I Am The law

New HMRC, in the shape of guidance note EM1609, seems to allow inspectors to retain tax rebates for self assessment tax payers whilst reviewing the case but without the need to open a formal invetsigation.

Mike Warburton of Grant Thornton and the Chartered Institute on Taxation's John Whiting claim that there is no basis in law that allows inspectors to do this.

HMRC claim that the note "broadens the options" available to tax inspectors.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Move Over Darling II

As predicted, HMRC have issued a revised version of "Darling's bankers' bonus tax".

Sneaking it out late last Friday, thus trying to minimise their humiliation, HMRC said:

"The bank payroll tax announced at PBR 2009 applies to retail and investment banks (including building societies), and to banking groups. It does not apply to non-banking companies outside of banking groups (for example, insurance companies, asset managers, stockbrokers etc.)."

Doubtless this clarification will have greatly reassured those who try to do business in the UK that our tax laws are well thought through, and professionally drafted.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Mission Creep - Free Advertising

ROFLOL!

It seems that HMRC are so very cross with tax advisers, who help people reduce their tax bill (ie avoid tax), that they are going to give some of them a public spanking and name and shame them.

Aside from the fact that, unless a criminal offence (ie evasion) has occurred, HMRC should not be publicly discussing the tax affairs of individuals and organisations it is a remarkably idiotic idea which will give the advisers some great free publicity (thereby undermining the HMRC's "lofty moral stance" on the issue).

HMRC claim that it would apply to advisers found to have acted "improperly" (whatever that means).

However, my sources tell me that HMRC seem to be a little confused as to whether their named and shamed list of advisers would apply only to those who aid evasion, as some (who have discussed this with HMRC) have interpreted the responses from HMRC re the new policy as also covering avoidance.

Could this be evidence of mission creep, in HMRC's and Labour's war against tax avoidance?

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Move Over Darling

As I predicted, Brown's and Darling's plans for a bankers' bonus tax (levied to divert attention from the 1% rise in National Insurance) is rapidly falling apart.

Both HMRC and the Treasury have been forced to admit that that the draft legislation on bank bonuses is poorly written, and will have to be revised in the New Year.

It seems, as ever with Labour's shoddy legislative drafting, that the net for this tax could be drawn very wide indeed (eg more than just "bankers").

HMRC are stressing that asset management firms (including those owned by banks), hedge funds, investment advisers, private equity and family offices would not be hit by the tax.

However, no one believes them!

Do you?

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Computer Says No

The Public Accounts Committee have lambasted HMRC's tired old IT systems, stating that the systems "do not provide essential information".

In fact these systems are so tired and old, it is estimated that around £11BN of the £28BN of tax owed at March 2009 will remain uncollected. That's a tad more than the revenue that Darling kids himself he will make from taxing bankers' bonuses (£500M).

Anyhoo, the committee is of the view that more money needs to be spent on new systems.

Maybe so, but there are a few problems with this "statement of the obvious":

1 Brown has bankrupted Britain, there is no money available to spend on IT upgrades.

2 Will an IT upgrade really improve the bad debt situation so radically?

3 Are HMRC's executives and our "respected" politicians really capable of sourcing, implementing and managing a serious large scale IT upgrade? Experience tells us that they are not.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Thought For The Day

Good luck to HMRC in trying to levy a "bankers' bonus tax", in the event that Darling implements one in his "Pre Budget Report" today.

Disregarding the fact that taxing one specific "class" of worker is contrary to the concept of taxes being non discriminatory, the tax will be unworkable:

1 There will be a wholesale exodus of banks, other financial institutions and individuals from the UK.

2 What is the definition of a "banker"? Those who currently fall into Darling's definition of "banker" will simply have their employment status/title changed, to eg "admin clerk".

3 Pay rises will be backdated to mop up the bonus pool.

The tax will be shot to pieces, and HMRC will be forced to waste valuable time and resources trying to "pin a tail on the donkey" of the bankers.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Tax Avoidance? - Certainly Not!

There has been a large amount of chatter in various organs of the media recently about our "beloved" ex PM, religious convert and international peace maker, Tony Blair.

