Happy New Year!

As the calendar year comes to an end, and we stand on the threshold of 2012, it is "refreshing" to learn that "Tax Freedom Day" (for the average taxpayer) is 26th July 2012.

We are all working for the government now.

Happy New Year everyone!

Tax does have to be taxing.

UK EXPATS: Reduce tax on UK Pensions
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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"

Shabby

My thanks to a loyal reader, who dropped me a note about a penalty notice that he had received from HMRC. The penalty notice prompted him to search through some case history, with some interesting results.

Read on...

"In September this year I was issued with a penalty notice for failure to file my employers end-of-year return on time. 

In my appeal I queried why I had not been informed earlier, when the amount of the penalty would have been less. 

Enough about my own troubles - except that this matter prompted me to do a little research. 

I found that in recent tax tribunal findings, scurrilous behaviour on the part of HMRC has been revealed.

In HOK Ltd and Commissioners HMRC, 22nd June 2011 it was stated in the findings:

'...Thus, HMRC deliberately waits until four months have gone by and does not issue the first interim penalty notice until, as in this case, September of the year of default. 

By that time a penalty of £400, being four times £100 per month is said to be due.....

..In our judgement there is nothing fair or reasonable about in setting a computer system so that it does not generate a penalty notice until four months have gone by..

...It is no function of the State to use the penalty system as a cash generating scheme’. 

In this case the tribunal reduced the penalty from £500 to £100. 

In HMD Response International and Commissioners HMRC, 7th July 2011 the tribunal found that:

‘Even if there had been no reasonable excuse [for late filing] the penalty would have been reduced from £500 to £100 given that HMRC deliberately desisted from sending out a penalty notice until September 2010, by which time it could demand a penalty of £500....'

This appeal was allowed in full and the penalty dismissed. 

Clearly somebody within HMRC is culpable and one wonders at what level the order to ‘set the computer system...’ was given. "

All seems a bit shabby really, doesn't it?

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"

The HMRC and PAC Pantomime

My thanks to a loyal reader who provided me with a copy of HMRC's 20 point rebuttal (can I use a word that contains "butt" before 9PM?) of the Parliamentary Accounts Committee savaging of HMRC's performance.

I am glad to see that HMRC and PAC are entering into the spirit of Christmas, and indulging in some traditional Panto:

- "Oh no we didn't!"

- "Oh yes you did!"

banter.

"20 things the Public Accounts Committee got wrong.

Today, there is media coverage on HMRC and its large business tax settlements. 

While the Department provided journalists with a full briefing, many of the errors came from the original report, which HMRC says is based on ‘partial information, inaccurate opinion and some misunderstanding of facts’. 

Here are 20 things the Public Accounts Committee (PAC) got wrong: 

1. There are systemic failures in the way HMRC manages tax disputes A mistake was made in one settlement and we have explained how this happened. This is not a systemic failure. In fact, our large business strategy is now being adopted by other tax administrations around the world, including the United States of America. 

2. There is more than £25 billion outstanding in unresolved tax bills The figure quoted is not tax owed. It is a ballpark estimate of maximum potential tax liabilities, before a full investigation of the facts and before any reliefs or allowances are applied. This figure is actually known as ‘tax under consideration’ – in many cases, when we look at all the facts, it becomes clear there is nothing to pay. We told the PAC this. Twice. 

3. Millions of pounds are being lost to the public purse Last year, we collected £468 billion, including £13.9 billion through compliance work. We told the National Audit Office about one mistake, which the NAO estimated was worth between £5 million and £8 million. 

4. HMRC’s relationship with big business is far too cosy It is quite wrong to suggest that we are soft on large businesses. They account for 60 per cent of the UK’s total tax receipts. What’s more, around half of the additional £13.9 billion HMRC brought in through compliance work came from large business. 

