£1M Claim Against HMRC

A WEST Norfolk woman is demanding £1 million compensation and is fighting to change tax laws after a nightmare, 10-year battle with Her Majesty's Revenue and Customs (HMRC).

Read the full article in the Fenland Citizen.

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"

"Efficiency" Savings

There was a rather interesting take on the effectiveness and value of the "efficiency" savings being implemented by government organs, such as HMRC, in yesterday's Guardian.

In effect the Guardian reasons that costs are not being saved, but are being swept under the carpet and being passed on to others attempt to clean up the less left by a newly "efficient" and "cost effective" government organ:

"Look at the "cost savings" made at the Department for Work and Pensions and HM Revenue & Customs. Both these flagships of public-sector reform have been subject to top-down makeovers along approved factory lines. Dumbed-down "front offices" sort and feed incoming cases to specialised processing sections in the "back office" in the belief that these mass-production techniques will cut the unit cost of transactions and harvest economies of scale.

Even in manufacturing, economies of scale lost their grail-like allure when the Japanese discovered how to make small quantities of different, high-quality goods cheaply. In services the case is at best unproven (banks, anyone?), and so far the successes in shared services are few and far between. But even if they do make transactions cheaper, that's irrelevant if from the citizen's point of view the service is worse, requiring more transactions to put right. And it takes no account of the disbenefits of the efficiency measures elsewhere in the system.

Thus the HMRC and DWP cost savings recorded in official figures reappear, with interest, in the workloads of harassed local councils, housing associations, police, courts and advice agencies. They have to pick up the pieces left by the failure of HMRC and DWP's demoralised staff and fragmented processes to provide an acceptable (rather than cheap) tax and benefit service.

Much of the work of the UK's voluntary advice organisations now consists of dealing with mistakes affecting the most vulnerable in society perpetrated by New Labour's efficiency flagships."

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"

Strike

I am advised that the PCS Union have called for industrial action commencing next Monday. All members have been asked to down tools from 9am to 11am, and again from 6pm to 8pm.

This action, if it takes place, will affect the services provided by call centres.

Staff have also been asked to ignore work codes, which will put them at risk of disciplinary action and negatively impact call centre statistics.

I have looked at the PCS website, and cannot see anything about this mentioned there. Does anyone have any more information about this?

Updated 25 April 2009

My thanks to the individual who posted a link to the relevant page on the PCS Site.

The action has been postponed:

"..the Group Executive Committee (GEC) has agreed to postpone the start of action for four weeks from the intended start date of 27th April in order to allow time for an audit of and further negotiations on how Real Time Monitoring (RTM) will be used in relation to individuals in the future."

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"

Fantasia

Yesterday's fantasy budget, based on an unachievable 2011 growth forecast of 3.5%, was remarkable in many respects.

Aside from the fact that national debt has now shot up to £1 Trillion (see below), it proposed among other measures:

- Fines for tax advisers who are incompetent.

- A requirement for Finance Directors (FDs), of large companies, to personally certify that adequate controls are in place to prepare accurate tax computations. They will be personally fined £5K if they fail to do so.

- HMRC to publish a quarterly list of names and details of individuals and companies who have been penalised for deliberate defaults.

Why are these proposals so wrong?

1 Re financial advisers, the onus is on the client of the adviser to claim redress for incompetence not HMRC/HMG. This is an unnecessary, and unwelcome, extension of HMRC's powers to levy fines and regulate commercial relationships between third parties.

2 Re FD's certifications, this goes against the principles of company law whereby the board has collective responsibility; and is yet another excuse to raise revenue by levying fines.

3 Re the "name and shame" suggestion, as "morally satisfying" as that may appear, it may well breach human rights legislation and goes against the central tenets of HMRC; ie never to reveal an individual's/firms' tax affairs. It will also be open to abuse by HMRC, who will use it as a stick to threaten people who they "suspect" (but don't have proof) of misstating their tax declaration.

So much for KPMG's call for "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"

Happy Budget Day!

Expect higher taxes, broken promises, flawed statistics, fanciful forecasts and "bigging up" rhetoric from Darling and Brown today.

Despite the fact large segment so the budget have already been leaked to a compliant media, the devil will of course be in the detail; which will only become apparent once the professionals have gone through the reams and reams of documents, relating to the budget, produced by the Treasury.

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"

Gone Fishing

Barrister Keith Gordon, of Atlas Chambers, has set up a blog covering his appeal against the right of HMRC to ask the "service company" question in tax returns.

This question was introduced in 2008, and has caused controversy over its legality and confusion as to what constitutes a "service company".

Needless to say, if the hapless taxpayer neglects to fill in the "service company" section of the tax return (where he technically should have done) even though his tax return gives rise to an accurate assessment of his tax liability, he will liable to a fine.

KERCHING!!!!

