Something For The Weekend - A State of Denial

I will be writing something tomorrow about the recent news re HMRC's performance.

However, in the meantime, I understand (I did not hear it myself, so please tell me if I have this wrong) that George Moody MP said yesterday on The Today Programme (Radio 4) that when Dame Leslie has appeared before the Commons committee before he always thought she was in denial.

Methinks that her opinion will have to change, if she returns to work after her sick leave.

Tax does have to be taxing.

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What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Tax Credit Deadline

HMRC is advising people that 31 July is the deadline for people to submit their Annual Declarations for tax credits, so that payments can continue after this month.

It has also warned of another rash of "phishing" emails from fraudsters that inform people that they are owed a tax rebate, then take the hapless victim to a fake HMRC website asking for credit or debit card details.

You have been warned!

Tax does have to be taxing.

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HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

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

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What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Obscene

The Guardian reports that the government is paying up to 10 times more for IT projects than the standard commercial rate.

The public administration select committee (PASC) found ministers were "overly reliant" on a few large suppliers, resulting in the waste of an "obscene amount of public money".

Is HMRC being ripped off?

Well, judge for yourselves:

"The Aspire contract between HMRC and Capgemini covers a 13 year period and was originally valued at £2.8 billion.[49] This contract is a case study of what is wrong with the present procurement culture. Such a large contract is too complex to manage. The assessment of costs and benefits is opaque and it commits too much power and money to a single supplier."

Source Government and IT- "A Recipe For Rip-Offs": Time For A New Approach

Tax does have to be taxing.

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HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

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

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What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Fraud

The BBC reports that Emily Barrass, a call centre adviser at tax offices in Dundee, stole a woman's identity and invented four children in order to fraudulently claim £90K.

Barrass began claiming a stranger's benefits after moving into her former home in Arbroath.

Barrass added two children to Susan Lindsay's claim and two to another woman's claim before she was caught.

Barrass pleaded guilty to the charges and was jailed for two years.

Miss Lindsay, who was unknown to Barrass, had a live claim for tax credits which were being paid into her bank account. She advised HMRC that she was emigrating to the US, but payments continued to be made.

Barrass amended Miss Lindsay's file to claim a higher rate of child tax credit, and changed her bank details twice.

She also updated the telephone contact history on Miss Lindsay's file to indicate that she had processed a call from her and removed the bank account details.

Over a three-year period, she updated the account to claim Miss Lindsay had informed her of two children being born, increasing the payment amounts.

Suspicions were raised in 2009, and an investigation was launched.

In 2009, Barrass had also accessed the tax credit account of the former partner of a relative and amended the account to make payments into Susan Lindsay's Post Office account.

Two more fictional children were added to this claim.

Tax does have to be taxing.

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HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

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

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What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Delays II - Run Out of Paper

Last week I wrote about HMRC delaying sending out some of the mid-year self assessment statements to taxpayers. Some of my loyal readers at the time posted comments explaining that the delay was down to the fact that HMRC (or rather the organisation that prints the statements) had run out of paper.

I am gratified to see that the Telegraph and the Mirror have picked up on this and written about the paper shortage as well.

My thanks to the loyal readers who brought this problem to the attention of the outside world.

Well done the Mirror and Telegraph for following this site so closely:)

Tax does have to be taxing.

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HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

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

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

HMRC - A Law Unto Itself

The Belfast Telegraph report that McGrigors are of the view that thousands of taxpayers may have been unfairly fined for paying tax late or failing to file their tax returns on time.

A spokesman for McGrigors is quoted:

"The law says that taxpayers should not be fined if they have a 'reasonable excuse' for late payment of tax or an overdue tax return.

Legislation does not define the phrase 'reasonable excuse', but the string of recent rulings against HMRC has made it clear that HMRC's official interpretation is too narrow."

Jason Collins, from the firm, is also quoted:

"The spate of recent cases suggests that HMRC has been imposing penalties far too harshly on taxpayers who have genuinely tried to comply with the law.

Thousands of taxpayers are likely to have been wrongly fined, yet very few challenge these fines.

This is because the way in which HMRC's guidance is worded makes taxpayers think they would stand little chance in a tribunal.

Taxpayers who feel they have been unfairly fined really should challenge HMRC.