5. Large companies receive more favourable treatment than ordinary taxpayers We treat all taxpayers even-handedly, supporting the majority who comply with their duty to pay their taxes, and cracking down hard on evaders, avoiders and fraudsters. Our handling of large business settlements is tough but fair. 

6. Large companies have longer to pay (up to ten years) than smaller ones Generally, time to pay is given more often to smaller businesses and for longer periods of time. Large business debts are dealt with using the same criteria that HMRC use for any other business. In fact, large debts are pursued very quickly: it is the size of the debt we look at, not the size of the business. If a business owes us a large amount then we may ask for an Independent Business Review before considering a Time to Pay agreement. 

7. HMRC’s mistake led to £20 million of interest not being collected A mistake was made in one settlement. We brought it to the attention of the National Audit Office, who estimated the error as being between £5 million and £8 million. There was no attempt to hide anything, and we do not agree the £20m figure. 

8. HMRC deliberately decided to withhold information which it could have disclosed to the committee There is no express power for HMRC to disclose taxpayer information to Parliament. Parliament itself wanted to keep taxpayer information out of the political arena when it passed the confidentiality provisions we are bound by. In our view, disclosing confidential taxpayer information in a public forum, even in evidence to a Parliamentary Committee, would be unlawful, because it would hinder rather than help us in our function of collecting tax. 

9. There is less justification in keeping tax information confidential about large business than small businesses or individuals We have a statutory duty of confidentiality, which is central to maintaining confidence in the tax system. The requirement for taxpayer confidentiality is underpinned by a criminal sanction. This is so that taxpayers (whether large or small) are not inhibited from full and frank disclosure of their affairs. Large business tax settlements are a vital part of how HMRC secures tax revenues for the country and without them Britain’s public finances would be seriously damaged. The legislation that binds us makes no distinction between types of taxpayer – whether it’s an individual or a large business. 

10. The PAC have to find out about cases that concern them through the media This is not correct. Parliamentary scrutiny by the PAC is delivered via the National Audit Office – which has complete access to all of our paperwork. Many of the reports in the media are inaccurate and misleading. It is a source of great frustration to us that, as a result of taxpayer confidentiality, we are unable to correct them. 

11. Senior officials failed to answer questions before the Public Accounts Committee in a spirit of openness Dave Hartnett and Anthony Inglese provided as much information as they possibly could, within the constraints of taxpayer confidentiality under which they work. The National Audit Office has had complete access to all of our paperwork. 

12. HMRC does not take legal advice before reaching settlements In many cases, any legal issues are well understood by the tax professional involved who have no need to involve lawyers. It is important to remember that almost all tax work in HMRC is delivered by our tax professionals and it is tax professionals who often instruct Parliamentary Counsel in the preparation of legislation. Often, cases hinge on questions of fact or accountancy – not law. In these cases, the tax professional leading the case does not need input from lawyers. Almost 99 per cent of all tax disputes are settled by tax professionals. 

13. There is little or no sense of personal accountability or responsibility for serious errors Our commissioners are accountable. Our former Chief Executive, Permanent Secretary for Tax and Directors General have all been publicly held to account by both the PAC and Treasury Select Committee in recent months. 

14. Not enough attention was paid to the risks that hospitality may result in the perception of a conflict of interest The senior leadership of HMRC is completely transparent on this issue. We have strict rules on acceptance of hospitality underpinned by guidance for all to see. Details of hospitality received are published quarterly on HMRC’s website. Most of the hospitality received by Dave Hartnett involved him representing HMRC or speaking on behalf of the Department. It’s absurd to think senior officials would be swayed by a glass of wine and a plate of canapés. 

15. Dave Hartnett was personally involved in settling the tax dispute referred to by the PAC Our Permanent Secretary for Tax was only involved to broker a relationship issue. 

16. The decisions made in the four large tax cases the PAC refer to were not sound As part of the 2010-11 annual report and accounts process, the National Audit Office looked at our processes for resolving tax disputes with large businesses. They endorsed our governance arrangements for large business tax settlements. 

