HMRC Clarifies The Year End Deadline Extension

In case you were confused by the recent announcement of a 2 day deadline extension by HMRC, HMRC have issued further clarification.

HMRC have emphasised that this is not actually an extension of the deadline, since this would have required legislation to implement an extension.

Instead HMRC is using its ‘collection and management’ powers, which allow it not to collect sums that are legally due if it would not be cost effective to do so.

In this case, people affected by not being able to contact HMRC with queries on 31 January, who then can’t file their returns, could appeal against the penalties on the grounds that they have a ‘reasonable excuse’ for being late so no penalty would be due in the end.

The cost of this exercise to HMRC would outweigh the penalties that might be due from the small number of people who might file late anyway on 1 and 2 February without a reasonable excuse for being late.

Everyone clear now?;)

Tax does have to be taxing.

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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

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Hanging On The Telephone - How Long Have You Spent?

Today (tax deadline day) up to 20,000 members of the Public and Commercial Services union working in HMRC will strike, in opposition to planned call handling trials where HMRC will use two private sector companies.

As a result of the strike HMRC, although keeping the 31 January deadline for online filing of self assessment tax returns, have added a 2 day "grace period" to 2 February to allow more time for taxpayers seeking help in completing a return. Tax returns filed on 1 or 2 February will be treated as having been filed on 31 January.

Anyhoo, today's reduction in call centre functionality provides an opportunity to hear from anyone who believes that they hold the "record" for spending the longest on the phone to HMRC waiting for their call to be answered.

I already have two contenders for this record. One loyal reader informs me that he spent 48 minutes waiting for his call to be answered, whilst another had several bites of the cherry:

"Trying to contact HMRC by phone.  

Been cut off three times after waiting for someone to answer for over 45 mins, in all cases.  

Just holding on for 'an adviser to be with me as soon as possible' for just over 26 mins now.  

Help. 

Need to make an appointment with local HMRC centre. They will not speak with me unless appointment is made by phone.  

No one seems available to answer the phone in order to make the appointment!!!!"

Anyone care to top that?

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"

Das Boot

Let's start the week with a little light reading about HMRC boarding a U-boat last Thursday and arresting its "captain", wrt allegations over a £1M VAT fraud.

The Yorkshire Post reports that officers from HMRC boarded "U-8047", a converted barge which is tethered to a jetty behind the Royal Armouries museum in Leeds, and arrested Richard Williams its "captain".

Officers then conducted a detailed search of the U-boat, examining fittings and artifacts of the floating museum.

The early morning raid (part of Operation Cloudcastle) was carried out by investigators from HMRC, assisted by UK Border Agency officers and local police.

Mr Williams, aside from "commanding" a U-boat,  also once built a Star Trek Enterprise “bridge” in his front room.
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"

Diddle Diddle Diddle

I see that Dave "Jack" Hartnett has given an interview to the Telegraph, in which he laments the damage done to the country by the "black economy" (whereby tradesmen etc get paid in cash, thus evading VAT).

Hartnett tells us that it is our duty to ensure that other people do not evade paying their share of tax.

He is quoted:

“Every time someone pays cash in order not to pay VAT, the nation gets diddled.”

Jack wants people to shop their friends, neighbours and local tradesmen by phoning HMRC's whistle-blower hotline.

It is wrong for the state to encourage people to spy on one another; it is the pathway to dictatorship, as people will end up living in fear of one another and will use the state to settle personal vendettas.


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"

HMRC Uses The C Word

26 January 2011

Self Assessment deadline

To make sure our customers are not disadvantaged if they cannot get through to HMRC's call centres on 31 January, we will not impose any late filing penalties for people who file their Self Assessment returns on 1 and 2 February.

The SA deadline remains midnight on 31 January. But HMRC will treat all returns that come in by midnight on 2 February as though they were submitted by 31 January. No customer will have to pay interest on payments due on 31 January that are paid on 1 or 2 February.

