Complexity Costs

The long running issue with regard to tax credits being overpaid by HMRC to low income families, and the financial problems caused by demands for repayment are well documented and well known.

However, another group of people are now also being hit by HMRC errors. This time it is pensioners who are on the receiving ends of demands from HMRC for payments of underpaid tax, resulting from errors by HMRC.

This Is Money reports that almost half a million people with small pensions have had slipped under HMRC's radar, as a result of this they are now facing demands for hundreds of pounds of unpaid tax.

Former nurse Olive Mader, 65, faces a bill of almost £7,000 after drawing her state pension for the past five years. She continued working full-time until she was 65, but was not taxed on her state pension. She says she cannot afford to pay.

HMRC is supposed to send out P161 forms to people approaching state pension age. However, Paddy Millard from TaxHelp for Older People says these forms can be lost in the post or left on the mantelpiece because older people don't understand their importance.

The errors stem from a breakdown in communications between the Department for Work and Pensions and HMRC.

Failure to comply with the bureaucracy means that HMRC fails to apply the right tax code, and pensioners don't pay the full amount of tax.

In an perfect world, of course we should all check that the tax that we pay is correct. However, this is not a perfect world:

-People do not understand the complexity of the tax system

-Not every elderly retired person is as good with bureaucracy as those who are still working

Whilst the underpayments do need to be addressed, there is a funadamental problem with how HMRC "connects/communicates" with real people and with other government departments.

This is yet another example of how the complexity of the tax system is causing distress, errors and extra work/costs in trying to sort out the mess.

A spokesman for HMRC is quoted:

"We issue a form called a P161 to every pensioner for whom we receive notification from DWP that payment of state pension is about to start.

We are working with the DWP to explore ways of making the service to people approaching retirement more joined up."

Let us hope that they really do find and implement a "joined up" approach pdq.

It is a pity that Brown doesn't do "simple".

Tax does have to be taxing.

The New Statesman, Britain's leading political magazine is delighted to announce that HMRC Is Shite has been nominated for a New Media Award in the category of Campaign For Change. The campaign for change award will go to the individual or organisation that has most effectively influenced opinions and behaviour through the use of new media technology. The winner of this award will champion a cause and provide information and tools to instigate change.

The full press release can be downloaded here.

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"

Hanging On The Telephone

The consumer magazine Which? has named and shamed over 30 organisations that are using 0870 or 0845 customer-service numbers to profit from their callers.

Which? is calling for all companies to switch their helplines and technical support lines from expensive numbers to cheaper 03, 0800 or geographic numbers.

Which? said a 10-minute call from a BT landline to a normal geographic line costs about 40p at most while the same call to 0845 number could cost up to 60p (50% higher).

I looked at the list, and saw that HMRC does not feature on it.

Great!

Unfortunately this appears to be an omission on the part of Which?, as all the documentation that I have from HMRC gives 0845 numbers for phone queries (as indeed does the HMRC website).

Maybe the call costs are tax deductible?

Tax does have to be taxing.

The New Statesman, Britain's leading political magazine is delighted to announce that HMRC Is Shite has been nominated for a New Media Award in the category of Campaign For Change. The campaign for change award will go to the individual or organisation that has most effectively influenced opinions and behaviour through the use of new media technology. The winner of this award will champion a cause and provide information and tools to instigate change.

The full press release can be downloaded here.

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"

Using The Data Protection Act

In early April Nick Morgan wrote about the ordeal that he suffered whilst being investigated by HMRC. HMRC when it launches an investigation turns centuries of British jurisprudence on its head, by shifting the onus onto the taxpayer to prove his/her innocence.

In late April Nick wrote a follow up piece for AccountingWeb, explaining how he used the Data Protection Act to gain access to the files that HMRC kept on him during the investigation to fight his corner.

It seems that when a request is made for information held by HMRC, the tax file is physically sent to Newcastle where it is read and vetted by the Data Protection team. Once they have decided what can and cannot be released, copies are made and sent out to the taxpayer and the original documents are then returned to the investigating officer.

Nick got what he wanted, including information that showed the HMRC investigating officer admitting that the case was not a big one, and a senior officer saying that he wanted it closed down ASAP.

Nick advises that people make the most of the Data Protection Act whilst they can. His prognosis for the future is that HMRC will seek to change the rules and block future requests.