17. HMRC have very few people with “deep knowledge of tax affairs” We have more than 15,000 people working in tax professional roles here in HMRC. Most are expert in tax law and more than 2,000 have completed our four-year tax training and development programme. Our Tax Academy will ensure that we have the right number of tax professionals going forward. 

18. We are the only country that has this problem. Other countries don’t have problems over taxpayer confidentiality Taxpayer confidentiality is a legal requirement in the UK, and a fundamental principle in tax administration across the world. We hold by our view of the law, which means we were unable to provide the Committee with all the information it requested. 

19. HMRC has suspended the whistleblower Nobody has been suspended. Neither has anyone been disciplined or threatened with dismissal. We are investigating the circumstances around the publication of legally-protected and confidential information. This investigation continues. 

20. Parliament needs assurance that these settlements are appropriate and good value for the taxpayer Parliamentary scrutiny is delivered via the National Audit Office – which has complete access to all of our paperwork. Our officials always answer questions as fully and frankly as they can, within the legal framework we work under. HMRC welcomes the further enquiries to be made by the NAO with support from a retired High Court Judge as an opportunity to confirm this and clear up the myths about foregone millions."

Twenty miles to London, and still no sign of Dick!

Merry Christmas folks!

Tax does have to be taxing.

UK EXPATS: Reduce tax on UK Pensions
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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"

Gauke Speaks Unto His Minions

Following yesterday's spat between HMRC and the Public Accounts Committee (PAC), over whether HMRC was systemically failing etc, the Treasury Secretary (David Gauke) has written to HMRC staff.

My thanks to a loyal reader who posted the text in full on this site.

Gauke (who is not a financial expert, but a lawyer) wants closure on this, and expresses the view that it is a "shame" that a"couple of cases" have "eclipsed" the work that HMRC is doing.

As I have stated before, this mess has been caused primarily by the politicians.

However, it is notable that unlike other major government departments (eg NHS) there is no minister responsible for HMRC (who should be made to stand in front of the dispatch box and be summarily abused each week for HMRC's failings).

I wonder why that is then?

"Excellent article Ken. 

For your amusement here is David Gauke's message (Bollocks) to staff.


Exchequer Secretary writes to staff
following Public Accounts Committee
criticism of HMRC


20 December 2011


Dear colleagues


I know that the publicity about the Public Accounts Committee report into HMRC's large business tax settlements will have concerned many of you, and I want to assure you of my continuing support for HMRC and for all of you working with such commitment and professionalism to secure the tax revenues for the country. I have full confidence in HMRC and its current leadership.

While I agree with the Public Accounts Committee that the public needs confidence in the way that HMRC carries out its functions, I am disappointed that the committee has failed to acknowledge the valuable contribution that HMRC’s current approach to large business makes to the Exchequer and to reducing the national deficit. It is a shame that the controversy over a couple of cases has eclipsed the great work happening generally with large businesses, which together account for around 60 per cent of UK tax receipts.

In my view, HMRC is taking positive steps to strengthen its governance, including with the recent appointment of two new Commissioners with tax and financial expertise.

Last year, the Department brought in record revenues of £468 billion for the UK, including £13.9 billion that would otherwise have been lost to tax avoidance, evasion and fraud. More than half of this was secured directly from large business. HMRC could not have achieved this success without the hard work of all its people.

It is clear that HMRC’s strategy for large business is working. Revenues collected from large businesses continue to grow, while HMRC’s approach provides greater certainty for business. HMRC's strategy is now being adopted by other tax administrations around the world.

I hope that during the coming weeks there will be some clarity and closure on the recent issues, so that we can all start to focus on the great work I know the Department will deliver in 2012."

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"

The State Displays Self Loathing

When it comes to self loathing, no one and nothing does it better than politicians and the State; especially when they viciously turn on one of their own departments.