Acting Director General Personal Tax, Stephen Banyard, said:

"We've always been very clear that we want the returns - not the penalties. For that reason, we don't want anyone who can't get through for help and advice on 31 January to be disadvantaged in any way."

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"

Newsflash - Fines Waived

HMRC will waive penalties for self assessment filings made on 1 or 2 February.

David Gauke, exchequer secretary to the Treasury, said in a statement:

"This strike could have caused thousands of people to incur fines, so I am pleased that HMRC has taken this common sense approach. 

The government does not want anyone trying to file their tax return on time to be unfairly penalised because they were unable to get through for help and advice on the 31st [January]"

However, HMRC have tweeted this rather confusing and contradictory tweet:

@HMRCgovuk "You have until 2 Feb to file your tax return, but do it now to avoid a penalty".

Errm..anyone care to translate that? 

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"

Beaker Lays Down The Law

I am gemused to read that the Chief Secretary to the Treasury, Danny "Beaker" Alexander, has decreed that athletes resident outside of the UK who compete at the Glasgow 2014 Commonwealth Games will be exempt from income tax.

Under UK tax rules, any sportsperson not resident in the UK is subject to UK income tax on any payment in connection with their performance here, including a proportion of any worldwide endorsement income.

Beaker said:

"With six months tomorrow to go until London 2012, I’m pleased to announce this special exemption for Glasgow 2014 which will prolong the Olympic legacy and help spread the long-term benefits into Scotland."

Are we to assume that no one would have competed in the games if the tax exemption had not been put in place?


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"

Reasonable Excuse

With the ongoing "hoopla" over fines for the late submission of tax returns, and a heated debate about what constitutes a "reasonable excuse", I am indebted to a loyal reader who dropped me a note about a tax tribunal appeal determined on 17 November last year which featured "reasonable excuse" and delays (another subject of discussion recently) by HMRC in contacting the appellant.

An appeal was made against a surcharge imposed for the late payment of tax for the tax year 2009/2010. The appellant had a considerable number of "challenges" (eg husband had a breakdown, lost his job, high level of debt etc).

Quote:

"There was only so much she could cope with and was unable to manage the amount of paperwork coming in."

HMRC submitted that hardship or distress "is not a consideration that HMRC can take into account", and would be a matter for the Time To Pay Unit.

The Appellant made a time to pay request on 23 February 2011; she was told that HMRC would contact her for further discussion.

HMRC telephoned the Appellant on 29 March 2011 (over one moth later); she was not available and a letter was issued requesting the Appellant to call back in 7 days. On 23 May 2011 the Appellant contacted HMRC and agreed a monthly payment plan which commenced on 2 June 2011.

The Tribunal finds as a fact that the Appellant made all reasonable attempts to arrange a time to pay agreement prior to the trigger date (the date of the letter) and cannot be held accountable for the delay in HMRC attempting to contact her when she had been told that HMRC would contact her to discuss the matter.  

The Tribunal finds as a fact that the separation of the Appellant and her husband, taken together with her husband’s alcoholism, constitutes a reasonable excuse.

The appeal was allowed.

Case details in full:



FIRST-TIER TRIBUNAL TAX SARAH CORNES Appellant 

- and - 

THE COMMISSIONERS FOR HER MAJESTY’S REVENUE AND CUSTOMS Respondents TRIBUNAL: J. BLEWITT (TRIBUNAL JUDGE) 

The Tribunal determined the appeal on 17 November 2011 without a hearing under the provisions of Rule 26 of the Tribunal Procedure (First-tier Tribunal)(Tax Chamber) Rules 2009 (default paper cases) having first read the Notice of Appeal dated 17 July 2011 and HMRC’s Statement of Case submitted on 14 September 2011. 