Is Nick being too cynical about HMRC?

Surely they are merely a tax collection function, set up to serve to the people, which would not seek to change the rules?

Tax does have to be taxing.

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"

Too Clever By Half

Sometimes people and organisations can be just a little bit "too clever".

HMRC and the Treasury have suffered an attack of "cleverness" which backfired on them, and recently forced them to back track on one of their cherished policies.

HMRC has now backed down from taxing foreign sport stars' global income, as a result of the very real threat of losing out in the selection to host top sports events such as Uefa Champions League Final in 2011.

Brigid Simmonds, chairman of the Central Council of Physical Recreation (CCPR), told the Telegraph before the climbdown:

"There is no doubt that we are losing out on major events because of the heavy-handed way in which tax on sport is treated in this country.

In other countries, the authorities go out of their way to attract major sporting events - international and European competitions which bring in a great deal of money, local investment and prestige, as well as home advantage.

But the taxman here seems to be going out of his way to put people off."

Jane Kennedy, treasury minister, relented and told the Football Association a fortnight ago that, if Britain won the right to host Uefa, visiting players would not be taxed here.

This follows hot on the heels of a similar exception granted to the Olympics.

Which is all very well, but as Mike Warburton told The Telegraph:

"What we need is a clear statement of policy rather than the treasury being forced into one embarrassing climbdown after another."

He added:

"HMRC thinks it is being very clever, but this approach has the unintended consequence that Britain loses international sporting events and the economic activity they generate."

As said, HMRC at times tries to be too clever by half.

Tax does have to be taxing.

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"

Computer Says No - Yet Again!

There has been another IT foul up at HMRC.

This one has left up to 100,000 low-income families waiting for £250 child trust fund payments that they are entitled to. These payments top up the £250 voucher available to all parents.

Kitty Ussher, the economic secretary to the Treasury, told a select committee on Thursday that a "programming error" had delayed the payments.

She is quoted in the FT:

"It is a technical thing due to the way the various computers at HMRC  . . .  talk to each other around people who are eligible for benefit payments."

She added that a separate problem "that we have not quite got to the bottom of" had also affected payments.

It would seem that, amongst other things, the merger of Customs and the Revenue has caused issues wrt the IT systems of the pre merged organisations not being able to communicate effectively with one another.

These communications problems are further compounded by the fact that Brown has habitually, for the last decade, made the tax system ever more complex. We should not of course forget the fact that politicians are incapable of effectively implementing/managing IT systems.

Unsurprisingly the delayed payments are, in many cases, linked that failed "flag ship" of Brown's: Tax Credits.

Why not abandon the sinking ship of tax credits, and increase the personal allowances by a significant amount instead?

A solution that is cheap, simple, effective, and easy to understand/implement.

Unfortunately Brown does not do "simple".

Tax does have to be taxing.

The New Statesman, Britain's leading political magazine is delighted to announce that HMRC Is Shite has been nominated for a New Media Award in the category of Campaign For Change. The campaign for change award will go to the individual or organisation that has most effectively influenced opinions and behaviour through the use of new media technology. The winner of this award will champion a cause and provide information and tools to instigate change.

The full press release can be downloaded here.

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"

Lost - The £9.9BN

The Liberal Democrats have accused HMRC of losing almost £10BN of public money owing to flaws (fraud, error and overpayments) in the tax credit system.

The tax credit computer system was recently condemned by the Public Accounts Committee for suffering "the highest rate of error and fraud in central government", and is losing £1BN a year as a result of erroneous tax credit payments each year.

Shadow work and pensions secretary Danny Alexander said:

"The government's boasts about the tax credit system have been exposed as spin."

The treasury has refuted the numbers, saying they ignore the fact the that HMRC will recover the majority of overpayments and that it includes "unrelated" figures.

Maybe so, but wouldn't it save time, money and effort if these overpayments were never made in the first place?

Tax does have to be taxing.

The New Statesman, Britain's leading political magazine is delighted to announce that HMRC Is Shite has been nominated for a New Media Award in the category of Campaign For Change. The campaign for change award will go to the individual or organisation that has most effectively influenced opinions and behaviour through the use of new media technology. The winner of this award will champion a cause and provide information and tools to instigate change.

The full press release can be downloaded here.

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"

Cheers!