Therefore it should come as no surprise whatever to read the "public damnation" of HMRC by the Public Accounts Committee.

PAC Chairman, Margaret Hodge, expresses "righteous anger" at how HMRC handles tax disputes with large corporations and the specific and "systemic failures" within HMRC.

PAC, ever mindful that the government is skint (and desperately needs money in order to keep itslef in the style to which it has become accustomed), expresses outrage at the £25BN of uncollected tax.

For good measure, PAC also lambaste HMRC for trying to maintain confidentiality and for not being transparent.

Well, all of these criticisms may well be valid. However, may I make a few observations from my humble perspective of being a "mere citizen" and not a politician:

1 HMRC is the product of the politicians, in terms of its structure, budget and how it is managed (eg politicians appoint the senior mandarins etc). Therefore the "buck" stops at the feet of the politicians, when it comes to apportioning blame for the failure of HMRC.

2 Has HMRC only just now started "doing deals" with major corporations?

I think not!

This has always been standard practice, the corporations and HMRC "negotiate" a settlement in order to minimise the costs and time spent in a protracted legal battle that neither side is certain who will win.

Why now are politicians (some of whom serve on the boards of large companies) expressing surprise at this and becoming excised over this?

3 To hear politicians bemoan the lack of transparency in an organisation is akin to watching a dog trying to walk on its hind legs.

Hypocrisy writ large!

4 The failings of HMRC are the product of a botched restructuring, poorly skilled senior managers, poor quality training, misdirection of resources, the politicisation of HMRC and an unduly complex and cumbersome tax system etc etc. All of these issues come firmly back to roost in the crow's nest of the government (Labour and Tory administrations alike).

Until the politicians "fess up" to the fact that they are responsible for this failed state "enterprise", nothing will improve.

Here is the summary of the report:

"The Commons Public Accounts Committee publishes its 61st Report of the Session which, on the basis of evidence from the Cabinet Office and HM Revenue and Customs (HMRC), examined tax disputes.

• Report: HM Revenue and Customs 2010-11 Accounts: tax disputes
• Public Accounts Committee

The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, today said:

"This report is a damning indictment of HMRC and the way its senior officials handle tax disputes with large corporations. We uncovered both specific and systemic failures which must be addressed.

There is more than £25 billion outstanding in unresolved tax bills and it is essential that there should be proper accountability to Parliament for the settlements reached by HMRC.

Having looked at the two cases in the public domain, we are concerned that many millions of pounds may be lost to the public purse.

It is extremely disappointing that senior HMRC officials were not prepared to cooperate with our inquiry in a spirit of openness. We accept that there is a need for confidentiality to protect individual taxpayers, but this must not be used as a cloak to protect the Department from scrutiny.

It is absurd that we had to rely on the media and the actions of a whistleblower to find out about the details of individual settlements. Parliament and the public have legitimate concerns that large companies are being treated more favourably than ordinary taxpayers, whether they be small businesses or hard-working families.

The Department's working practices must be seen by the taxpaying public to be absolutely impartial. The impression being given at the moment is quite the opposite, of far too cosy a relationship between HMRC and large companies.

In several cases, HMRC chose to depart from its normal governance procedures. It is extraordinary that the same officials who negotiated deals also approved them. In one instance, a mistake led to a potential £20 million of interest on a tax liability not being collected. Parliament and the public must be assured that settlements do not short-change the Exchequer."

Margaret Hodge was speaking as the committee published its 61st Report of this Session which, on the basis of evidence from the Cabinet Secretary and HM Revenue & Customs (the Department), examined tax disputes.

At 31 March 2011 HM Revenue & Customs (the Department) was seeking to resolve tax issues valued at over £25 billion with large companies, some of which included disputes over outstanding tax. The Department must collect as much outstanding tax as possible and be held properly to account for how it resolves tax disputes. We have serious concerns about how the Department handled some cases involving large settlements, where governance arrangements were bypassed or overlooked until it was too late. In some cases the same officials negotiated and approved the settlements, which is clearly unacceptable.

