Rewarding Failure - The Gray Scale

As is reasonably well known, the civil service has a grading structure which determines salary, pension, perks, etc etc.

However, as with all government orifices there are nuances etc that may not be so well known. Doubtless you will all recall the datagate fiasco of last year, where HMRC lost the data records of 25 million people and put their personal security at risk.

At that time Paul Gray, CEO of HMRC, was chosen to fall on his sword for this fark up and leave HMRC. Not that many tears were shed for him at the time, because he happily slipped into a new role in another part of the civil service (heaven forfend any senior member of the civil service should ever lose their job over something that they were responsible for!).

Within weeks, he had moved into the Cabinet Orifice where he led a project on 'developing civil servant skills' before his contract finally expired in December.

However, what was not revealed at the time was how much he was paid off for leaving HMRC. The payoff has now finally come to light.

How much do you think he got for leaving HMRC, after taking some of the responsibility for losing 25 million data sets?

Maestro, cue a role on the drums please!

Paul Gray received a payoff of........£400,000.

His salary when he was in HMRC was £200K per annum, so that means he got a two year pay off.

By the way, he has now also managed to negotiate a retirement package that will be officially revealed in the HMRC's annual report next month.

This particular civil service grade and pay scale shall henceforth be known as "The Gray Scale", applicable to all senior civil servants those who fail in their jobs.

HMRC: rewarding failure, punishing enterprise!

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"

The Nearly Man - Epilogue

In case there is any doubt whatsoever, Dave "Nearly Man" Hartnett will not be promoted from "acting CEO" to permanent CEO; as Chairman Clasper's first order of business will be to find and appoint a CEO.

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"

Power Corrupts

The Tories are going to mount a last ditch attempt next week to halt the juggernaut of new powers that will be granted to HMRC, when the finance bill enters its final stages.

Shadow chief secretary, Philip Hammond, made the promise specifically in relation to the new powers which include the right to "raid" businesses and visit the offices of advisers during a tax investigation.

These powers will quite clearly be used for fishing expeditions, as there is no oversight over HMRC.

The Liberal Democrats are backing the Tories, and note that civil liberties are at stake.

HMRC is meant to be purely an administrative function that collects taxes, it is not meant to be a weapon used by the state against the people.

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"

The Tangled Web - Deplorable Failures

What a tangled web we weave, when at first we practice to deceive.

I am sure that those "in charge" of HMRC are wishing that they had remembered the above phrase, before they tried to blame the datagate fiasco (where the personal records of 25 million people were lost by HMRC) on the actions of a junior employee.

I have stated here on several occasions that this was clearly the result of senior management incompetence, rather than the actions of a junior. Two reports issued yesterday confirm that view.

The reports state that the loss was "entirely avoidable", of course it was, and that the loss was due to "serious institutional deficiencies" at HMRC. They went on to blame senior management for not explaining data protection rules to junior staff.

This is the crux of the failings within HMRC, as I keep repeating on this site, that the senior management within HMRC and indeed those within Treasury allegedly "in charge" of HMRC are not up to the job of managing HMRC.

Investigations by the Independent Police Complaints Commission (IPCC) and Keiran Poynter, the chairman of PricewaterhouseCoopers, concluded that there was no evidence of malice or misconduct and blamed systemic failures at HMRC.

The IPCC found "no coherent strategy" for mass data handling. Poynter said that data security was not a "management priority" and morale at HMRC was "low" (rock bottom I would say).

Richard Thomas, the Information Commissioner, said he would serve an enforcement notice on HMRC over its "deplorable failures" on data security, a move which could result in criminal prosecutions unless it improves its record.

The reports contradict what Brown and his lackey, Darling, said at the time about the loss:

"This was ... not about a failure in the procedures as such".

Darling wnet on to say at the time that the decision to send the two discs to the National Audit Office, where they never arrived, was taken "at a junior level".

Lies always come out in the end. How pathetic HMRC senior management and the government now look for trying to blame a junior.

What has happened to the poor sod that they tried to blame? His/her life was probably made hell on earth at the time. If I were in his/her shoes, I would sue the hell out of HMRC and the government for defamation and emotional damage.

That aside, what is clearly required is major culling of the senior management within HMRC; they are not fit for purpose.

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"

The Nearly Man - Always The Bridesmaid

Regular readers will doubtless recall that I have on numerous occasions referred to "acting Chairman" of HMRC Dave Hartnett as being the "nearly man", always the bridesmaid but never the bride.