I am advised that there are members of staff of HMRC who visit this site in order to keep themselves up to date with what is going on in HMRC. Apparently HMRC's internal Intranet does not contain the level of detail that this website does.

I am happy to be of service:)

Tax does have to be taxing.

The New Statesman, Britain's leading political magazine is delighted to announce that HMRC Is Shite has been nominated for a New Media Award in the category of Campaign For Change. The campaign for change award will go to the individual or organisation that has most effectively influenced opinions and behaviour through the use of new media technology. The winner of this award will champion a cause and provide information and tools to instigate change.

The full press release can be downloaded here.

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"

Catch 22 - A Dilemma

I understand that those in charge of HMRC have presented those who work for HMRC with something of Catch 22 dilemma.

Allow me to explain.

When people apply for a CIS card, Tax Credits, or register for Self Employment they are required to produce several forms of ID at a Revenue office.

So far so good.

One of the forms of ID can be a letter from a Government department to the applicants home address.

With me so far?

Now here is where it becomes a little more tricky.

Imagine that you are a failed asylum seeker.

What would you do to prove your identity?

Yes, that's right, you would use a letter from the Home Orifice.

After all, the Home Orifice is a "respected" government institution, a letter from them surely would cut the mustard...wouldn't it?

In theory yes it would, until that is you actually read what the letter says.

Now what do you think that this letter says?

Shall I help you here?

It says that the failed asylum seeker is specifically forbidden from working or claiming benefits, as the failed asylum seeker has been denied rights to asylum.

Now a logical and sensible employee of HMRC would of course use this letter as the basis for denying benefits/tax credits. Unfortunately those who run HMRC are not very logical, sensible or indeed very bright.

Those in charge of HMRC have issued an edict to their staff telling them to accept these letters as a valid form of ID for verification purposes.

Let me just remind you one more time:

THE LETTERS SPECIFICALLY FORBID THE RECIPIENT FROM WORKING OR CLAIMING BENEFITS!!!

To add insult to injury, the staff at HMRC have also been expressly forbidden from notifying the Home Orifice etc of the fact that this "client group" is breaking the law, due to the "data protection" implications.

Am I the only one who finds this to be completely absurd?

Would those who "run" HMRC care to comment?

Tax does have to be taxing.

The New Statesman, Britain's leading political magazine is delighted to announce that HMRC Is Shite has been nominated for a New Media Award in the category of Campaign For Change. The campaign for change award will go to the individual or organisation that has most effectively influenced opinions and behaviour through the use of new media technology. The winner of this award will champion a cause and provide information and tools to instigate change.

The full press release can be downloaded here.

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"

Communications Problems

A report by The Public Accounts Committee has given HMRC a sound kicking wrt its communications with taxpayers.

The report said:

"The department's target to answer at least 90% of telephone callers within a day is not demanding, nor in line with industry benchmarks."

It noted that callers receive incorrect advice when they ring up, and HMRC's website is poorly designed.

"The Department's website is not user friendly and falls short of the standards achieved by tax administrations in other countries.

It should improve accessibility with more effective search engine and navigation tools, including last-modified dates on webpages, and by meeting Cabinet Office guidelines on accessibility for groups such as blind and partially sighted users.

It should not wait for the Direct.gov website to become available in 2011 as the main web channel for citizens before carrying out these improvements."

It also noted, something that I find amazing given that we are now in the 21st century, the fact that HMRC does not readily allow taxpayers to send email.

Anyone would think that HMRC doesn't want to interact with the taxpaying public, or indeed help them!

Other gems include the fact that guidance leaflets produced by HMRC require a reading age higher than the national average, and the fact that HMRC have not estimated the amount of tax overpaid.

Here are the 10 conclusions and recommendations:

1. HMRC answers 72% of telephone calls within 20 seconds, compared with a general industry benchmark of 80%. HMRC should aspire to be an industry leader, aiming to match the average standards achieved by other organisations and then to achieve those of the top-performing organisations industry-wide.

2. HMRC's target to answer at least 90% of telephone callers within a day is not demanding, nor in line with industry benchmarks. To measure its performance and set targets it should introduce recognised industry benchmarks such as the average time to answer and the percentage of calls answered within 20 seconds.

3. Telephone callers sometimes receive incorrect or incomplete advice because they are not referred to staff with appropriate knowledge.

4. HMRC's website is not user friendly and falls short of the standards achieved by tax administrations in other countries.