© CROWN COPYRIGHT 2011 DECISION 

1. This is an appeal against a surcharge imposed for the late payment of tax for the tax year 2009/2010, imposed pursuant to section 59C Taxes Management Act 1970. Submissions of the parties 

2. By Notice dated 17 July 2011, the Appellant appealed to the Tribunal. The grounds relied upon can be summarised as follows: 

(a) The Appellant is a salaried partner in a small solicitors firm who has taken a 50% pay cut for the last 2 years as a result of the recession; 
(b) The Appellant’s husband lost his livelihood 3 times in the past 3 years with a near nervous breakdown many times throughout that period; 
(c) The couple have debts of approximately £85,000 which are being repaid under a Debt Management Plan; 
(d) Due to the Appellant’s husband being an alcoholic, combined with the financial pressures suffered, the couple separated on 20 April 2011. Throughout this period, the Appellant made all efforts possible to manage the separation, her 2 children, working full time and controlling the debt. There was only so much she could cope with and was unable to manage the amount of paperwork coming in. 

3. HMRC’s Statement of Case does not dispute the facts relied upon by the Appellant. Instead, it submits that hardship or distress is not a consideration that HMRC can take into account; any such request would be considered by the time to pay unit. For the surcharge not to have been raised, it s submitted that the Appellant was required to either pay the liability due at 31 January 2011 or have an agreed time to pay arrangement in place by the trigger date of 28 February 2011. The Appellant made a time to pay request on 23 February 2011; she was told that HMRC would contact her for further discussion. HMRC telephoned the Appellant on 29 March 2011; she was not available and a letter was issued requesting the Appellant to call back in 7 days. On 23 May 2011 the Appellant contacted HMRC and agreed a monthly payment plan which commenced on 2 June 2011. 

Decision 

4. The issue for the Tribunal to determine is whether there was a reasonable excuse for the late payment. The claims relied upon by the Appellant are not disputed by HMRC and therefore I find them as fact. 

5. HMRC accept that the Appellant made contact prior to the trigger date in order to request a time to pay arrangement. There is no explanation as to why an agreement was not reached on 23 February 2011; instead the Appellant was told she would be contacted to discuss this issue further at a later date. Contact was attempted by HMRC on 29 March 2011, over 1 month later, however the Appellant was unavailable. The Tribunal notes that this contact by HMRC post dates the trigger date for the surcharge of 28 February 2011. In the absence of any evidence to the contrary, the Tribunal finds as a fact that the Appellant made all reasonable attempts to arrange a time to pay agreement prior to the trigger date and cannot be held accountable for the delay in HMRC attempting to contact her when she had been told that HMRC would contact her to discuss the matter. 

6. HMRC rely upon the fact that the Appellant did not make contact with HMRC following their letter dated 29 March 2011, until 23 May 2011. The Tribunal finds as a fact, having accepted the circumstances of the Appellant to be as set out in the Notice of Appeal, that the separation of the Appellant and her husband, taken together with her husband’s alcoholism, constitutes a reasonable excuse. Separation and the no doubt numerous difficulties arising as a result, not least housing and childcare, is an unforeseeable difficulty and one outside of the sole control of the Appellant. Such events are also not easily resolved overnight. The Tribunal finds that the Appellant had acted as a prudent and diligent taxpayer in attempting to agree a time to pay arrangement prior to the surcharge trigger date. The Tribunal finds as a fact that there is a reasonable excuse lasting throughout the time between the letter from HMRC dated 29 March 2011 and the Appellant’s telephone contact with HMRC on 23 May 2011 on the basis of her circumstances throughout that period. 

7. The appeal is allowed. 

8. This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. 

Tax does have to be taxing.

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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 Lifts Embargo On Talking To BBC About Troops In Afghanistan

I am very pleased to see the very active level of comments from some of my loyal readers about my recent highlighting of a BBC News item about troops serving in Afghanistan being fined by HMRC if they submit their tax returns late.

Indeed one of you was so keen to put his/her viewpoint across, that he/she posted 14 times in the last 24 hours!

Anyhoo, you will doubtless be pleased to learn that HMRC have lifted their self imposed embargo on talking to the BBC about the issue.

AccountingWeb reports the following:

"British armed forces personnel in active service who have failed to file their tax return in time will have their penalties cancelled as a ‘Reasonable Excuse’ if they get in touch HMRC.