Indeed you will also recall that I have asked on several occasions why it is that the "acting" part of his title has not been removed, or at the very least he is replaced with a more permanent person.

Well, it seems that those "in charge" of HMRC have been reading this site and have finally taken my advice.

Ladies and Gentlemen it gives me great pleasure to inform you that Dave's "nearly man" days are at an end, up to a point; he is no longer "acting chairman" of HMRC.

HMRC have announced a new chairman, Mike Clasper who was once CEO of BAA (a "world class" company, massively in debt, providing "world class" facilities at Heathrow et al).

What, I hear you ask, is to become of Dave Hartnett?

He will become....wait for it....

Cue a roll on the drums!!



Acting Chief Executive, whilst HMRC look for someone else to fill the role on a more permanent basis.

Farking hell, is there no limit to which HMRC is prepared to humiliate this man?

Is there any limit to the amount of humiliation that Dave is prepared to endure?

Below is the full text of the announcement, and Q&A article, which appeared on the HMRC Intranet site yesterday.

I draw your attention to this particularly fine piece of prose contained within the Q&A article:

"Did Dave Hartnett apply for either job?

We don't announce applicants, only outcomes. Dave will become the acting CEO as soon as the new chair takes up appointment."

There you have it in black and white, if Dave applied for Chairman he failed and is being shunted from pillar to post; always the bridesmaid never the bride.

There are two questions that I must ask:

1 Did someone actually get paid for writing this (the announcement/Q&A article) pile of shite?

2 Did someone in "authority" within HMRC actually approve this pile of shite before it was posted on the intranet?

I assume the answer yes, applies to both questions. In which case it seems proven, beyond any doubt whatsoever, that HMRC senior management are completely clueless. My sympathies are 100% with the people who have to work there, it must be hell on earth.

Oh, how careless of me, I almost forgot to mention this.

Clasper left BAA in 2006 with a pay, pension and share package worth £10 million. Clasper can expect to be paid for his 3 days a week at HMRC in line with a permanent secretary salary scale of between £139,740 and £273,250.

**********

The Prime Minister has announced the appointment of Mike Clasper as chair of HMRC following an open recruitment process.

Mike will oversee the Department's strategic direction, play a lead role in continuing to strengthen HMRC's corporate governance and drive forward engagement with its many stakeholders.

He will take up the post on 1 August, working three days a week, and will be involved in the selection of HMRC's first chief executive - who will take charge of the Department's day-to-day business.

Dave Hartnett will become acting chief executive until the selection process has been completed.

Mike said: "HMRC plays a vital and unique role in the life of our country, its work touching every individual and business. I want to see HMRC in the vanguard of public service delivery, providing a top quality and reliable experience for all of its users.

"That is what those who work in HMRC want and I'm determined that working together we will achieve that goal."

Mike joins HMRC from Terra Firma Capital Partners Ltd, where he was an operational managing director. He was formerly chief executive at BAA plc.

Alistair Darling, the Chancellor of the Exchequer, said: "Appointing someone of Mike's calibre and experience is particularly important at this point in HMRC's development and I am delighted he has agreed to take on the role. Mike will bring the leadership and vision needed to deliver on HMRC’s goals of providing an enhanced service to all of its customers across the UK."

Welcoming Mike to the Department, Dave Hartnett said: "It has been an honour to serve as acting chairman and I look forward to helping build on the progress we've made so far."

Q&A

**********

What is the role of the chair?
His role will be to strengthen HMRC's corporate governance and to provide oversight to the executive committee and departmental board. In addition, he will play a key role for HMRC by engaging with the Department's many stakeholders.

Key aspects of the role include:
Ensuring that HMRC has a clear strategic direction, which reflects ministers' priorities, is consistent with the resources made available by Parliament and enables the organisation to maximise the revenues properly collected and improve services to its customers.

Together with HMRC's board, to develop the strategy, holding the chief executive and senior executives to account for delivering that strategy and for the organisation's performance.

To oversee and ensure the highest standards of corporate governance, which means there are clear roles and responsibilities for all staff within HMRC and that the right cultures and behaviours exist to help deliver our objectives.

By providing leadership to the board; taking responsibility for the board's composition and development; ensuring good information and analysis for the board; and planning and conducting board meetings effectively.

Along with other members of the board, to hold the chief executive and senior executives to account for the delivery of HMRC's strategy and for the organisation's performance in meeting the targets set by ministers. To play a strong representational role, with ministers, Parliament and key stakeholders, including explaining HMRC's strategic direction to them and to its own staff; and to win their support for, and commitment to, that strategy and the resources required to carry it out.