HMRC really has become a law unto itself where fines are concerned.

The courts have made it clear that HMRC's guidance on fines is at odds with the law, and that its definition of 'reasonable excuse' should not be taken at face value."

When unelected state bureaucracies become "laws unto themselves", the foundations of our democracy are dangerously undermined.

Tax does have to be taxing.

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HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

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

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Debt Collection - The HMRC Way

Over a year ago I wrote the following:

"HMRC debt collection agents out in the field are now forbidden from contacting HMRC offices to validate the debts that they are being asked to collect.

For why?

It seems that the support teams back at base do not have the time to take phone calls.

That at least is the official explanation given to the field farce. However, it is widely suspected that the real reason is that HMRC is preparing the ground for this work to be given to private debt collection agencies. These private agencies, quite correctly, will not be able to phone up HMRC offices and ask for details from confidential records.

FYI, the budget announced that another £500M of debt would be handed over to private debt collection agencies to chase.

For why?

Well it seems that a pilot scheme went very well for the debt collection agencies.

The agencies were given a tranche of work to do, and a control tranche was left with HMRC teams (but was left completely untouched).

Can you guess what happened?

Yes, that's right, the debt collection agencies won!

Simple!

Anyhoo, why does it matter if field farce teams (or for that matter private debt collectors) cannot contact HMRC support offices?

Surely a debt is a debt, which should be collected, and that is the end of the matter?

Not quite, for I am also given to understand that the field farce estimate that a large percentage (maybe up to 60%) of the debts they are given to chase up are in fact incorrect.

The field farce have been told that, if challenged by a "customer" (taxpayer to you and I), the onus is on the "customer" to prove that HMRC are wrong.

Guilty until proven innocent is the motto!

How can there be such a large percentage error in debts being chased up?

Due to delays in processing returns, field farce are regularly chasing estimated debts which have been, or should have been, displaced by returns submitted. The returns have either gone down the online black hole, again a regular occurrence, or are sitting in an office somewhere waiting to be dealt with.

Additionally, when they are chasing current PAYE, their cases are sometimes prepared up to 3 weeks in advance.

Guess what?

Most have been paid by the time they get to them.

I won't say what I was told about the validity of New Tax Credit debts!

Things will only get worse!

Well, "good news"!

Accountancy Age reports that 10 debt collection agencies have been appointed by HMRC to collect up to £1BN in taxes owed.

The contracts are worth £70M.

The successful companies this time around included Advantis Credit, Apex Credit, Close Credit Management, Clanchatton, Hillesden, Fredrickson International and Rossendales.

Commercial Collection Services, Fairfax Solicitors and iQor Recovery Services have been retained from the pilot scheme in 2010-11. However, Credit Solutions, will not be appointed by HMRC, despite collecting debts in 2010-11.

Hoozah!

Tax does have to be taxing.

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HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

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

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What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Delays

The ICAEW Tax Faculty has been warned by HMRC that there has been a delay in sending out some of the mid-year self assessment statements to taxpayers. As these may be needed for the 31 July 2011 payments, practitioners may wish to contact their clients to see if they have their statements.

In the absence of a statement with a payslip, form SA361 can be downloaded from the HMRC website. This facility will be available until 15 August. Alternatively, payments can be made electronically or by telephone.

Fair enough that HMRC have issued the warning.

However, there are a few points worth raising here:

1 The statements have been issued twice a year for a number of years now. Therefore it should be a simple matter of routine to issue them. Why the delay?

2 Why keep the download facility only open until 15 August?

3 The delay and extra administration caused by this delay will add to the workload and costs of taxpayers and their agents.

Why has there been a delay?

Tax does have to be taxing.

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HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

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

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Qualified NAO Report III

Another day, another National Audit Office (NAO) report about HMRC.

Gosh, busy bees aren't they?

This particular report looks at Reducing Costs in HMRC

Unsurprisingly the NAO are of the view that "HMRC faces a significant challenge in securing a £1.6 billion reduction in running costs over the next four years, at the same time as increasing tax revenues, improving customer service and achieving reductions in welfare payments."

Quite!

"Reducing running costs by £1.6 billion over four years is a big challenge for HMRC. It is making progress but there is no contingency in its plans.