People are a little confused about how he makes his money, and the purpose of a number of companies that he seems to have connections with. Windrush Ventures, Tony Blair Africa Governance Initiative, and another called the Tony Blair Faith Foundation have all come under the spotlight.

The funny thing is that, as yet, no one has quite been able to make sense of the rationale for the structure of the 12 companies that Blair has created.

Now, were this anyone else, the obvious answer would be tax avoidance. Tax avoidance is of course perfectly legal. However, as TB is ex leader of the party that has officially come out against tax avoidance, describing it as "immoral", and as TB was once an MP (MPs' financial dealings are always above reproach, leading the moral way forward) this bizarre structure cannot possibly be for tax avoidance.

So what on earth is it for?

The Guardian, fed up with not understanding this either, has launched a wee competition asking accountants et al to study the company documents and structure and come up with an answer to this question:

"The former prime minister Tony Blair has received millions of pounds through an unusual mixture of commercial, charitable and religious income streams. Since he stepped down from office in 2007, his financial affairs have been described by observers as "Byzantine" and "opaque". The Guardian is now launching an online competition offering a prize to the person who can shine the brightest light on those financial structures.

Blair has a commercial consultancy, called Tony Blair Associates, plus jobs advising a US bank and a Swiss insurer. He has a multimillion pound book deal. He also has a charity, the Tony Blair Africa Governance Initiative, and another called the Tony Blair Faith Foundation. But much of the income, which includes charitable donations from other sources, has been funnelled through a structure called Windrush Ventures No 3 Limited Partnership. Our contest asks: what is Windrush?

Blair has a complex web of structures involving 12 different legal entities handling the unprecedented millions he is receiving since he stepped down from office in 2007.

So mystifying are the former prime minister's financial structures – which involve highly specialised limited partnerships and parallel companies – that the Guardian today launches an open invitation to tax specialists and accountants to attempt to explain the motivation behind such structures. We have published the Companies House documents and other legal papers regarding the structure of the partnerships at guardian.co.uk and invite expert comment via our site at guardian.co.uk/politics/series/blair-mystery."

I assume that HMRC have satisfied themselves that this does not conflict with their new found zeal to clamp down on avoidance schemes?

Any ideas anyone as to what this is for? There's an "HMRC Is Shite" T shirt in it for the winner.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Brave New World

Dave Hartnett's vision of the future, automated HMRC systems that take action without reference to human involvement:

"I'd like to think that relations between tax authorities and practitioners will become less confrontational and more collaborative. If, by 2049, our tax system is fully founded on trust and openness there will have been real progress.

I would like the tax system to be widely seen for what it is – the provider of vital funds for public services. The internet and software that powers financial services will become more intelligent, providing customers with more control and flexibility over how they engage with HMRC.

Sadly, there will still be a need for compliance work and I think our systems will be driven by intelligent software that anticipates abuse, taking action without reference to human involvement.

There will still be plenty for people to do because good tax administration will always require sensitivity and judgment – that's one thing that won't change."

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Bottom of Class

In August I asked:

"If offshore tax havens are so evil, in the eyes of the Treasury and HMRC, why are HMRC's buildings subject to a sale and leaseback deal with Mapeley PLC (a property company based offshore in Guernsey)?"

It would seem that was not the only question that I should have asked about HMRC's relationship with Mapeley.

In fact "Serious Cat", in the comments section of that article, was quick to point out at the time that there were other issues wrt HMRC choosing Mapeley:

"I think we all know exactly why Mapeley were chosen for this property management contract and, indeed, there are some parliamentary minutes floating around which detail this reason - they're cheap!

Of course, Mapeley had no experience in property management, but theirs was the cheaper bid by far."

And

"The following is an excerpt from the "Oral evidence taken before the Committee of Public Accounts on Wednesday 27 October 2004"

Q1 Chairman: Good afternoon. Welcome to the Committee of Public Accounts where today we are looking at PFI: the STEPS deal, and we are joined by witnesses from the Inland Revenue, HM Customs and Excise and a witness from Mapeley. Mr Varney is the executive chairman of the Inland Revenue/Customs and Excise. It is your first visit, I believe. You are very welcome. He is joined by Ms Helen Ghosh, director general, corporate services, and Ms Siobhán McHale, director of estates and, from Mapeley, Mr Jamie Hopkins who is the chief executive officer. Mr Varney, does it give the Inland Revenue any sense of shame that they are now known as a well known tax avoider?