Appear before select committees to give evidence about the strategic direction of HMRC and governance issues.

The role is part time – how part time?
The post will be 3 days a week.

What level of salary is he getting for this part time post?
His pro-rata salary for 3 days a week is commensurate with that of the most senior civil servants

Why is he only working part time - who is in charge the rest of the time?
The role of chair is to assure delivery of the departmental strategy. It is not to run the business; that is a full time job. The day-to-day running of the Department is the responsibility of the chief executive and the executive team. Chairs of huge and complex multi-nationals in the private sector with this kind of assurance role are frequently part-time.

Why is a part-time chair appropriate for an organisation dealing with "hundreds of billions" of pounds?
Because he will oversee the delivery of the departmental strategy. It is not to run the business; that is a full time job for the CEO. Chairs of huge and complex multi-nationals in the private sector with this kind of assurance role are frequently part-time.

What will he do on the other two days a week?
Mike Clasper is a non executive director of ITV plc, a position he will retain. He is also chairman of the West London Consortium, a body aimed at improving employment and skills services to residents and employers.

What is his CBE for?
Mike was awarded a CBE in 2005 for services to the environment. He led an all-industry taskforce on packaging waste, among other activities.

Will he be retaining his non executive directorship with ITV?
Yes

What about the conflict of interest?
As chair of HMRC, Mike is bound by the rules on avoiding conflicts of interest as set out in HMRC guidance. This means he has to take all possible steps to protect himself and the Department from allegations or perceptions of impropriety. He has to give priority to the role of HMRC chair over any past or present associations with any other businesses.

Will we ensure that the new chair and chief executive have never been involved in tax planning/avoidance/evasion?
The successful candidates will be of the highest integrity. There is no question anybody appointed to the posts could bring the Department or their own personal integrity into question.

Will they have to open their financial affairs to scrutiny?
They will be subject to the same checks designed to ensure financial propriety as any other member of HMRC.

Why do we need two people to run the department when we only had one before?
Only one person will be running the department; the chief executive. The chair's role will be to provide strategic leadership and oversight. This is in line with the recommendation in the HMRC Capability Review that we should consider separate roles for a chief executive and chairman.

How can a chair with no experience of HMRC run a tax collecting department?
This is not a question of running tax collection. The role is to ensure HMRC sets the right strategy in line with ministers' priorities and delivers it. Mike has been appointed on the basis of his extensive leadership skills and experience.

Will the chair be directly employed by HMRC/the Civil Service?
The chair will be a civil servant.

Will the chair or chief executive be a commissioner?
This is yet to be decided.

Why were the jobs not advertised and appointed together?
It is sensible that the chair is involved in the selection of the chief executive

When will the CEO appointment be confirmed?
The CEO competition is ongoing and an announcement will be made in due course. The current expectations are that this will be in September, giving the chair time to get to know the organisation before the final selection is made.

Did Dave Hartnett apply for either job?
We don't announce applicants, only outcomes. Dave will become the acting CEO as soon as the new chair takes up appointment.

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"

Bring on The Strippers

Those in charge of HMRC and the Treasury may well be advised to make the most of their remaining time in orifice. On the assumption that Brown and his mob get kicked out at the next election, there will be some changes in the upper echelons.

The shadow chancellor, George Osborne, recently stated in the FT that the Treasury would undergo a major restructuring of its "rather dysfunctional" operations.

Osborne has quite rightly identified that the Treasury became an "imperial power base" for Gordon Brown during his ten year chancellorship, which allowed him to block any policy initiatives coming from Number 10. This of course meant that "the Treasury itself became a rather dysfunctional organisation".

One key change that Osborne would enact would be to strip the administration of tax credits and child benefit from HMRC, and move it to the Department for Work and Pensions.

For why?

"The DWP is better than the HMRC at understanding the pressures involved...I don't think HMRC are used to people who can run out of money on a weekly basis."

In other words, HMRC doesn't know what it is doing nor how to interact with human beings. This should come as no surprise to those who interact with HMRC wrt tax credits.

Osborne said:

"There is a strong argument for removing the delivery function of tax credits, child benefit and child trust funds, and putting them with the Department for Work and Pensions."

He noted, what has already been stated on this site before, that the Treasury because it administers tax credits had been robbed it of its status as "the one department making sure money is well spent across Whitehall"; ie there is no oversight.