To achieve value for money, it needs to better define the service it is aiming for; improve its understanding of costs; and develop its implementation plan."

Amyas Morse, head of the National Audit Office, 20 July 2011.

This is polite "audit speak" for saying the HMRC is winging it and making things up as it goes along, hoping against hope that nothing goes wrong.

Impressive yes??

"HMRC’s cost reduction proposals involve much uncertainty."

Really?

"HMRC has made no allowance in its cost reduction plans for under-delivery or slippage, and currently has no reserve of proposals on which to draw."

A recipe for disaster!

Good luck to everyone working for HMRC, and good luck to the long suffering taxpayers.

Tax does have to be taxing.

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

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

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Ker Farking Ching!

Thanks to the incompetence of our political "elite", the country is broke.

Therefore no one should be under any illusions that the state, in order to maintain its existence, will do all it can to extract every last penny from the taxpayers.

ICAS have issued a timely warning concerning the aggressive new penalty regime being applied by HMRC as from October.

Instant £100 fines will be applied for even a one day delay in filing, together with additional fines for lengthier delays.

"If people are even one day late in filing their paper self-assessment tax form they will be hit with an instant £100 fine. After another three months an additional fine of £10 a day is added for each day overdue, up to a maximum of £900. Tougher fines are added if passing the six month or one year mark; the larger of £300 or five per cent of the tax due.

From the 31 January next year the same will apply for people who file their form online. So a return due by the end of January 2012 but not filed until 5 August 2012 would attract £1,300 or higher in fines.

According to ICAS, the professional body of Chartered Accountants (CAs), since self-assessment was introduced in 1997, nearly one million people each year have been late in filing their return. Many people delay submitting their return for longer than 12 months. Until now so long as the person had paid all the tax due no penalty could be charged by HMRC.

Derek Allen, Director of Tax at ICAS, said:

'We are concerned that most people will not yet be aware of these new penalties as they have not been widely communicated. Based on the last decade of experience, at least one million people could find themselves liable to the additional penalties.'

The new penalties could also see taxpayers losing out on tax rebates from HMRC. This is particularly relevant for self- employed in the construction sector, where tax is often deducted initially by the contractors. Individuals are then due repayments after calculation once they lodge a return. However, under the new rules if the return is late the repayment owed will be a lot less because it has been used by penalties."

Suck it up people, the country is broke and the political "elite" have no intention of removing their snouts from the trough.

Ker Farking Ching!


Tax does have to be taxing.

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

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

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Qualified NAO Report II

The National Audit Office (NAO) have been busy of late wrt HMRC.

Not content with issuing a qualified report on the accounts of HMRC, they have also issued a report on HMRC's PaceSetter Programme.

"PaceSetter is travelling in the right direction but not fast enough. After five years HMRC's approach to process improvement should be better measured, more sophisticated and more ambitious in its transformation of the Department."

Amyas Morse, head of the National Audit Office, 15 July 2011.

"We conclude, therefore, that the programme is not yet value for money."

NAO are of the view that PaceSetter is not yet value for money because the extent to which efficiency has improved is not clear; and some key principles of process improvement are not yet being applied strategically across the entire organisation and embedded into the Department's core processes.

For reasons best known to HMRC, it decided to monitor only certain of the costs involved, and excluded, for example, the salary costs of its own PaceSetter experts.

Why does a financially literate organisation only monitor certain costs (ie do things at half cock)?

NAO estimate that thus far (since 2005) PaceSetter has cost at least £115M on consultancy, equipment, staff and travel costs.

The report notes that evidence that is available on overall business performance shows improvements and deterioration. In other words, given the ongoing restructuring within HMRC, PaceSetter is not necessarily having any discernible effect (be it good or bad) other than costing the taxpayers £115M.

The effect on staff engagement is "bugger all".

"The Department’s employee engagement index, derived from its 2009 People Survey, was 36 per cent, compared to an average of 58 per cent across other government departments. The analysis for areas where PaceSetter has been introduced gave an index of 37‑40 per cent."

Impressed?

- Why did HMRC go for PaceSetter in the first place?

- Why does the senior management team continue to support PaceSetter?

- How reliable are the internal statistics provided by middle management to senior management? etc

Feel free to comment.