Barrister Gordon is of the view that a tax return should be designed so as to include only questions that are statutorily permitted, and directly relevant the calculation of an individual's tax liability for the year under review.

Quote:

"HMRC do not have the right to ask additional questions merely on the grounds that it is administratively convenient (for them) for such questions to be addressed."

He goes on to warn of the dangers of the new powers given to HMRC as from 1 April 2009. They permit HMRC to ask any taxpayer for any information "reasonably required by [HMRC] for the purpose of checking the taxpayer's tax position"

HMRC have until 13 May to respond to his appeal.

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"

Tax Refund Delays III

This appeared in the Times on Saturday (see below). It seems that HMRC are delaying a large number of tax repayments (see my earlier articles about tax refund delays for further background on this).

The Times wants people who are experiencing delays with tax repayments to write to them at this email address troubleshooter@thetimes.co.uk, with a view to giving HMRC a well deserved kick.

Might I also suggest that you copy your emails to Dave Hartnett at this address dave.hartnett@hmrc.gsi.gov.uk, in order to focus HMRC's attention on the matter.

"I have received a self-assessment tax statement for the year 2007-08, showing that I was due a £4,000 rebate in January. Three months later, I have yet to receive it.

On ringing the tax office, I was told that 10 per cent of all tax returns are called in at random for checking and that mine is one of them. I was also told that since I had now chased it, it would move up the pile and be dealt with in the next couple of weeks - the implication being that had I not chased, I would never receive the money. That was a month ago. Further chasing was met with the same answer.

If the tables were turned, I would be fined immediately and charged interest. Is it just me, or is there a lot of this going on at present, given the Government's financial mess? How do I get my money and can I expect interest?

Roland Grant, Middlesex

The Revenue's response was typically unapologetic. It said that it aims to deal with repayments as quickly as possible, that it cannot always prioritise repayments but there is no policy of delaying them, and that checking will take longer at peak times of year. Yawn. Three months to repay £4,000? Come on. The private sector would never get away with it.

You eventually received your cheque while Troubleshooter was investigating your case, but without the interest. Troubleshooter was somewhat confused by this, as the Revenue had confirmed that interest is payable from the date that you paid the tax until the end of the month when the repayment is issued. Normally, at least.

Now that the Bank of England base rate is at the subnormal level of 0.5 per cent, the Revenue has reduced interest payable to an invisible 0 per cent, defending itself thus: 'The rate of interest on overpaid tax reflects the average commercial rate for a return on deposits. No commercial body has the same rates for both paying and charging interest.'

True, except that 0 per cent does not reflect the average commercial rate for a return on deposits, which is 0.66 per cent, according to Moneyfacts. Furthermore, the Revenue began applying 0 per cent from January 27, when the base rate was still 1.5 per cent. It did not fall to 0.5 per cent until March 5. Did it know something we didn't?

The Revenue went on to say that it does not wish to pay too much interest and encourage 'banking' with the tax office. So you are left without compensation for the interest that your £4,000 could have earned in a savings account, which is unfair. Clearly, the accusation of unfairness does not worry the Revenue, as no compensation has arrived yet. What is needed is people power. Anyone who has not had interest paid on their rebates should contact Troubleshooter."

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"

Pissing in The Wind

As the budget looms, KPMG is calling for tax reform; it wants the government to reduce the level of complexity and uncertainty in the tax system.

Good luck with that then!

This Administration does not do "simple".

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"

System Weakness

Concept Business Systems Ltd have advised me that they have identified a system weakness, within the HMRC website, that might be exploited by hackers.

Seemingly the "vulnerability allows hackers to traverse directories on the server and include files which wouldn't ordinarily be available".

They go on to say:

"The sub-domain in this PoC (Proof of Concept) may not contain any information which puts tax-payers at risk. However, it may contain sensitive database information which could pose a significant security risk to everyone involved.

Either way, a hacker with virtually open-access to a supposedly secure system can only lead to further problems."

Any IT experts out there care to comment on this, eg how serious is this weakness?

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"

Snouts in The Trough

How ironic that our MPs, some of whom are making very public noises about "cracking down" on tax avoidance (which is perfectly legal), are so assiduous at avoiding tax themselves.

The Telegraph recently noted:

"Accountants calculate that MPs avoid an average of more than £54,000 a year in tax on parliamentary expenses claims which, according to official figures, usually exceed £135,000 each.

Second home allowances and other expenses average more than double the MPs' basic salary of £63,291 and are not subject to tax. But accountants point out that constituents who were lucky enough to receive such sums from their employers would have to share 40pc with HM Revenue & Customs (HMRC)."

Are the best interests of the voters really being served by MPs who enjoy different tax treatment to their constituents?

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"

Tax Refund Delays II

Re yesterday's piece about tax refund delays, here is an article from SME Web that may shed a little more light on what is going on:

"HM Revenue & Customs (HMRC) delays in processing paperwork are slowing down vital refund payments to businesses, says PKF Accountants & business advisers.