Make no mistake, the Treasury and HMRC will be stripped of their power.

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"

No Chance

The ordinary taxpayers, who can't afford high cost legal eagles to protect them from overzealous tax investigations, are going to face a tough time in the future with HMRC.

That is the view of Nichola Ross Martin, Accounting Web's UK Tax Editor, who spoke at recent tax conference at the ICAEW in London about new HMRC powers.

She is quoted as saying:

"Unrepresented taxpayers will not stand a chance under HMRC's new penalty regime.

Many accountants are in for a bit of a shock too.

It was an unhappy coincidence that shadow home secretary, David Davies happened to chose the same day to resign his parliamentary seat on account of 'the insidious erosion of civil liberties in the UK'."

The new tax penalty system allows abatements/reductions from a statutory maximum penalty, by decreasing penalty charges according to taxpayer behaviours. However, HMRC will be required/allowed to pass subjective judgement on the affairs of taxpayers.

This subjective judgement will be fraught with dangers.

The taxpayers themselves will be expected to know if they need professional help or not in their tax affairs, they will then also be responsible for the selection a suitably qualified accountant.

HMRC's Compliance Handbook is not easy reading, even for those who are tax specialists, and is designed to obfuscate rather than help. A sure sign, if ever one were needed, that HMRC is loading the dice in its favour.

Frank Haskew of the ICAEW concluded that HMRC "is consulting but not actually listening" and that "there are diametric views as to what is actually a safeguard" within HMRC.

The dice are well truly now loaded against the ordinary taxpayer.

Just you watch Brown and his cronies running HMRC bleed us dry, as they desperately scrabble in the mud for extra tax revenues to prop up Brown's expensive failed economic model.

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"

Online System in Meltdown

It does seem that those running HMRC are a tad slow at taking a hint. Those of you with long memories may recall that the HMRC online filing system has had one or two "issues", not least the fact it fell over during a vital 24 hour filing period.

Indeed, so concerned were HMRC over this issue that Dave "Nearly Man" Hartnett had a public paranoia attack and blamed a hacking attempt for the collapse. This of course turned out to be ill informed bollocks, but he seems to have little else to do in his role of "acting" Chairman (by the way, why haven't HMRC found a permanent Chairman yet?).

Anyhoo, given that, you would have thought that those in charge of HMRC would have devoted some considerable time and effort to rectifying the problems with the online system and to ensuring that it was "world class".

However, it would seem not; tax advisers have issued stinging criticism this week of HMRC, saying that the online system has not kept pace with changes introduced to the tax system.

There have been numerous updates to the guidance on various areas of tax. Unfortunately, the new disclosure requirements have not been fully implemented online; this in turn leads to a large number of tax returns being rejected.

HMRC had been warned on numerous occasions that there would be problems. However, for reasons best known to those "running" HMRC, these warnings have been ignored.

Former president of Business Application Software Developers' Association (BASDA), Dennis Keeling, said:

"We warned HMRC a year ago that it needed rigorous testing before going live, but they didn't listen to us."

Paul Aplin, chairman of the tax faculty of my own professional body the ICAEW, said that the "number of rejections were noticeably higher this year..Someone has to get a handle on where the problem is quickly."

Quite!

Paul Onions, operating director for PTP Group, a division of Iris, said:

"If you follow the guidance notes from HMRC when completing the returns it will be rejected.

Customers are contacting their software support lines for explanations for what are actually HMRC issues. We, like many software houses, have made changes to our programming to compensate for these HMRC errors."

The trouble is that HMRC senior management is much like a super tanker (not very "super" I would hasten to add), it takes hell of a long time to change course and speed. The world is moving on, leaving HMRC senior management far behind.

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"

Headless Chickens

The ongoing meltdown of HMRC has a number of causes, including the following:

-The complex taxation system of the UK
-The failed merger between the Revenue and Customs
-The shambolic government policy wrt tax changes
-Insufficient training and resources within HMRC, wrt IT and security issues
-The badly thought out, and incompetently managed, restructuring process
-The lack of sufficient and well trained resources within HMRC
-The incredibly incompetent and inept senior management within HMRC

However, the root cause of the above comes from the very "top" of the pile of compost that runs HMRC, or at least claims to run HMRC, ie the Treasury.

Tax is the largest single source of discontent among businessmen. There is very real concern over the fiscal changes, eg the scrapping of the 10% capital gains tax rate, which has been exacerbated by the Treasury's failure to consult business effectively.

