that Tony Blair (the pious ex leader of Labour) proactively uses tax avoidance schemes to minimise his tax bill, no one can possibly argue that tax avoidance is illegal or immoral:)


Tax does have to be taxing.

UK EXPATS: Reduce tax on UK Pensions
HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

Quote ID code "ABC" when contacting a QROPS specialist.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

IT Issues

My thanks to a loyal reader who sent me a copy of a missive that he sent to HMRC just before Christmas, concerning VAT issues and problems using HMRC's online system.

"Dear HelpDesk


first of all: We will no long communicate with HMRC as long you decline a reply by email but force people to hmrc web site and castrate them to 2000 characters!


It's amazing and frustrating how "carefully" you read the enquiries of your tax payers.


Yes, our business is already registered for VAT, and our VAT No. reads as follows: XXXX; and of course the business must be already registered for VAT in order to BE ABLE to enroll for EU VAT REFUNDS AND RCSL.


But this was not the question.


The question was: WE ARE UNABLE TO ENROLL FOR SERVICES: RCSL and VAT EU Refunds.


The reason for this could be, that you not yet have changed our post code from XXX to XXX. We have many times written to you, and again and again noted you the change since 3 years.


The second part of our enquiry below was where and how to download ECSL forms, as we have run out of paper forms. Your answer has not even tickled this part of our inquiry.


After a long search we have meanwhile found the online resources on the HMRC web site and could download the form. HMRC cannot cover their tax payers with penalty and delay charges but does not ensure, that the online service facilities HMRC offers is functional.


We had the same horror with the enrolment / registration for Corporation Tax on what has taken you  an ample time of  'only' 3 years (!!) to resolve and after many written but ignored enquiries from our site.


Finally after you got this running and could issue a CT No. to us, HMRC 'rewarded' us with a tax estimation and penalties of meanwhile £XXXX (!!!!) which goes far back to the day of incorporation of the business!


In the UK it's ridiculously enough common to say "Thank You" for just everything.


So, let me "Thank You" for the £XXXX!


Thank you, that you widely opened me the occasion to simply be too stupid to deal with HMRC's buggy online system and of course, it is finally on me who caused all the delays. I believe this is what you want your tax payers to act like. It must be like a haunting melody, an excellent sounding symphony in your ears!


After all of this I am very scared that HMRC moves straight forward to have almost everything done online. Indeed, it's a great idea. 

But not with a poor system!


Due to the continuous malfunctioning online system HMRC might rather end up in receiving more penalty & delay charges than tax amounts owned to the crown.


So I finally come to the following conclusion:


a) I am currently not able to provide and submit all the necessary tax returns in an accurate manner as HMRC's online self-service system permanently refuses our attempts to enrol for the required services.


b) Either my English language skill is that bad so that no one can track down what I want to articulate, or it's by now time to face once and for all the sad fact, that in England a lot of things are handled with negligence, but on the same time a highly sophisticated system catalogue of penalty, delay, administration and handling charges' is maintained just waiting for someone goes astray.


Please advise, AND:  Thank You!"

Tax does have to be taxing.

UK EXPATS: Reduce tax on UK Pensions
HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

Quote ID code "ABC" when contacting a QROPS specialist.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Cameron On Tax Avoidance

I see that David Cameron has jumped onto the anti tax avoidance bandwagon, now seemingly rather popular with our political "elite".

Cameron was at a "PM Direct" event with small business this morning. The Huffington Post quotes him as saying that the government needs a "tougher approach" to tax avoidance (tax avoidance is legal, tax evasion is illegal).

He stated that HMRC needed to make sure big companies paid "their fair share".

Adding:

"I think we need a tougher approach and one of the things we’re going to be looking at this year is whether there’s going to be a more general anti-avoidance power that HMRC can use, particularly on very wealthy individuals."

Cameron added that HMRC should think about being "business friendly to small business".

A few points:

1 Tax avoidance is legal, and has been part of the system since day one.

Why now are our political "elite" suddenly so vexed about it, especially as so many of them are on the boards of the companies that seek to minimise their tax payments via legitimate tax arrangements?

The "elite" have been part and parcel of tax avoidance schemes employed by large companies since day one.

2 What exactly does Cameron mean by "fair share"? Either you are paying the taxes as prescribed by the law or you are not.

3 Taxes, and HMRC, all come under the control of our elected representatives; it is time that they accepted their responsibility for the mess that our tax system is in.

4 "Business friendly to small business" starts with cutting government red tape and simplifying the tax system. When exactly does the government intend to start doing this?


Tax does have to be taxing.

UK EXPATS: Reduce tax on UK Pensions
HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

Quote ID code "ABC" when contacting a QROPS specialist.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

HMRC's Confetti Approach To Penalties

UHY Hacker Young have concluded that 65% of all VAT penalties and decisions issued by HMRC incorrect, and have to be subsequently overturned on internal review.