HMRC makes security checks on 10% of tax refund claims to ensure they are not fraudulent.

Where a claim does not pass the initial test it is transferred to a new specialist unit in Bristol to investigate further - the taxpayer is not informed.

This special unit only accepts written communications so, once a case is referred there, there is no way to speed up the process or find out why a refund has not been made.

In PKF’s experience across the country, the involvement of the new unit adds at least a month to the refund process.

Peter Harrup, tax partner at PKF says, "This two stage process can make the wait for a tax refund even longer – struggling taxpayers are having to wait months for their refunds. Clearly, HMRC have to check that claims are genuine, but officers should keep taxpayers informed of what is going on and keep delays for small businesses to an absolute minimum.”

In the Pre-Budget Report last year, that Chancellor announced a temporary extension to the loss carry back rules to allow losses to be carried back up to three years.

But the small print of the announcement said that any refunds would not be made until Budget day (22 April) at the earliest.

PKF says there is a rumour that even refunds that have already been submitted may not be paid until the Finance Bill has received Royal Assent – likely to be in July.

Peter Harrup says, “There is a sharp contrast here with the Government’s statements on ‘Prompt payment’ to suppliers: it aims to pay suppliers within 10 days and promises to pay within 30 days. The circumstances may be a little different, but the impact of a delay on a struggling business can be just the same – a cashflow crisis.

“While I doubt that HMRC is deliberately delaying tax refunds to protect the Government’s own cashflow, it must improve its performance on making refunds at this difficult time for many businesses."

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"

Tax Refund Delays

I received an email from a tax professional yesterday, who works in a firm of accountants.

He advised me that his firm were having great difficulty in obtaining refunds for clients who have overpaid tax. These refunds would normally be made automatically, following the submission of the tax return.

However, this year the firm is having to chase HMRC to pay up.

In a substantial number of cases the excuse is that the refund has been chosen for a "random security check", and cannot be repaid until this has been completed.

My correspondent advises me that it the firm's understanding that there is a backlog of repayments awaiting these "security checks".

All very well maybe, but in the meantime the government sits on taxpayers' money (and now pays no interest, of course); some of these taxpayers are in severe cashflow difficulties.

How widespread is this problem?

Is anyone else having similar problems?

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 Tonight Programme

Here is a link to the video of last night's Tonight programme about HMRC.

Tonight

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 Massive Mess That is HMRC

Something for your diaries for this evening, ITV's Tonight programme scheduled for 8PM tonight, lifts the lid on the chaos within HMRC.

The programme will state that HMRC staff are so overworked and under pressure to meet government targets, that taxpayers letters are routinely binned and calls are either ignored or cut-off prematurely.

A whistleblower states:

"Staff have actually been told that when someone rings in with a tax inquiry and you spot a mistake on a person's record, you have to ignore it unless they have actually asked you to look at that mistake.

It's all about the government target of answering so many calls in a day.

And if you write in, the post often goes missing. It just disappears, just gets binned... some letters simply aren't seen by anyone.

Last week we had a situation where half a million payment reminder letters were sent out late, meaning people were being threatened with surcharges and penalties they might not even owe.

It's a massive mess."

I wonder if more whistleblowers came forward whether we would discover if this is but the tip of the iceberg?

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"

Inappropriate System Uses

Computing reports that the Department of Work and Pensions (DWP) has a database (Customer Information System - CIS) that makes 92 million tax and benefit records available to 80,000 DWP employees, 60,000 workers from other government departments, and staff from 445 local authorities.

Since July 2008 these workers have also had access to HMRC's tax credit data through the system.

So far so bad.

DWP claimed in February 2007:

"With regard to the CIS, there are strict measures in place to protect the integrity of people's data.

Access to the information is only allowed where it is legal to do so, and it is restricted to the specific business needs of the customer.

Specific controls are in place to restrict who can see each field, which manages the risk of unauthorised or inappropriate access."

Now here is where the problems really start, Computing has discovered that in the six months to January 2009, six DWP employees were disciplined for "inappropriate use" of the system.

In the same period, local authorities were obliged to carry out internal investigations eight times after being notified by DWP that CIS had been accessed inappropriately.

How many other undiscovered inappropriate uses of CIS are there?

These issues are clearly not failings of HMRC systems or personnel. However, they are issues that HMRC should be concerned about as they affect the confidentiality of taxpayers' data which is sacrosanct within HMRC.

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"

Judge Judy

Congratulations to Judy Clements OBE, who has recently been appointed by Mike Clasper Chairman of HMRC to take over from Dame Barbara Mills as Adjudicator from 20th April.

The role of the Adjudicator is to provide an "independent investigation of complaints that HMRC are unable to resolve".

How can the Adjudicator fulfil that independent role if the Adjudicator is selected and appointed by HMRC themselves?

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"