Business is now questioning the Treasury's (and it officials') ability to deal with the economic downturn and to manage HMRC.

Richard Lambert, CBI director-general, said last week:

"A lot of people in the Treasury don't know what the hell it [a downturn] is and they're running around like (I will be polite and assume he said headless chickens)...That contributes to the uncertainty."

The Treasury is also lambasted by business leaders and politicians for the specific failings of HMRC, eg datagate and the ongoing tax credits fiasco.

The decision to transfer the administration of tax credits and child benefit to HMRC meant that the Treasury had, in effect, become a spending department in its own right. This is contrary to what the department, as guardian of the nation's purse strings, is meant to do.

Who therefore acts as "oversight" to the Treasury?

HMRC's problems will not be alleviated until there is a radical overhaul of the Treasury, both in terms of its remit and the quality of its resources. Regrettably that will not occur under this administration.

Headless chickens should not be in charge of 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"

Scottish Cuts

HMRC Derby (re yesterday's article) is not alone in facing government and senior HMRC management plans for restructuring.

There are also plans for many other offices to be axed, eg 11 Revenue and Customs offices employing 171 staff across north and north-east Scotland.

Mary Hay, who is the HMRC director responsible for the programme, is quoted in The Press and Journal:

"By consolidating work in fewer locations we will be able to work more efficiently and so improve customer service as well as providing better value for money."

The consultation paper said that "where feasible" staff will be offered relocation, but overall 600 out of 1,800 jobs across Scotland will be lost.

Mark Serwotka, general secretary of PCS, the main union involved, has a view that does not chime with HMRC senior management claiming that it was "a crude drive to slash jobs and cut costs which will leave HMRC unable to deliver quality public services.

Access to tax advice in communities across the UK will be damaged by these proposals hitting businesses and the public, in rural towns and villages, as well as taking quality jobs out of local communities."

The hit list of offices includes Elgin, Longamn House, Invereness, Grangemouth Customs House, Wick, Buckie, Falkirk, Stirling, Dunoon, Perth and Oban.

An HMRC spokeswoman said:

"Many of our customers now prefer to deal with us by telephone or the internet at a time of their choosing."

That may not be entirely true given the meltdown of the online filing system this year at a critical moment, and the less than high quality phone service provided by HMRC.

The proposals have not gone down well with the politicians in Scotland.

First Minister Alex Salmond said that the cuts amounted to "centralisation totally out of control".

Argyll and Bute Liberal Democrat MP Alan Reid said:

"It is an outrage that the three tax offices in my constituency are all to close and local people will have to travel a hundred miles or so to Glasgow or Inverness for face-to-face advice."

Caithness, Sutherland and Easter Ross Lib Dem MP John Thurso said he was "steaming with rage at the deceitful and underhand way in which HMRC have acted".

It seems that HMRC senior management and the government have something of a credibility problem wrt their restructuring plans. They claim that they will improve efficiency and reduce costs. However, neither the staff nor the "customers" (taxpayers to you and I) believe them.

Why do people not believe HMRC senior management?

• Could it be that the senior HMRC management is simply not up to the job of managing the hotch potch that HMRC has become, since it was created from Customs and the Revenue?



• Could it be that the piles of unopened post, going back months, sitting in HMRC offices across the country indicates that there are no efficiency savings and that HMRC is in meltdown?



• Could it be that the datagate fiasco is merely the tip of the iceberg of an organisation on the brink of collapse?



• Could it be that HMRC senior management are simply not good at their jobs?



• Could it be that the plummeting morale within HMRC indicates that senior management do not know or understand how to manage change of this nature?

I most definitely think so!

The government claims that it wants to improve the efficiency, and reduce the costs of HMRC. To my view this is not the way to go about it.

The most effective means of improving efficiency and reducing costs would be for a massive simplification of the tax system.

Unfortunately, as long as Brown is PM this will never happen; 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"

£4M Cost of Closure

The ongoing restructuring within HMRC is not going down well with the staff and unions. The Public and Commercial Services Union has estimated that plans to close Mansfield Street in Derby, and move it to Nottingham, will cost around £4M.

The union estimate that it will cost approximately £3M to retrain staff, and a further £1.35M in travel expenses over three years for those who relocate to the new offices.

HMRC made the proposal last year to shut the Mansfield Road and Agard Street offices and move 400 staff. At that time the local Evening Telegraph began a campaign "Hands Off Our Taxmen" (HOOT), which had the effect of causing HMRC to change plans and agree to only close Mansfield Street with the relocation of 200 staff.