As discussed on BBC Money Box, soldiers serving in Afghanistan will still face penalties if they fail to file by the 31 January deadline, but there will the chance to appeal. 

Paul Lewis said: 

“HMRC refused to talk about this all week, but on Saturday morning at 11.30, [half an hour before Moneybox was broadcast], they told us if armed forces let us know, we will immediately cancel penalties. 

They will accept serving in Afghanistan as a Reasonable Excuse.

An HMRC spokesperson also told AccountingWEB: 

“For a service person who is serving with the military in Afghanistan, we appreciate that they have higher priorities than filling out their tax return. They’re in a fairly unique position, a combat position, and obviously that has to come first for them, and we completely understand and support that.

“So if they couldn’t complete the return by 31 January the penalty notice would be automatically generated by the system. However, if the service person contacts us as soon as they can to point out that they didn’t complete it because they were on a tour of duty in Afghanistan, we would cancel that penalty notice.

HMRC confirmed that while there is a 30-day deadline to appeal, they will “apply common sense”, and this will be waived for those serving in Afghanistan.

“You’re supposed to appeal within 30 days, but again we know that being on active service in Afghanistan is a pretty unique position, so we would be very flexible about that and as soon as they got in touch we would make sure they didn’t have anything to pay.

The advice is, don’t wait for penalty - send a letter in to accompany your late 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.

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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"

Homer Shortlisted

Talking of awards, my hearty congratulations to Lin Homer, HMRC’s recently appointed Chief Executive Officer, who herself has recently been "ranked/shortlisted" by the media.

In this particular case Homer has been listed seventh in a list of 100 ‘people to watch in 2012’ published in The Times the other day.

As The Times put it:

"..managing Britain’s tax collectors is a tough job at any time but Revenue & Customs is under pressure to justify the deals that it has made with big companies and has the lowest morale of any Whitehall department."

Homer, doubtless is an ideal appointee to the role of HMRC CEO; aside from having no experience at all wrt tax (beyond being a taxpayer), she also has a fine list of accomplishments:

"In 2005 Birmingham was declared to be a "banana republic" by the Election Commission.

For why?

Wholesale electoral fraud in the council elections.

The Election Commission ruled that Labour had been responsible for “massive, systematic and organised postal ballot fraud.”

He then made a few choice remarks about the Chief Returning Officer, also the chief executive of the council.

She had " thrown the rule book out of the window”.

To whom did he refer?

Why none other than Lin Homer.

Labour helped her out by making her head of the UK Borders Agency.

This being the very same UKBA that threw the rule book out of the window and relaxed border controls.

Lin, clearly a career minded woman, moved on from there this summer (just before the shit hit the fan) and became Permanent Secretary at the Department of Transport."

Doh!
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"

Shortlisted For "Accountancy Personality of The Year"

My thanks to PQ Magazine for placing me on the shortlist for their 2012 awards, in the category of “Accountancy Personality of 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"

Every Cloud Has Silver Lining

The Telegraph reports that because of the threatened walk out by HMRC staff from call centres on 31 January, HMRC will waive the automatic £100 late fines for anyone whose return was delayed because they could not get through by phone to HMRC on the strike day.

Specifically HMRC said that anyone who was prevented from filing their return by the strike would not have to pay the automatic £100 late penalty, so long as they send a letter explaining their return was delayed because they could not get through.

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"

Troops In Afghanistan Fined For Late Tax Returns

HONOUROURFORCES HONOUROURFORCES

The Tax Office says that troops in Afghanistan will be fined if they are late with there tax returns Bloody Crazy, @HONOUROURFORCES Pls RT

Source BBC

"Members of the armed forces serving in Afghanistan could be fined if they fail to submit their tax returns by the January 31st deadline.


There have been calls for them to be given more time, but the tax office says if the paperwork is late, they must impose a £100 fine."

Evidently serving your country does not constitute a "reasonable excuse" for late submission!