5. The Income Tax Self Assessment return is the only personal tax form which can
be filed online and the Department offers very restricted facilities for people to contact it by email.

6. Many people have to contact HMRC to obtain information which should be readily available on its website in printed guidance or in letters.

7. Only 10% of HMRC's forms advertise the availability of documents in alternative formats for blind and partially sighted people, special telephone numbers for people who are hard of hearing and translation services.

8. HMRC does not systematically assess the accuracy and completeness of advice given in face-to-face contact at enquiry centres, and these centres do not always tell visitors about alternative formats or translation services.

9. In a sample of commonly used guidance leaflets, half required a reading age higher than the national average. The guidance accompanying HMRC's forms is lengthy and dense, making it difficult to understand.

10. HMRC has estimated that the level of underpayments on Self Assessed Income Tax was £2.8 billion in 2001–02, of which around £330 million may have been due to unintentional mistakes by taxpayers. It has not estimated the amount of tax overpaid. The Department should set a timetable for producing its first estimate of overpayments.

The full report can be accessed here "HM Revenue and Customs: Helping individuals understand and complete their tax forms"

Tax does have to be taxing.

The New Statesman, Britain's leading political magazine is delighted to announce that HMRC Is Shite has been nominated for a New Media Award in the category of Campaign For Change. The campaign for change award will go to the individual or organisation that has most effectively influenced opinions and behaviour through the use of new media technology. The winner of this award will champion a cause and provide information and tools to instigate change.

The full press release can be downloaded here.

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"

Smug Alert

The battle between Tesco and the Guardian, over an article that the Guardian published relating to Tesco's alleged tax arrangements, has taken another twist over the weekend.

The Guardian now admits libel, and has formally offered amends. However, the Guardian made it clear that it would strenuously defend a malicious falsehood claim by the company.

Yet, despite this, the Guardian has chosen to stand astride a self constructed "moral soapbox" and displays a remarkable degree of smugness.

Its defence papers state:

"With profits before tax of over £2.5BN, Tesco has no possible commercial or ethical justification or need for SDLT tax avoidance.

Tesco must at all material times have been aware that many of its customers and shareholders would reasonably deplore tax avoidance of any kind."

What complete and utter crap!

Tax avoidance is legal, and commercially logical.

We all practice it (eg via use of personal allowances, ISAs etc).

What gives the Guardian the right or "moral" superiority to dictate to us that tax avoidance is unethical, or that the shareholders or customers of Tesco would deplore tax avoidance?

Is the Guardian saying that none of its journalists, shareholders, board or readers practice tax avoidance?

As already noted, we all do!

Maybe it should get its head out of its own backside, stop smelling its own farts, and take a good look at reality for once.

This misplaced and odious smugness from the Guardian forms part of the ongoing drip drip drip of negative publicity being spewed forth by the government, their lackeys and HMRC against tax avoidance.

The government is broke and is desperately looking for ways to find more money to feed its insatiable appetite. Once they have broken the backs of the more elaborate and expensive tax avoidance measures, they will come after the more mundane (ones that you, I and the Guardian staff/board/readers use).

Tax does have to be taxing.

The New Statesman, Britain's leading political magazine is delighted to announce that HMRC Is Shite has been nominated for a New Media Award in the category of Campaign For Change. The campaign for change award will go to the individual or organisation that has most effectively influenced opinions and behaviour through the use of new media technology. The winner of this award will champion a cause and provide information and tools to instigate change.

The full press release can be downloaded here.

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"

Factoid

Did you know?

HMRC spends £35 million a year on producing and distributing printed forms and other guidance.

It also spends £55 million a year answering 12.5 million enquiries on how to complete forms through 13 telephone helplines, face to face meetings at 279 enquiry centres or via its website.

HMRC handles over 20 million telephone calls a year from taxpayers who have specific queries about their tax affairs or need general information. Its performance in answering telephone calls has improved with 72% of calls answered within 20 seconds in 2006–07, compared with 45% in 2005–06. However, it is still below the general industry benchmark of 80%.

Watch this space for more Factoids about HMRC.

Tax does have to be taxing.

The New Statesman, Britain's leading political magazine is delighted to announce that HMRC Is Shite has been nominated for a New Media Award in the category of Campaign For Change. The campaign for change award will go to the individual or organisation that has most effectively influenced opinions and behaviour through the use of new media technology. The winner of this award will champion a cause and provide information and tools to instigate change.