Investigation of these specific cases has led to serious concern about systemic issues which must be addressed with the utmost urgency. There needs to be proper separation between the negotiation of tax settlements and the authorization of such settlements. And the Department must address issues of accountability so that Parliament and the public can be satisfied that best value is secured.

The Department has made matters worse by trying to avoid scrutiny of these settlements and has consistently failed to give straight answers to our questions about specific cases, which has severely hampered our ability to hold it to account for the settlements reached.

The Department has insisted on keeping confidential the details of specific settlements with large companies, even where there have been legitimate concerns about the handling of cases. Details of some cases only reached the public domain because the press secured the details. We recognise the general intention of the legislation is to keep taxpayers' details confidential, but there is a provision which allows the Commissioners to authorise disclosure in certain circumstances. Furthermore, HMRC has a clear duty to assist Parliament in its work to establish value for money and detailed information can be necessary if Parliament is to properly meet its obligations. Given the public interest in these very large settlements, it is not unreasonable that they should be subject to more specific scrutiny. As it stands, the Department’s decision to withhold details from us reduces transparency and makes it impossible for Parliament to hold Commissioners to account. This situation is entirely unacceptable.

We discovered that the Department's governance processes for large settlements were not applied consistently. In one case, a mistake was not picked up until too late because the Department failed to follow its own governance procedures. The C&AG told us that this resulted in a loss of up to £8 million in interest forgone. We have since received evidence from a whistleblower that the total value of interest payable in respect of this particular settlement could be as high as £20 million. Our understanding of how this case was settled is inhibited by the imprecise, inconsistent and potentially misleading answers given to us by senior departmental officials, including the Permanent Secretary for Tax. In particular, his evidence to the Treasury Select Committee on his relationship with Goldman Sachs is less than clear given his evidence to us that he facilitated a settlement with the company over their tax dispute. We expect far greater candour from public officials involved in administering such an important area of government, especially when there is a question about whether HMRC acted within the law and within its protocols. We are concerned that whistleblowers using the provisions of the Public Interest Disclosure Act 1998 face threats of dismissal for providing important and relevant information.
 
The Department accepts that its governance arrangements have not provided sufficient assurance and that independent scrutiny of large settlements is needed. It has appointed two new Commissioners with tax expertise, and plans to introduce a new assessor role to permit independent review of large settlements before they are finalised. The Cabinet Secretary assured us that proposals would be submitted to the Public Accounts Committee by Christmas. We welcome these measures, but they will not by themselves guarantee proper accountability. In future, the Department needs to ensure it follows its own governance procedures and checks without exception. In particular, it needs to make sure that in all cases there is a clear separation between the roles of those negotiating and those signing off settlements.
We saw little evidence of a culture of personal accountability within the Department. We were told that one individual was held accountable for the mistake which led to a loss of the interest due to the Department. However, those at the top of the Department also need to take responsibility for how the overall system has been designed and operated, since that is the context in which mistakes have occurred.

We have serious concerns that large companies are treated more favourably by the Department than other taxpayers. We were told by the Cabinet Secretary that the relationship management approach adopted for large companies had been very successful in terms of tax collection. But for the public to have confidence in this approach, the Department's working practices must be seen to be absolutely impartial. The Department has left itself open to suspicion that its relationships with large companies are too cosy. We are also concerned that large companies appear to receive preferential treatment compared to small businesses and individuals – for example, in settling the totals due at less than the sum claimed by HMRC and in the time they are allowed to pay their tax liabilities without incurring interest charges. In order to maintain public confidence, the Department must ensure it avoids any perception of undue leniency in its dealings with large companies and must be seen to treat every taxpayer equally before the law.