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's Confusing Letter

As my loyal readers know, we are rapidly approaching the 31 January deadline for online filing of tax returns for the tax year end 2011.

The new penalty system (automatic £100 fines for late submissions, even if you don't owe any tax) certainly has caused some heated discussion on this site!

Anyhoo, HMRC to give them credit are making an effort to remind people that the deadline is approaching and that there is a new penalty regime in force.

HMRC have sent out letters entitled:

- "Last chance to avoid the new penalties"

It then sets out to tell the recipient that, if they haven't already filed a paper return, they must file online by 31 January to avoid the late submission fine of £100.

Fair enough, but wouldn't it have been cheaper to only send these letters to those who haven't filed their paper returns or are HMRC records not yet up to date on that?

Anyhoo, moving on, the letter then confusingly goes to to say:

"Please do not file a paper return after 31 January"

This implies that submitting a paper return prior to 31 January is OK.

This of course is not the case, as paper returns filed after 31 October will be subject to a late payment fine.

I humbly suggest that the above phrase should be removed from next year's reminder letters, lest it give people the false impression/hope that paper returns up to 31 January are OK.

UPDATE

It seems that one of my loyal readers disbelieves that such a letter exists (see comment below), I assume that this particular reader is not a member of HMRC staff (as he/she would have been able to check for its existence).

Therefore, in order to assuage his/her doubts, here is a copy:

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's Money Making Scam II

Now, as my loyal readers know, we are rapidly approaching the deadline (31 January) for the filing of online tax returns for tax year end 2011.

This year HMRC have added another money making string to their bow, in the shape of an automatic fine of £100 for any returns that are submitted late (even if there is no tax due).

In my very humble opinion fining people for submitting a late return, on which they have no tax liability, is a farking disgrace; and clearly is a blatant attempt by the bankrupt state to screw the taxpayer for as much money as possible.

As we know, the "state is unlawfully using late-payment penalty fines against tens of thousands of small firms who do not file their tax returns on time as a "cash-generating scheme" for the Exchequer."

Anyhoo, thus far, HMRC have stated that they are determined to collect these unjustified fines from anyone who misses the deadline (even if they owe no tax).

Given that there will doubtless be quite a few people (who owe no tax) who miss the deadline (human being are human beings, no matter what a government bureaucracy would like to turn us into), it will be very interesting to see what happens in February, March and beyond when the fines start dropping onto doormats.

Despite the fact that the political "elite" have no intention at the moment of removing their snouts from the trough, I suspect that this blatant money making scam will come back to bite HMRC and the government on their bureaucratic arses. There will be some very heavy political backpedalling, when the politicians realise that this is a step too far.

Tax does have to be taxing.

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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

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HMRC's £100K Giveaway

Despite Stephen Hardwick's assertion that penalties are the correct way to encourage people to submit their tax returns and pay their taxes on time:

"We use penalties purely to encourage on-time filing."

It seems that others are willing to think outside of the box, and use other means to encourage on time filing and early payment of tax liabilities.

Cameron's Behavioural Insight Team have proposed that anyone who files their tax return, two months early, could have a chance at a £100,000 prize.

Let's see if this ever gets off the drawing board then!

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"

Hang On A Minute!

My thanks to a loyal reader who sent me a copy of an article posted on the HMRC intranet last week by The Director Corporate Communications, Stephen Hardwick.

It is on a strand called 'Hang on a Minute!" which basically answers criticism from the press on various HMRC issues.

Here it is:

"The Independent: 

In an article headlined 'Exposed: Taxman's illegal war against Britain's small businesses' , The Independent claimed HMRC is deliberately using late-payment fines to generate extra revenue. 

HMRC's Reply: 

HMRC does not use small business penalties to boost revenue. We do not want penalty payments either from businesses or individuals. We use penalties purely to encourage on-time filing and to be fair to the vast majority of taxpayers who file on time. 

HMRC supports small businesses as shown by the £7.71 billion of small business tax we have deferred to help with cash flow problems. 