According to the firm, in 2011 HMRC completed 39,551 reviews of VAT decisions imposed on businesses in relation to tax disputes and late filing/payment of tax. Of these, 25,633 were subsequently ruled incorrect.

The number of internal reviews of VAT decisions has more than doubled since the reviews were introduced in April 2009. In the first year of the new review process, 16,460 VAT decisions were reviewed at the request of taxpayers, of which 53% were overturned.


The suspicion amongst taxpayers is that HMRC is putting VAT Officers under huge pressure to maximise revenues by issuing as many fines as possible.

Simon Newark, VAT partner in the firm's London office, said:

"These numbers are worrying. Penalties shouldn’t be thrown around like confetti and it suggests that Officers are really not adhering to the findings of the Courts in penalty cases. 

While it is encouraging that HMRC is prepared to correct its own mistakes, it really shouldn’t be making this number of errors to begin with.

The figures suggest that HMRC has been using the carelessness argument far too liberally to generate penalties. It would be understandable if a small percentage of fines were wrong, but for this many to be overturned by their own Review team is quite astonishing.

Not only has the volume of penalties and decisions sent for Review doubled but the proportion incorrectly applied has risen from half to almost two-thirds in just 18 months.

HMRC clearly needs to exercise greater care itself and issue far fewer penalties.

How many taxpayers have been wrongly fined but trusted HMRC’s judgement and not pushed for a review?

HMRC Officers should understand the law and apply it correctly in the vast majority of cases. Incorrect decisions can potentially destroy perfectly viable businesses. VAT is a very complex area of tax law, which most businesses do their best to comply with. 

When HMRC’s own Officers can’t get it right, why should businesses suffer?

HMRC’s review team is not truly independent and the suspicion is that they will support the original decision if they can and will only overturn decisions which are so blatantly wrong that they don’t have a leg to stand on. 

Many of the decisions which are upheld will only have the slightest justification or be marginal at best and HMRC is probably relying on taxpayers not having the time or money to pursue the matter further.

It can be very costly and time consuming for taxpayers even if a fine is overturned on review. HMRC does not reimburse the cost of contesting a decision which is wrong. It can cost thousands to take an appeal to the Tax Tribunal and HMRC know that many taxpayers will simply pay up despite the injustice.  

The current adversarial culture between taxpayers and HMRC is getting worse despite many exercises and consultations over the years.

The lesson here is if you get a fine or a decision you are not happy with, be prepared to challenge it. The chances are it might be worth your while.”

"Greater care" may well be fair advice, on the face of it.

However, first what needs to be done is to identify why there are so many errors; is it really down to increased pressure maximise revenues?

Tax does have to be taxing.

UK EXPATS: Reduce tax on UK Pensions
HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

Quote ID code "ABC" when contacting a QROPS specialist.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Spot Checks

The New Year is upon us, and already HMRC has been flayed by certain MPs and the Federation of Small Business (FSB) for harassing small businesses.

The cause of the outpouring of ire are the plans drawn up by HMRC for conducting spot checks on the paperwork, going back several years, of up to 20,000 firms as from April.

Ironically, as per an article I wrote in September, the original target was 50,000:

"HMRC have reduced their target for checking business records down from 50,000 to 20,000.

However, for reasons best known to HMRC, they are describing this reduced target as an "extension" of the scheme.

For good measure they also claim that the record checks are in the businesses best interests .."

Anyhoo, 20,000 or 50,000, failure to provide HMRC with the information that they require may give rise to a fine of up to £3K.

John Walker, national chairman of the FSB, is quoted by The Independent:

"Despite the worsening economy, HMRC is launching this scheme regardless of the consequences.

We have spoken to HMRC and expressed our concerns about this a number of times. But as far as they and ministers are concerned it is a policy aim to make this happen.

There is a huge difference between the rhetoric of the Government about helping small businesses and what it is doing in reality."


Priti Patel MP is quoted:

"This is the persecution of small businesses at a time when they are already facing a very, very hard time. The attitude of HMRC to small businesses is frankly disgraceful when they are blatantly doing deals with large firms which have allowed them to escape millions of pounds in tax liabilities."

Interestingly, according to a spokesman,  HMRC appear to be backtracking on the plans:

"HMRC recognises that the launch of the Business Records Checks pilots has caused considerable concern to the tax profession, and that the project would have benefited from more detailed consultation with tax professionals at an earlier stage. 

In the light of these concerns, HMRC will undertake a strategic review of the project, in consultation with the professional and representative bodies.

The findings of the review will be shared with representative bodies in January 2012, and final decisions will be made by HMRC before the end of the current financial year."

Let us see if that gets anywhere.

Notwithstanding the above, the politicians would do well to remember that as they are responsible for tax legislation, HMRC's budget and the senior appointments to HMRC, they are ultimately responsible for HMRC.

Tax does have to be taxing.

UK EXPATS: Reduce tax on UK Pensions
HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

Quote ID code "ABC" when contacting a QROPS specialist.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"