The union calculate that 130 staff will relocate, while the remaining 70 will have to be retrained for different posts.

Under relocation rules, HMRC have to cover the travel costs of those moving to Nottingham for three years. Union officials have estimated that with 130 staff travelling each day (remember there are daily mileage allowances) and paying £35 a week to park in Nottingham, that cost will be £1.35M over three years.

A union spokesman is quoted in the Evening Telegraph:

"The 70 staff who are not moving will have to be retrained to new roles and staff from Nottingham who have to fill those vacancies will have to be retrained as well because the work is about local compliance for Derby.

HMRC's insistence that the transfer of a particular business area still takes place runs directly counter to every statement the Government has ever made about cutting waste in the Civil Service.

HMRC has given some flimsy rationale relating to cutting the costs of running the department yet, as we can see, the decision makes no economic sense."

HMRC are quoted:

"We do not recognise the figure that the unions have given but we are consulting widely and we will be interested to hear how the unions arrived at this figure."

Whatever the truth or otherwise of the figures being quoted one thing is clear, the costs (financial, time, inefficiency) will be borne by the taxpayer.

However, will we actually see any benefits?

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 - Will The Government Ever Learn?

It beggars belief, given last year's datagate fiasco, but more HMRC files were lost last week. However, this time the files did not contain details of the personal details of taxpayers and have been safely returned.

The files were lost in a bundle of secret government documents detailing the UK's policies towards fighting global terrorist funding, drugs trafficking and money laundering. They were found on a Waterloo bound train last Wednesday and handed to 'The Independent on Sunday’, which in turn handed them back to the government.

The confidential files detailed how the trade and banking systems can be manipulated to finance illicit weapons of mass destruction in Iran. The files also highlighted the weakness of HM Revenue & Customs' (HMRC) IT systems, which track financial fraud.

It would seem that this government has more than a little difficulty with the finer points of data security.

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"

Malicious Calls

The Public Accounts Committee have been told that the HMRC hotline, set up to catch income tax cheats, has been flooded with calls from people making malicious and unfounded allegations.

One woman made 68 calls to report her husband, none of which had led to an investigation.

There have been 120,000 calls the hotline. However, the National Audit Office report that it is was the least cost-effective detection method, with the yield being only twice the cost of operating it.

Dave Hartnett, acting chairman of HM Revenue and Customs, said he was "disappointed by the quality" of calls.

What did he expect?

People will always use nasty little government "sneak lines" like this, to settle scores and vendettas. These "sneak lines" bring out the absolute worst in people, and are the hallmarks of a third world dictatorship.

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"

The New American Revolution

The American Revolution began over a dispute about taxes.

Some 232 years later, it appears that there is another dispute over taxes between the US and the UK. The dispute is over Brown's and the Treasury's plans to tax airlines for transatlantic and other long haul flights; instead of each passenger paying a fixed levy per flight, the Treasury will instead tax each plane. Airlines will then pass on the tax to passengers.

This has displeased the US. There is in fact a very real risk that the US will sue the Treasury, if Brown doesn't back down on his plans.

An official letter sent by the US Embassy to the British Government, which was leaked to The Daily Telegraph, shows that the Americans have "deep concerns with the proposal". They threaten the Treasury with legal action over the planned tax increase.

In theory the tax is meant to be for the "greener good" of the country and the world. However, the US letter totally refutes the "green" claims of Brown and his sidekick Darling.

Quote:

"The Treasury's proposal, although cast as an environmental measure, appears in reality to constitute nothing more than a device for generating additional revenue from the airline community.

There is no linkage between the funds collected from airlines and the mitigation of any environmental impact of airline emissions or any other environmental problem…Moreover, the Treasury's proposal does not demonstrate that the new duty would influence airlines to adjust their fleets or their booking practices to achieve higher load factors...Nor are any data provided to justify the levy based on an assessment of damage from aircraft emissions."

As I have said many times, the tax policy of the UK is being driven by the overriding fact that the government is broke. The taxpayers and HMRC are the ones who have to pick up the pieces, and pay the price for Brown's mismanagement.

The US has warned the Treasury that the "proposed duty raises serious legal concerns".

The new tax, it seems, breaches a number of international tax treaties; the Americans have even sent the memo to other European governments.

How did this come about?

Whilst the government may well be broke, surely someone would have warned them that this plan would unravel?