We welcome the Comptroller and Auditor General's proposal to conduct further work to consider the reasonableness of the settlements reached in the specific cases where normal governance processes were not followed, and to report on whether proper legal advice was secured in a timely manner and that HMRC complied with its own published procedures and protocols. The Department has agreed to co-operate fully with this inquiry and with any subsequent hearings we hold."

Here is HMRC's response:


HM Revenue & Customs (HMRC) has today responded to the report of the Public Accounts Committee into tax disputes. An HMRC spokesman said:

“HM Revenue & Customs rejects the conclusion of the Public Accounts Committee that there are systemic failures in the management of tax disputes. The report is based on partial information, inaccurate opinion and some misunderstanding of facts.

HMRC's internal processes are robust and this was confirmed by a recent review by the National Audit Office of large business settlements. We agree that public confidence in our processes is important, and as we have already informed the Public Accounts Committee we propose to make further improvements to our governance and to increase transparency about our work with large business. We also welcome the further review that the National Audit Office is to carry out as an opportunity to confirm this and clear up the concerns about foregone millions.”

In response to the specific criticisms, the spokesman said:

1. “specific and systemic failures”
“We acknowledge that a mistake was made in one settlement and explained how this arose. We reject the suggestion that this is evidence of systemic failure. This assertion, based on untested, leaked information, is without foundation. ”

2. “more than £25 billion outstanding in unresolved tax bills”
“We explained to the Committee and again in a letter to the Committee Chair in November that this figure is a ballpark estimate of maximum potential tax liabilities, before a full investigation of the specific facts has taken place, and before applying any reliefs or allowances. It is not actual tax either owed or unpaid. In many cases, when HMRC has looked at the full facts it becomes clear that there is no further liability at all. Tax under consideration is an administrative tool to help us to focus our resources on cases where potential tax liabilities appear to be greatest. It is not tax owed.”

3. “many millions of pounds may be lost to the public purse”
“HMRC’s job is to bring in the tax that’s owed and that’s what we’re doing. We collected a record £468 billion in taxes last year, including more than £13 billion extra from our compliance work. We drew the NAO’s attention to an error in a single case which they then estimated to be between £5 and £8 million.

4. “a mistake led to a potential £20 million of interest on a tax liability not being collected”
“We do not agree this figure. We drew the attention of the Comptroller and Auditor General to an error, which he then estimated as between £5 million and £8 million.

5. “it is extremely disappointing that senior HMRC officials were not prepared to cooperate with our inquiry in a spirit of openness. We accept that there is a need for confidentiality to protect individual taxpayers, but this must not be used as a cloak to protect the Department from scrutiny…It is absurd that we had to rely on the media and the actions of a whistleblower to find out about the details of individual settlements.”

“Senior HMRC officials sought to be co-operative by providing as much information as possible within the legal constraints of taxpayer confidentiality under which they work. Taxpayer confidentiality is a legal requirement, fundamental to tax administration in the UK and across the world. Parliamentary scrutiny is delivered via the NAO to whom HMRC provide unfettered access to all their papers.”

6. “Parliament and the public have legitimate concerns that large companies are being treated more favourably than ordinary taxpayers… “
“HMRC treats all taxpayers even-handedly, supporting the majority who comply with their duty to pay their taxes, and cracking down hard on evaders, avoiders and fraudsters.
“It is wrong to suggest that HMRC officials are too lenient on large businesses. Large businesses pay around 60 per cent of total UK tax receipts, and account for more than half of the £13.9 billion additional compliance revenues that we brought in last year.
“Large business tax settlements are a vital part of how HMRC secures tax revenues for the country and without them Britain’s public finances would be seriously damaged. HMRC's large business strategy is now being adopted by other tax administrations around the world.

7. “in several cases, HMRC chose to depart from its normal governance procedures. It is extraordinary that the same officials who negotiated deals also approved them.”