Tax does have to be taxing.

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

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

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Complexity

The FT reports that Smith & Williamson have warned that pensioners are more likely to over-pay tax on their income than other taxpayers, as a result of incorrect PAYE codes.

The coding problems arise as a result of the fact that some pensioners have complex (by HMRC standards) financial affairs that don't neatly fit into "boxes", eg pensions from a number of different sources together with savings/dividend income.

Add in the fact that personal allowances vary according to age, and you have a recipe for disaster.

The Office of Tax Simplification has said it recognises the difficulties, and is considering how the tax matters of pensioners can be improved.

However, in the meantime, pensioners (as should all taxpayers) check their tax calculations and (where necessary) use the services of organisations such as Citizens Advice Bureau and TOP (TaxHelp for Older People).

The days when a taxpayer's affairs were looked after in a local tax office by a named Tax Officer, who would give individual attention, have long gone and will never return.

Tax does have to be taxing.

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

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

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Qualified NAO Report

Last week the National Audit Office (NAO) published a qualified report (as per previous years) on the 2010–11 accounts of HMRC.

"There is clear evidence that HMRC is beginning to stabilise its administration of PAYE, following the disruption to processing which flowed from the introduction of its new computer system. However, stabilisation will not be fully complete until 2013, according to the Department, and it will need to deliver its plan to improve PAYE data quality if it is to realise the benefits of the new system and prepare for the move to real time information.

"In a substantial majority of cases, the Department has complied with its governance arrangements for settling tax disputes with large companies. To give confidence to external and internal stakeholders, however, HMRC needs to ensure that, for all major tax disputes, there is a demonstrable separation between those responsible for negotiating the settlements and those responsible for approving them.

"HMRC’s revised strategy for dealing with error and fraud in the tax credits system, including the increase in the number and depth of checks at the point of claim, is beginning to reduce the amount of losses. The Department has made less progress in dealing with the overall amount of tax credit debt, which continues to increase."

Amyas Morse, head of the National Audit Office, 8 July 2011

The Comptroller and Auditor General has qualified his opinion wrt tax credits expenditure.

The NAO also looked at three areas which were a priority for HMRC during this period:

- The resolution of tax disputes.
- The stabilisation of the PAYE system.
- Tax credits.

The resolution of tax disputes

In three of the largest settlements examined, one or both of the Commissioners of HMRC signed off the settlement in which he/she had also participated in the negotiations. This apparent lack of independence undermines the credibility of the settlements reached.

Tax credits

The overall level of error and fraud has decreased from between 8.3% and 9.6% in 2008–09 to between 6.6% and 8.1% in 2009–10. However, as this expenditure has not been for the purposes intended by Parliament, the Comptroller and Auditor General has qualified his opinion on the regularity of tax credits expenditure.

Additionally tax credit debt continues to increase. At the end of March 2011, the overall level of tax credits debt was £4.7BN against a target of £4.3BN.

Tax does have to be taxing.

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

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

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Catch 22

My commiserations to a loyal reader, who advised me about a communications issue he has had wrt HMRC and the R40 form "Claim for repayment of tax deducted from savings and investments".

Having completed the form, he sent it off to HMRC and in due course received this response:

"Thank you for your R40. I can confirm that the appropriate amount of tax has been deducted for 2010-11.

I do not propose to issue a tax calculation unless requested.

Signed by the Admin. Officer."

My loyal reader, not unreasonably (given that errors do occur), would very much like to request a calculation. However, he is concerned that if he writes to HMRC they will not answer letters (as specifically stated by his local tax office) and if he calls he will have to spend an eternity on the phone.

Catch 22!

Tax does have to be taxing.

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

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

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Can't Get No Satisfaction

ICAS (the Scottish professional body of chartered accountants) last week published results of its survey of its members, that shows that SMEs are receiving a poor service from HMRC.

The survey findings highlighted that local compliance offices, which handle the tax affairs of small businesses, were rated as poor or very poor by 65% of the respondents.

Elspeth Orcharton, Assistant Director of Tax at ICAS, said:

"The UK’s largest businesses are given good service through customer relationship managers in HMRC’s large business services department, created in 2007. However, the demand this has placed on resources has resulted in poorer services for the majority of smaller businesses.