The full press release can be downloaded here.

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 Health Warning

A few days ago AccountingWeb reported that Baker Tilly had criticised HMRC's "new" version of the IR20 booklet IR20 "Residents and non-residents: liability to tax in the United Kingdom", published on HMRC's website on 6th May.

Seemingly the booklet is not "new".

George Bull, head of tax, is said that the "new" booklet is in fact a revised version of the 1999 edition of the booklet.

So far so good.

Unfortunately, it takes no account of the major changes that were announced in the Budget which are in the Finance Bill currently awaiting parliamentary approval.

For example this version of IR20 includes no mention of:

-the change to the day-counting rule to include any day when a person is present in the UK at midnight;

-the new £30K charge on non-domiciliaries who have been UK-resident for over seven years and who wish to claim the remittance basis; or

-the changes to the remittance basis itself.

HMRC said a few days ago that it does not intend to publish the fully revised version of IR20 until after the Finance Bill has become law.

However, as I noted earlier this week, what a difference a few days make in politics and tax!

HMRC have now issued a health warning about this booklet.

It points out that it now includes as an appendix Revenue & Customs Brief 01/07 which was issued following the recent Gaines-Cooper case, but it does not include reference to the proposals made in the 2008 Budget to change the way days of presence are counted for residence purposes, nor to changes made to the operation of the remittance basis as we are not able to publish such guidance until the 2008 Finance Act has received Royal Assent.

You can bet your bottom dollar that HMRC would not have issued this health warning had people not raised a fuss over the booklet.

Therefore, here's the very obvious question that I am sure all of you want to ask HMRC.

Why the hell did you waste our money and your time publishing a revised booklet that you knew perfectly well was out of date, and that you knew you would have to republished in the next few weeks?

Tax does have to be taxing.

The New Statesman, Britain's leading political magazine is delighted to announce that HMRC Is Shite has been nominated for a New Media Award in the category of Campaign For Change. The campaign for change award will go to the individual or organisation that has most effectively influenced opinions and behaviour through the use of new media technology. The winner of this award will champion a cause and provide information and tools to instigate change.

The full press release can be downloaded here.

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"

What The Fark!

Dear oh dear, what a difference a day makes in politics and indeed in tax!

I must congratulate our "respected" Prime Minister and Chancellor for their astute footwork in trying to dig themselves out of their own "self dug" graves.

Quite whether they will still be in orifice by the end of this year remains to be seen.

Confused?

So am I!

In 1999, with much fanfare and hubris Gordon Brown (never one to hide is "accomplishments" from the world) announced the introduction of a 10p tax band...to help the less well off.

In 2007, Gordon Brown with much fanfare and hubris announced the reduction of the 22% tax band to 20%.

Hidden within the morass of papers spewed out by the Treasury was a wee note that said Brown would be abolishing the 10P band too.

Funny that he didn't mention that during the his 2007 budget speech!

Anyhoo, fast forward one year, facing meltdown in the local elections Labour MPs suddenly realised that the abolition of the 10p tax band was not going to be popular. They mounted a very noisy and vocal rearguard action to try to stave off electoral defeat, and appealed to Brown and Daring to rescind the 10p abolition.

Alas their protestations were to no avail, Darling said in April that budgets cannot be rewritten - the 10p abolition was here to stay. Indeed, he stated very clearly that he could not even afford to compensate those who had been hurt by its abolition (by the way, Brown still contends that via his crappy tax credit system no one is disadvantaged - but that's another story for another day).

Can you guess what happened next children?

Yes, that's right, Labour were well and truly farked over in the local elections; they scored the lowest percentage of votes since 1349 (or thereabouts).

Moving forward but one month, Frank Field and his chums scented blood and threatened (a threat that was taken very seriously) to defeat the Finance Bill. The Finance Bill is of course sacrosanct.

On top of this Brown faced defeat at the Crewe by election, therefore a political and financial bribe of staggering proportions was required.

The solution?

So simple, so obvious, so expensive!

Raise the tax allowances by £600, thus offsetting the negative impact of the abolition of the 10p rate.

The good news is that this gives very basic rate taxpayer a nice £120 windfall, even those who were not negatively impacted by the 10p abolition.

The bad news?