“We have already informed the Committee of the action we have taken to ensure that in any case where an HMRC Commissioner has been involved in negotiations, the settlement decision is made under a ‘dual key’ approach by two different Commissioners. We have also written to the Committee with proposals to further strengthen our internal governance. These further changes will be agreed with our new Chief Executive in the New Year.


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 Quick Off The Mark

It is nice to see that HMRC don't always delay communicating with their "customers" (ahem).

This year they have sent some taxpayers a special Christmas message.

The Independent reports that HMRC have been very quick off the mark to send out penalty notices to taxpayers, telling them that they have been fined £100 for not submitting an online tax return for 2011.

Unfortunately, there is one small fly in HMRC's oinkment, the deadline for the online tax returns is in fact January 31 2012.

Aha!

Angela Beech, a senior tax partner at Blick Rothenberg, is quoted:

"The Revenue has got it wrong again and is causing unnecessary distress during the festive season. We have seen several demands and while the deadline for paper returns is passed, people have until 31 January to file online."

She went on to highlight the case of one of her clients who had been told that he did not need to complete a return, yet has already been fined £100 for not sending any return.

"Not only that, but for every day the return is late he will be fined £10. People are being asked to pay their fine within 30 days and are being told that if they haven't paid by then, penalties of £10 per day can be charged for the next 90 days, making a whopping £1,000 fine for a tax return you didn't have to file."

HMRC don't seem to have issued a comment yet on this, but it seems to be down to an IT error.

As with all IT systems, they are only as good as their design and the information put into them.

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"

Gauke Speaks - Don't Believe The Hype

HMRC's much hyped Real Time Information (RTI) system, that is "allegedly" going to be up and running on time and on budget in 2013 (April "apparently"), is going to add to the cost burdens of business.


David Gauke, the exchequer secretary to the Treasury, let the cat of the bag at the All Party Parliamentary Group on Taxation's (APPG) event to mark the beginning of its work on a report on RTI.

Guake is quoited in the Guardian as saying:

"Businesses are going to have to update software to comply with RTI, but the overall impact for employers will be to reduce costs."

Allegedly the "savings" will come from reduced costs of operating PAYE, and careful implementation should reduce the costs of software upgrades. Helpfully, he also added that the government is looking at ways of helping small businesses to make the changes.

Gauke claims that the RTI project is on schedule.

Is it?

Please feel free to drop me a note if you have knowledge of the reality of the progress of this project.

I ask, because in September I wrote the following:

"HMRC have fessed up privately to ministers that the deadline will be missed.
Universal Credit is now being assessed by the Major Projects Authority, a group of officials and commercial experts from the Treasury and Cabinet Office. Their key concern being that the “real time” information system, to be provided by HMRC, will not be ready by April 2013."

In the space of less than 3 months is everything now really back on schedule?

Major IT projects (both public and private sector ones) very rarely come in on schedule or on budget, does anyone (aside from Gauke) seriously believe that this one will?


Wrt business saving money, if RTI gets up and running on time, if there are any business owners out there with a view on this please feel free to share it with us.

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"

Here Comes The Judge

The Telegraph reports that next week the Public Accounts Committee (PAC) will accuse HMRC of failing the public, through systematic management errors that may have cost taxpayers £5BN.

Sir Andrew Park, a former High Court judge, will investigate HMRC agreements made with a number of companies including Vodafone and Goldman Sachs (the vampire squid).

The National Audit Office (NAO) has been asked by MPs to carry out an investigation beyond its usual remit to examine up to 10 specific deals approved by HMRC, Sir Andrew will lead the investigation.

The PAC report will heavily criticise David "Jack" Hartnett.

How very "civil service" that his departure from HMRC was announced/arranged prior to the publication of the report!

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 Beats The Retreat

I see that HMRC has had a run in with Danielle Forster, a farmer’s wife, which has caused HMRC to "beat a retreat".