It seems that the Treasury made a major mistake, and have been making policy up as they go along.

Another badly thought through "initiative", another backtrack and reversal; yet more mess and costs for the taxpayer and HMRC to absorb and deal with!

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"

Fairness

In news that should not really come as too much of a surprise to those of us on the receiving end of our tax system, the UK's tax system is viewed as less fair and less transparent than other tax regimes around the world.

That is the finding of an international study of finance professionals conducted by ACCA (the Association of Chartered Certified Accountants).

"Perspectives on Fair Tax" surveyed ACCA members in Australia, Canada, Hong Kong, Singapore, the UK and the US, gauging opinions on tax fairness, complexity, transparency, and how well tax authorities communicate with their citizens.

Professor Francis Chittenden, ACCA Professor of Small Business Finance at Manchester Business School, who wrote the report with colleague Hilary Foster, said that:

"The message from our research is for governments to reduce the volume of laws, directives and regulations that contributes most to complexity.

There is a fundamental issue for governments around the world to decide the purpose and structure of tax systems, and importantly to communicate the rationale behind these decisions."

A very good point, the trouble is the current government in the UK and its Prime Minister has an obsession with complexity and regulations.

Respondents from the UK rated the UK tax system as the least transparent, and said that there were too many taxes in the UK which added to tax complexity.

Specific concerns raised included:

-The increasing role of employers acting as tax collecting agents for government

-Retrospective changes to the tax system

-"Stealth taxes" – such as the failure to index link thresholds and allowances

-The assumption of additional powers by HM Revenue & Customs

Respondents in the UK also said that a lack of clarity, increasing complexity and a seemingly aggressive stance by HM Revenue & Customs were breaking an already fragile trust.

Trust, as the report notes, is crucial for a tax system to work in any country. Governments should create a system that treats them with respect.

The current government in the UK and its Prime Minister has an obsession with complexity and regulations, and do not treat the citizens with respect.

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"

Fujitsu Fired

Back in February/March of this year I wrote about the contract between HMRC and Fujitsu, whereby HMRC have outsourced various processing functions to Fujitsu.

I was interested (purely at an academic level) to see that another organ of the state, the NHS, has fired Fujitsu the other week from the £12.7BN National Programme for IT (NPfIT).

NHS Connecting for Health (CFH) fired supplier Fujitsu, which was responsible for the southern region of the scheme, after 10 months of contract re-negotiations broke down.

CFH, which runs the NPfIT, said that the move was in the best interests of the taxpayer, and that Fujitsu would help ensure a smooth transition to any
new supplier.

Quote:

"NHS CFH has to continue to protect the interests of the taxpayer and preserve the basis of contracts which ensure payment on delivery. Work has started immediately on planning the necessary arrangements."

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"

All Power Corrupts

The old saying "all power corrupts, and absolute power corrupts absolutely" has been taken on board and clearly understood by the new ICAEW president, David Furst.

Mr Furst, a partner at Horwath Clark Whitehill and national head of the firm's professional practices group, is to push the government to safeguard taxpayers from sweeping new HMRC powers.

He has called on parliament to insert safeguards against new HMRC powers in the finance bill.

The new powers give HMRC officials the right to turn up at business premises, including those of third parties such as tax advisers, and inspect books and records.

There is no requirement to give notice of an impending visit, and there is no right of appeal.

Let us be very clear, these powers are akin to those used by "officials" in a third world police state. The temptation to use them unfettered would be too great.

As Mr Furst says:

"There is potential for the powers to be used by individual officers in a way which is inappropriate and unacceptable.

The ICAEW will be lobbying very hard for any new powers to be subject to limits and conditions, with safeguards spelled out in statute."

Let us hope that the government listens to the ICAEW.

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"

Dodgy Software

Those professionals who are tempted to use HMRC's free software, to help them complete client's tax returns, may care to read this warning message first:

Beware HMRC's dodgy software!

That's the gist of the warning from the ICAEW.

There appears to be a glitch in HMRC's online repayment system where it lets a user request a repayment to a nominee.

Users of the system receive an error message "Please enter the name of your nominee" in the on-screen data field captioned "Name of account holder."

Users can still submit a self assessment return online using HMRC's free software, and can still get repayments but not automatically and not without the taxpayer.

The ICAEW Tax Faculty recommends that users should fill in the return as usual, but not complete the overpaid tax page. Rather than depend on the self-assessment software, accountants should invest in commercial applications which cost as little as £30.