1 The taxpayers will have to pay for the government's bribe (as this money is being "borrowed" from us).

2 This is only effective for this year, next year Darling will have to come up with another solution (want to bet he is no longer in the job?).

3 Had the Chancellor been able to target the relief to only those who were negatively impacted by the 10p abolition, it would have cost us a "mere" £1BN. The solution he has used will cost us £2.7BN.

3 It's messy, confusing and entirely an own goal given that this is a mess of Brown's own creation.

Confused?

Well, I don't blame you.

Given that HMRC have to deal with the never ending shit spewed out by this government, it is hardly surprising that the tax system is confusing, unwieldy and prone to terrible errors.

Call me naive, but wouldn't it be better for the government to simplify the tax system (reduce the bureaucracy, cut the rates, cut the number of taxes and to use VAT to soak up tax take shortfalls) and to stop farking around with it?

Wouldn't that really be best for the country?

The trouble is, Brown doesn't do "simple".

He is the architect of his own downfall, let us hope he goes quickly.

Tax does have to be taxing.

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"

Congratulations To Tax Credit Casualties

Hearty congratulations to Tax Credit Casualties for also being nominated for the New Statesman New Media Awards, they are nominated in the Community Activism category.

"Tax Credit Casualties provide a life line to those who have, through no fault of their own, received overpayments of tax credits. Claimants in this position are routinely told that they can not appeal against this and must pay back the money immediately.

Tax Credit Casualties provide advice and guidance to enable individuals to fight their own cases, support so that individuals do not feel alone and also campaign for a fairer system. They even act take on cases for those individuals who are unable to fight for themselves. All this is provided in their own time and is funded through their own pockets."

Every bit of publicity they get is generating more disputes with HMRC - they advise me that the number of disputes are now at the highest level for five years.

A little bird also tells me that there is a film being worked on with the BBC....watch this space.

In my view, they well deserve to win the award. The dream ticket would be for both of our sites to win...one can dream!

Tax does have to be taxing.

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"

Bring It On

The Tesco vs Guardian dispute, over an article in the Guardian about Tesco's alleged tax avoidance plans, has intensified.

Tesco has demanded that the Guardian issue a front page apology.

As I have already noted, the story in the first place (although it transpires it was factually incorrect) was theoretically a non story.

Tax avoidance is legal.

However, in Brown's Britain (which is broke) the government, left of centre media organs, yesterday's politicians and HMRC are keen to tar tax avoidance with the same brush as tax evasion (which is illegal).

Tesco are to be congratulated for their stand against the ongoing negative publicity spewed forth by HMRC, the government and its lackeys.

The government and HMRC, if they succeed in shutting down complex and expensive avoidance schemes will move on to the more simple every day ones such as ISAs and even personal allowances.

They are broke and they are desperate.

Tax does have to be taxing.

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"

Nominated For Award

HMRC Is Shite has been nominated for the New Statesman New Media Awards 2008.

The New Statesman, Britain’s leading political magazine is delighted to announce that HMRC Is Shite has been nominated for a New Media Award in the category of Campaign For Change. The campaign for change award will go to the individual or organisation that has most effectively influenced opinions and behaviour through the use of new media technology. The winner of this award will champion a cause and provide information and tools to instigate change.

The full press release can be downloaded here.

Tax does have to be taxing.

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"

The Drip Drip Drip Continues

Yesterday's man, Michael Meacher MP, has written an article in today's Guardian calling for HMRC and the chancellor to "crack down on tax avoidance".

I am pleased to see that Meacher does agree with the point that I have repeatedly made on this site, that tax avoidance is legal. However, he states that whilst being legal it is "immoral".

Given that everyone who pays tax uses tax avoidance techniques, such as personal allowances, to reduce their tax liability; does this mean that we are all immoral?

Despite the drip drip drip of anti avoidance articles, written by certain politicians and would be politicians, there is nothing immoral about trying to reduce your tax liability.

The problem is that the governement is spending more than it is taking in tax.

Tax does have to be taxing.

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"

Heads We Win, Tails You Lose

It would appear that HMRC have a bit of a problem admitting that they have made a mistake despite the fact that all people make mistakes, even government organs!

Changes proposed by the Orwellian named Ministry of Justice will have a negative impact on those seeking to appeal unfair VAT bills. The proposed rule change means that the appellants will no longer be entitled to claim costs of the tribunal, even if successful.