Mrs Forster of Parsonage Farm, Arkesden, has successfully won an appeal against an HMRC decision to end a long standing practice (over 40 years) and combine her B&B business with the farm for VAT purposes.

She has been exempt from VAT, because her turnover is below the £73K threshold.

However, following a recent visit by a tax inspector, HMRC had ruled that the separation was artificial.

Communications

The ICAEW recently reported that a number of tax agents have visited HMRC offices to have a look around. The feedback from the visits to the post processing offices was positive:

Quotes from the agents:

“Without exception all the staff with whom I spoke, probably over 30, appeared to be well satisfied with their job, manager, training and workload.”


“From what we saw and were told, everything in the call centre, correspondence handling and referrals was running very smoothly.”


“The staff we met seemed very efficient, motivated and on the ball. We were told that things are now much better than they were a year ago, and it certainly seemed so.”


“The national unit dealing with referrals from the Agents Dedicated Line appeared to have good procedures in place. The more simple matters referred to this unit were dealt with by properly qualified members of staff but anything more complex was referred daily to a higher level of experienced staff and strenuous efforts were being made to respond to agents on a timely basis.”

Well then, everything now appears to be working tickedy boo!

Comments from front line staff in the post rooms are very welcome.

The ICAEW then posed some questions to HMRC, to which we look forward to seeing the answers:

- If the processes are working efficiently as reported, what is causing the delays in post?

- Were the offices visited those where the processes are good?

- Are the recent reports isolated instances, or relating to a particular tax? If so, which taxes?

In the meantime, as part of the apparent ongoing bonhomie between agents, ICAEW and HMRC, the ICAEW have published a few tips as to how to communicate with HMRC:

"Our volunteers have identified some tips for members, for contacting HMRC.

Is your issue a complaint or are you trying to resolve a client issue?

It may well be that you want to write in order to complain about the service you have received if HMRC has not replied to a letter. However, if your priority is to sort out a client issue we suggest you first use the Agent Dedicated Lines and Agent Account Manager (AAM) service, and only if you still have issues then use the complaints channel.

If you do want to make a complaint, indicate this clearly on the complaint letter, stating the tax concerned, eg SA and PAYE, CT, CIS, debt issues, VAT.

To find out more see:

HMRC: Make a complaint to HM Revenue & Customs.

HMRC: Dedicated helplines and contacts for authorised agents

HMRC: Agent Account Managers (AAMs) in HM Revenue & Customs

Are you sending post to the correct address? 

It is very important to use the latest reference when writing to HMRC and also to quote the client’s UTR and NINo on your letters. 

On compliance cases, the address to use is on the heading of the letter from HMRC. Unsolicited post (ie post that is not a reply to an HMRC letter) for SA and PAYE should be sent to the PO Boxes listed below.

For personal SA queries:

HM Revenue & Customs
Self Assessment
PO Box 4000
Cardiff

CF14 8HR

For queries relating to PAYE for individuals:

HM Revenue & Customs
Pay As You Earn
PO Box 1970
Liverpool

L75 1WX

For contact details for other taxes listed below, and more information generally, see HMRC: Dedicated helplines and contacts for authorised agents

• SA and PAYE for individuals
• Agent dedicated and priority lines
• PAYE for employers and construction industry
• Corporation tax queries
• VAT, Customs, Excise and international trade queries
• HMRC online services helpdesks
• Resolving problems or making complaints
• Specialist HMRC departments and finding other contacts
• Agent account managers"

Please feel free to comment on the efficacy, or otherwise, of the above advice (based on your own experiences).

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"

Fare Thee Well Jack!

Despite "retiring" from HMRC, Dave "Jack" Hartnett can't quite shake off those annoying questions about his deal with Goldman Sachs (the giant vampire squid).

Jack claimed that the cost of the waived interest was less than £10M. However, Mr Osita Mba (the HMRC lawyer whistleblower) has told the parliamentary committee investigating the issue that it was "£20M in rough figures".