Quote:

"As we have said previously, the Faculty recommends members to investigate commercial software - available for as little as £30 - rather than relying on HMRC's online product to complete clients' returns."

The software glitch is under investigation by HMRC, and HMRC has apologised for any inconvenience caused, the ICAEW said.

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"

Animal Farm II

It would appear that, as I stated in January, HMRC are most definitely fans of George Orwell; in particular his work "Animal Farm". In this book the animals take over the farm; the pigs then betray the other animals and impose a dictatorship, using the following slogan to justify their actions:

"All animals are equal, but some animals are more equal than others."

Thus it appears to be with HMRC's proposed new rules wrt timebars on making claims for tax errors.

HM Revenue & Customs (HMRC) are proposing to cut the number of years taxpayers will have to claim back any tax overpayments/overcharges. Fair enough, maybe, if the rule is also applied to HMRC's right to reclaim underpaid tax. However, there is one small fly in HMRC's oinkment, HMRC don't intend to apply the same timebar to their right to claim underpaid tax from the taxpayer.

When taxpayers are wrongly charged, they currently have 6 years to claim back their money. However, HMRC want to cut that time to 4 years. They want, of course, to retain their right to reclaim underpaid tax for up to 6 years.

Those who are most likely to suffer from tax overpayments are those on low incomes; as the system for extra allowances, tax credits and pensions is so complex that HMRC and the taxpayers are more often than not at a loss to understand it.

Additionally, to add to the confusion, HMRC does not keep all of its information about taxpayers together in one place.

Given the complexity and muddle of the tax system, why is that HMRC want to cut back on the rights of taxpayers to reclaim overpaid tax yet not apply the same rules to itself?

Hardly fair is it?

"All animals are equal, but some animals are more equal than others."

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"

Small Pensions

It seems that pensioners are having a few tax worries at the moment.

Last week I noted how a failure of communications between the DWP and HMRC led to a large number of pensioners underpaying their tax on their state pension, as a result of erroneous tax codes being applied.

On top of this, around 420,000 pensioners on low incomes were also under threat of having backdated tax demands for up to £300 being issued relating to underpayments of tax on "small pensions".

The issue arose as a result of a concession granted by the then Inland Revenue, over twenty years ago.

The Revenue told pension providers not to bother collecting any tax on "small" pensions, those of around £1,000 a year or less.

Strictly speaking the income was taxable, but the Revenue took the view that the administration costs involved outweighed the revenue benefits; ie commonsense was applied.

However, that was then and this is now.

As I have noted many times before, the government is broke and desperately needs to increase its tax take. As such HMRC, as it is now called, decided to end the concession and collect the unpaid tax.

Until this week HMRC was planning to backdate the tax to 2007/08.

However, this would have entailed up to 420,000 people being on the receiving end of a tax bill of up to £300 on income they have been up until now been receiving tax-free.

Last Friday 30 May, Treasury Secretary, Jane Kennedy, wrote to Age Concern to say she had "asked HMRC to carefully consider again their proposal."

The Revenue has now decided to "draw a line under 2007/08."

This concession is interesting, as HMRC have over the last year or so held the "upper hand" over the Treasury wrt "power play" in this government. Maybe the pendulum is swinging the other way?

However, tax will be applied on income arising from small pensions from 2008 onwards.

An HMRC spokesman said:

"In practice pensioners will pay tax on such pensions from the 2009/2010 tax year. Any underpayment of tax for 2008/09 will normally be collected in 2010/11.

This extended timetable takes into account the modernisation of our Pay as You Earn IT systems which are a key priority for HMRC in 2008."

The BBC have done a calculation that shows a pension of £1,000 would be paid in full this year, would have £200 tax deducted in 2009/10, and in 2010/11, would be paid after deducting £400 in tax.

John Whiting, an accountant and member of the Low Incomes Tax reform group, told the BBC:

"The Revenue has decided to turn on the taxing tap this year.

But they are not going to tell people because they don't know exactly who they are and won't know until later in the tax year.

It would have been much fairer if they'd written off this year's liability as well."

Maybe so, but the government is broke and "fairness" no longer comes into the equation.

A Revenue was quoted by the BBC:

"We are looking at how we are going to tell people.

We'll get the information in the middle of 2008/09.

So they will be told about it towards the end of the tax year."

Ugh, our tax system is a real mess.

For fark's sake let's simplify it for the good of the taxpayers who have to pay tax, and HMRC who have to try to administer it!

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"