Doesn't this sound a tad unfair?

Is this justice?

Denis Holly, director of VAT at Horwath Clark Whitehill, says that the change will have a particularly negative impact on SMEs.

Given the potential costs involved, and the fact that they may in fact exceed the amount being appealed, the SME may find that it is easier to pay the overstated VAT rather than contest it.

Does this not give an incentive to HMRC to become slipshod in its VAT computations?

Mr Holly is quoted in the Birmingham Post as saying:

"The new rules are a result of the merger between the Inland Revenue and HM Customs, which seeks to establish a common system for direct and indirect taxation tribunals. Costs are not awarded in direct tax tribunals and that principle is mooted to be applied to indirect tax tribunals.

It makes sense to have a common approach; it's unfortunate the rules on costs have been moved in the wrong direction."

Now the real issue, that sits like an elephant in the room, is this; why are the costs of appeals against direct tax assessments not allowed when the case is won by the appellant?

How can anyone seriously believe that this system is fair?

This gives the government and HMRC carte blanche to hound anyone they choose, especially individuals and SMEs, confident in the belief that the costs involved in mounting a defence will invariably outweigh the costs of paying the tax.

This is wrong!

Tax does have to be taxing.

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 Joins The Masons

HMRC are recruiting for two positions; a part time non-executive chairman and a Chief Executive Officer.

HMRC, in the face of plummeting morale, claim that they are changing their complex and incomprehensible management structure to try to bring in some elements of corporate governance and efficiency from the real world.

HMRC scanned the "talent" pool within its organisation and found that it is sadly deficient; therefore the posts were to be advertised in the real world.

Isn't it rather odd then that these two posts are not advertised on the HMRC website?

In fact they have never been advertised on the HMRC site.

Indeed, you have to look very hard to find any evidence anywhere that HMRC are proactively seeking to fill these roles at all.

Simon Sweetman of AccountingWeb states that there has in fact been only one advert placed for the Chairman's role, in the Sunday Times on the 2nd of March.

"The highest level of leadership, chairing and influencing skills are required, combined with extensive experience of senior executive or non-executive leadership in large complex organisations. The Chair will have a proven track record of managing multiple stakeholders and, preferably, of working with Government."

Simon then notes that the salary is around £150K, for this part time post, but that the advert gives no closing date.

Has HMRC become part of the Masons, whereby only those invited to the very top positions are allowed to join?

Tax does have to be taxing.

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"

Guardian Says Sorry

The Guardian has apologised to Tesco over its reporting of Tesco's tax affairs.

As noted on this site in April, the Guardian wrote an article about Tesco's alleged tax avoidance plans.

Seemingly the Guardian was talking bollocks, and has now stated that it no longer believes that Tesco's Cayman island structures allowed it to avoid up to £1BN in corporation tax.

"The original Guardian articles did not correctly explain the effect of Tesco's tax schemes. It was wrong to state that they were designed to avoid corporation tax. It would have been correct to refer to avoiding SDLT [Stamp Duty Land Tax].

As a result, the figure of 'up to £1bn' - calculated as the amount which could have been saved on the disposal of £5bn of property - is wrong. The loss to the exchequer is likely to be nearer the region of £90m-£100m."

All very well, but even if there had been a tax avoidance plan that could have saved £1BN, the Guardian has been duped by Hartnett and Brown into their web of deception that tax avoidance is somehow wrong.

So what if Tesco had in fact put together a tax avoidance plan for saving £1BN?

Tax avoidance is perfectly legal, we all do it each year by eg claiming our personal allowances.

Hartnett and Brown are keen to tar tax avoidance with the same brush as tax evasion (which is illegal) because they desperately need to increase the tax take, as the government's finances are blown.

Once they have cracked down on high profile schemes, they will turn their attention to the more "mundane" ones such as isa's and possibly even personal allowances.

The Guardian was duped into playing the government's and HMRC's game, yet they still don't see this. Their apology snidely refers to "clever accountants", thus leading the reader to conclude that tax avoidance is somewhat "dodgy".

However, being the Guardian, it chooses to cite their "righteous moralism" over "correctly reporting the facts" as being justification for the error.

"We remain ready to defend our journalism - in court, if necessary. We believe these matters should be subject to debate and scrutiny, and we invite further informed analysis from any readers with experience in accountancy or tax law."