Mr Varney: I do not think they are known as a well known tax avoider. I do recognise that in the agreement there is an unfortunate feature. As you know, the government changed the guidelines so for a forward procurement that would not arise.

Q2 Chairman: Why did you not specify in the bidding documents for this deal that these properties should be held onshore?

Mr Varney: With the benefit of hindsight, one can say it was a mistake.

Q3 Chairman: Will you please look at paragraph 2.24 which you will find on page 21? You will see there that it says: "The Board of the Inland Revenue only became aware of the tax arrangements late in the procurement" and the Customs and Excise were not told until after the deal had been signed. Why is that?

Ms Ghosh: I was not there. It was before my time, but—.

Q4 Chairman: We are not interested in whether you were there or not. You represent this Department and you will answer questions on it.

Later in the minutes...

Q92 Mr Steinberg: You have no proven record, have you, as a company in property management?

Mr Hopkins: Prior to this transaction, no.

Q93 Mr Steinberg: Why did you go to them? Purely financially?

Mr Varney: £500 million to reinforce—

Q94 Mr Steinberg: You were prepared to gamble the whole of the Inland Revenue estate on the basis of £500 million which they may at the end of the day cock up?

Mr Varney: The NAO Report makes very clear we followed all the lessons from DWP. We tried to look at how we minimised the risk in this contract. The public purse is better off to the extent of £500 million, plus it has competition and flexibility. That is not a gamble. That is a sensible decision.

Q95 Mr Steinberg: I would have been very suspicious when a company comes along and they can undercut everybody by half a billion pounds. Are you not suspicious at all about that? They do not have a record in property management and they can come along and undercut everybody by half a billion pounds and you think you are on a safe deal, do you?

Mr Varney: I think you do the due diligence which is described in the NAO Report but I do not see my job as trying to maximise the revenue of service providers.

The full text is available here and it makes very interesting reading.

Hopkins has jumped ship from Mapeley and gone to one of their rivals, while Varney pocketed a knighthood and left HMRC in 2006.

Basically, the whole thing was a massive cock-up from beginning to end. Mapeley have no property management experience and it shows. Tales of 3-month delays in receiving a replacement light-bulb are not uncommon and many members of staff have simply given up reporting issues because of the poor service.

That's the reality of the Mapeley contract."

However, it doesn't end there. The National Audit Office (NAO) have issued a report that gives HMRC a well deserved kicking for this contract.

HMRC had promised £1.2BN of savings in maintenance and other costs, as a result of signing with Mapeley. In reality the savings will be around £900M, possibly falling to £650M.

The NAO go on to state that there is now a "significant risk" that the contract will not deliver value for money over the rest of its life.

It seems that, according to the NAO, HMRC had no long-term plan regarding the sale and didn't even know that Mapeley was offshore!

The NAO is of the view that HMRC had not recognised the contract as a major strategic asset, and had not allocated the requisite commercial skills to managing it.

Well done!

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Best In Class

Congratulations to HMRC for winning "Best Public Sector Fleet (with more than 250 vehicles) 2009".

HMRC have reduced its fleet mileage by 12%, and saved 2,000 tonnes of CO2 (above and beyond its own targets).

I assume that this hasn't been achieved by managers ditching cars and flying instead?

It would be interesting to see if flying miles during the last year have increased/reduced or remained static.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Communications

I understand that HMRC, in an effort to save money, has decided to ask non English speaking people who call HMRC by phone (who require interpreters) if they have someone with them that can speak English or they can phone back once they have found a "friend" who can interpret for them.

This will save £75 per call which is currently paid to the Big Word Interpreter service.

Unfortunately most of the callers cannot speak English, therefore Big Word interpreters have to be used in order to give them this information.

Still, it was a nice idea in theory!

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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