HMRC’s operating and staffing systems are simply inadequate to support compliance with what has become one of the most complex self-assessed tax systems in the world.

Unaddressed this will become a threat to public finances and closing the tax gap.

Almost half the members who responded were happy with the technical skills of HMRC staff handling phone calls, once they had found someone with suitable knowledge, but getting to speak to such a person remains a problem. HMRC’s contact and management systems need to be fit for purpose so that people don’t feel they are being passed from pillar to post."

The HMRC department responsible for collecting tax payments, debt recovery and ‘time to pay’ arrangements also scored low in the survey. The debt management and banking division saw 60% of respondents rating it poor or very poor.

The survey results highlight that HMRC’s debt management processes are disjointed.

"Aggressive collection tactics are too often used to pursue tax not actually due, and communications between the different parts of HMRC need to be improved."

ICAS points out that the disappointing figures reflect the difficulties met by experienced accountants and tax professionals, raising even wider concerns about the impact on unrepresented taxpayers lacking equivalent expertise.

Tax does have to be taxing.

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

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What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Go East

I see that Dave Hartnett of HMRC is enamoured of China, specifically the Chinese method of taxing small businesses.

The Telegraph reports that Hartnett has told David Gauke, the Exchequer Secretary to the Treasury, and the independent Office for Tax Simplification (OTS) that China's new "turnover tax" has "appeared to have a very positive effect on tax compliance".

Gauke (a lawyer with little financial expertise) has now asked the OTS to examine new ways of taxing Britain's 1.8m sole trading businesses that are earning less than £20K per annum.http://www.blogger.com/img/blank.gif

It seems that Hartnett is of the view that small firms are responsible for a "sizeable element" of the UK's "tax gap". I wonder if he would care to provide figures to back that claim up?

Tax does have to be taxing.

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

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

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

HMRC Overtaxes Traders

The Oxford Mail reports that HMRC have allegedly been overtaxing some small businesses, in order to boost their performance related pay.

Alun Curtis, an HMRC tax inspector, claims that HMRC unfairly charged traders too much tax to make it look as if they had successfully solved cases and deserved performance-related pay.

Mr Curtis made his claims at an employment tribunal in Reading, and said that he had taken his concerns to bosses in the HMRC, but believed his speaking out led to him being vilified since he first made the allegations in 2008 and 2009.

Tax does have to be taxing.

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

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

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Advice To David Gauke

Get your figures right before you open your mouth.

Well done Accountancy Age for spotting this!

"Exchequer secretary to the Treasury David Gauke originally told Parliament that a total of 9,600 non-doms would pay an annual remittance charge in 2012-13, which allows them to pay tax only on money remitted to the UK and not on total worldwide income.

This was an increase on the 7,400 non-doms expected to pay the charge in 2011-12, despite chancellor George Osborne announcing an increase in the charge for non-doms who had been resident in the UK for 12 or more of the previous 14 years from £30,000 to £50,000.

However, following an investigation by Accountancy Age, Gauke yesterday told Parliament that the figures for 2012-13 were 6,300 in total, with 2,600 people paying the £30,000 and 3,700 paying the increased £50,000 charge."

Tax does have to be taxing.

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

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

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Impersonating HMRC

Oh dear, it seems that at least one of the private debt collection agencies used by HMRC got a tad carried away with itself in May and "pretended" to be HMRC.

Naughty naughty!

Here is an unedited post about the incident on AccountingWeb:

"Phone call just now:

"Hello, can I speak to Mr Client please?"

Who's calling?

"HMRC"

We are his agent, this isn't his number.

"Can you get him to call us on 0845xxxx ref 123456789"

That's 9 digits - are you sure? If you're HMRC, we are his registered agent, can we help?"

"We are calling on behalf of HMRC"

So you aren't HMRC?

"No"

They were a debt collection agency. Makes me mad. Interestingly a google of their name throws up on result 3 an article called "[name] recovery - idiots". Result 2 calls them idiots also..."

Under the Commissioners for Revenue & Customs Act 2005, section 30(1):

30(1) A person commits an offence if he pretends to be a Commissioner or an officer of Revenue and Customs with a view to obtaining–
(a) admission to premises,
(b) information, or
(c) any other benefit.