They want input, I suggest that you give them some; here is their email tax@guardian.co.uk

Tax avoidance is legal!

The most effective way for the government to reduce the time, effort and money spent by HMRC on chasing tax avoiders is to simplify the tax system; thus making it unnecessary for companies and individuals to set up complex and costly tax avoidance structures.

Unfortunately, Brown and Darling don't do "simplification".

Tax does have to be taxing.

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"

Infamy, Infamy, They've All Got It In For Me! II

In March of this year, Dave Hartnett the "nearly man" of HMRC and acting Chairman spoke at an ICAEW Tax Faculty event and addressed the highly embarrassing subject (embarrassing to HMRC anyway) of the online tax filing system crash at the end of January which forced HMRC to extend its filing deadline by a day.

In Hartnett's view this was not an accident, most certainly it was not the fault of HMRC or its IT system.

The real cause?

Deliberate Conspiracy!

Seemingly, according to Hartnett, there had been a mysterious "spike" at 11.10pm on the night of Wednesday 30 January when a number of users (a mere 6,500 users) had all come on to the system for a few seconds, but none actually filed.

Hartnett would not comment further on the issue, except to say that he would share details with the tax world when more was known.

I did note at the time that it was unlikely that even had this been a deliberate denial of service attack (DOS), 6,500 would not have caused a professional, well run IT system to crash.



However, it now transpires that the "nearly man" was talking...errmmm...using my favourite accounting phrase here...

Bollocks!

HMRC now report that is has "categorically established" that there was no attempt to hack into its online filing system on the evening that its computers crashed.

A Revenue spokeswoman said:

"We have now undertaken a thorough investigation into the problems that occurred and have categorically established there was no hacking attempt on the online filing system.

Our investigations show that customers were carrying out a number of activities in relation to their tax returns.

The number filing in the peak period is consistent with filing patterns for earlier years."

Therefore there are two questions that remain unresolved (unresolved publicly at least):

1 Why did the "nearly man" claim that the system had been subject to a DOS attack? Is it possible that the leadership of HMRC don't understand how IT systems operate?

2 Why did the system crash?

Tax does have to be taxing.

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"

You're Not Hired

Sorry folks, this post has been removed because it was complete nonsense.

Tax does have to be taxing.

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"

A Tangled Web

Our beloved government really should try to stop lying to us.

Doesn't it know that the truth eventually comes out?

In November 2007, Alistair Darling blamed the loss of the two HMRC CDs (Datagate) on a junior official.

However, this spin appears to be a load of (to use a technical accounting term here) bollocks.

Treasury financial secretary Jane Kennedy in a written answer on Wednesday gave a different version of the "government line".

According to Kennedy, data controllers within HMRC "sit within business units' line-management chain"; the director of each business unit in HMRC is ultimately accountable for the data-security arrangements in that unit; and the chair of HMRC has ultimate responsibility for data security.

When will they apologise to the hapless HMRC junior on whom they laid the blame?

Tax does have to be taxing.

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"

The Joy of Discipline

It seems that some people in HMRC are a little slow on the uptake, when it comes to data security issues.

You would have thought that following last year's datagate scandal, when HMRC lost the personal records of 25 million taxpayers, that things would have "sharpened" up a bit in HMRCland.

Indeed, HMRC have been playing the line that this was a one off cock up.

Seemingly not!

It appears that misuse of personal data is part of the culture of HMRC.

Over 600 staff at HM Revenue and Customs (HMRC) have been disciplined for accessing personal or sensitive data.

Treasury Financial Secretary Jane Kennedy said that there were 238 people disciplined in 2005, 180 in 2006, and 192 in 2007. In many cases the penalty for staff misusing data was dismissal.

Ms Kennedy is operating under the illusion that this unwarranted intrusion and misuse of people's private data is OK. She believes that the figures showed "the strength of HMRC's disciplinary procedures".

Ms Kennedy said HMRC has a "strict policy forbidding staff to access customer records unless they have a legitimate business need.

Breaches of this policy are taken seriously and any breach will result in the commencement of disciplinary proceedings.

Each case is treated on its merits but in many cases the disciplinary penalty for breach in dismissal."

Fine!

Therefore please answer this question, given that the penalties are so severe and the rule is well known, why are HMRC staff (albeit it a minority) still misusing the data?

Tax does have to be taxing.

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"