Tax does have to be taxing.

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

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

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

A Dangerous Obsession

HMG and HMRC have developed an unhealthy obsession with tax avoidance (a perfectly legal and perfectly logical practice) in their desperation to raise money to keep the ship of state afloat.

In HMRC's recent consultation document "High-risk areas of the tax code: Relief for income tax losses" (published on 30 June 2011) the phrases "robust defences against avoidance" and "the strategy focuses on preventing tax avoidance before it occurs to protect the Exchequer and increase certainty for taxpayers" appear in paragraph 1.1 on page 4.

Paragraph 1.5 then goes on to say:

"However, loss reliefs that can be used to reduce or eliminate tax on general income or capital gains have regularly been used for tax avoidance purposes."

So what?

Avoidance is legal, even though the government (members of which use tax professionals to minimise their tax payments) would like avoidance (except when they are practising it) to be made illegal.

Paragraph 1.6 "HMRC’s internal review has identified the income tax loss reliefs that are most prone to misuse for tax avoidance purposes."

"Misuse"??

Does HMRC regard avoidance as a crime?

Paragraph 1.8 offers the reader some hope that HMRC have finally realised that tax legislation has become far too complex:

"Continued attempts to prevent avoidance through legislative change have made the legislation unwieldy and complex, meaning there is also some potential for simplification."

However, that hope is crushed by paragraph 2.14 that asks for more legalisation:

"It is desirable, and would be more cost-effective for both taxpayers and HMRC, to have a legislative structure that provides certainty and deters tax avoidance involving sideways loss relief at the outset. This would eliminate the need for HMRC to investigate and litigate each individual case on its particular facts."

HMRC require feedback by 30 September, feel free to let them know what you think of it and also to advise them of the various tax avoidance measures currently used by members of the government, MPs and the companies which they run.

Given the obsession with avoidance, I suspect HMRC would have some rich pickings if it went after our "respected" elected representatives.

Wouldn't that be fun?:)

Tax does have to be taxing.

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

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

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Life After HMRC

As is evident from the many comments made on this site, many people do not enjoy working for HMRC and despair about their future.

However, all is not doom and gloom, I came across this story today that shows there is life after HMRC, if you are sufficiently high up the greasy pole.

Gabriel Makhlouf was director of dispute resolution at HMRC until 2010, look how far he has gone now!

Seemples!

I reproduce the article in full from The National Business Review:

"The Treasury’s deputy chief executive and acting secretary, Gabriel Makhlouf, has been appointed chief executive and secretary, the State Services Commission said today.

Mr Makhlouf, who has been acting in the role since June 1 following the departure of former Secretary John Whitehead, arrived in New Zealand from the United Kingdom in March 2010 to join the Treasury.

He almost immediately caused controversy with a call for Treasury to drop all screening of foreign investment.

Commenting after NBR’s story on Mr Makhlouf’s position, readers were split.

For some, dropping all screening opened the country to the likes of May Wang (the once-bankrupt Crafar Farms bidder blocked by the Overseas Investment Office).

For others, it was more a case of quid pro quo.

“Of course Gabriel Makhlouf is right,” read another comment. “Anyone who disagrees with him will also be insisting any company in NZ which own assets overseas must sell them, or leave NZ.”

Mr Makhlouf is also a member of a special advisory group of state services leaders formed as part of Finance Minister Bill English's bid to slash $1 billion from state sector spending.

Prior to joining Treasury, Mr Makhlouf was the director, dispute resolution at HM Revenue and Customs (HMRC) in the UK - although perhaps his most notable role was that of private secretary to Gordon Brown during his time as UK Chancellor of the Exchequer.

He joined HMRC in 2005 as the director, debt management and banking and in 2008 he was appointed as the director, banking services, HMRC.

Other senior management roles held by Mr Makhlouf in the United Kingdom Civil Service included director, international in Inland Revenue UK from 1998 to 2003 and director, Capital and Savings from 2003 to 2005.

From 2000 to 2004 he was chairman of the committee on fiscal affairs at the OECD.

Mr Makhlouf has been appointed for a five year term and will take up the position on 28 June 2011."

Tax does have to be taxing.

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

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

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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