We treat all taxpayers the same irrespective of their size and nature."

Well then, I leave it to you (my loyal readers) to express your opinions about the accuracy (or otherwise) of the above.

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"

HMRC Walkouts

There will be "lightening (or is it lightning?;)) walkouts" (lasting 30 minutes) by 20,000 tax officers today in protest against plans to use private companies to perform certain HMRC tasks.

Two private companies will run year long call handling trials at tax credit contact centres in Lillyhall in Cumbria, and Bathgate in Scotland.

PCS are of the view that this is the backdoor to privatisation.

HMRC claim that they are using the trials to see the costs and benefits of using additional capacity from the private sector, not as a basis for replacing HMRC staff.

Tax does have to be taxing.

UK EXPATS: Reduce tax on UK Pensions
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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"

HMRC's Money Making Scam

In December I wrote the following about HMRC's shabby attempts to screw taxpayers for late payment fines, by deliberately delaying sending out penalty notices:

"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....."

I am therefore pleased to see that others have also noted that HMRC are playing dirty.

The Independent reports that the state is "unlawfully using late-payment penalty fines against tens of thousands of small firms who do not file their tax returns on time as a "cash-generating scheme" for the Exchequer."

I have warned about the state (which is bankrupt) using HMRC fines to screw taxpayers for as much money as possible,  many times on this site.

This warning has been proven to be correct, the state is using fines to generate revenue; and HMRC is ensuring that the fines are as high as possible. The Tax Tribunal has ruled that HMRC is operating a policy of "deliberately" waiting months before alerting businesses that have not filed their tax returns, so that late payment fines stack up.

On the assumption that this judgement is upheld on appeal, it could result in between 50,000 and 100,000 firms being able to claim refunds on tens of millions paid in fines.

The judge, Geraint Jones, QC, said


"It is no function of the state to use the penalty system as a cash-generating scheme.

We have no doubt that any right-thinking member of society would consider that to be unfair and falling very far below the standard of fair dealing expected of an organ of the state."

Well said!

The scam operated by HMRC ensures that firms are given no notification of a failure to complete their end-of-year return by the May deadline. Instead, HMRC waits until September before sending out a computer-generated letter telling them they have failed to complete the return and are liable for four months of late payment fees of £100 each plus another £100 fine for late completion.
HMRC attempted to weasel out of the accusation by claiming that that it was not obliged to provide reminders to firms who failed to submit the correct tax returns, and that the penalties for doing so were clearly publicised.

However, Mr Jones saw through HMRC's weasel words and noted that when Parliament legislated to allow a penalty fine it did so "to encourage compliance and, in cases where compliance did not take place, to levy a proportionate penalty".

He added:

"It is unthinkable that Parliament would intend a manifestly unjust situation to arise as a result of HMRC being dilatory in sending out a first (or subsequent) penalty notice."

HMRC denied it was using penalties to raise revenue.

It would say that though wouldn'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.

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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"

Trust Dented - Rebuilding Trust

Anthony Thomas, President of the Chartered Institute of Taxation (CIOT), has laid out his vision of how HMRC can improve their "game" over the coming year and into the future, in an article in Tax Journal.

He notes, quite correctly, that a tax system depends on trust between the various parties involved; sadly that trust has been dented.

He notes:

"It is inevitable that the authority can be aggressive, and be endowed with overbearing powers – but these must be reserved for those who deliberately get things wrong."


Thomas calls for a fundamental review of governance arrangements wrt the whole of HMRC, not least HMRC needs to address the issue that NEDs on the HMRC have no operational tax experience. Thomas is also less than impressed with ExCom, again citing its lack of people with operational tax experience.

Consultation deadlines are also targeted as being too short.

Thomas is, quite rightly (as I have warned many times on this site), fearful of HMRC getting carried away by its powers:

"..we must ensure that HMRC does not evolve into a cross between an Orwellian ‘big brother’ and MI5."

He also, again quite rightly, expresses concern about the level of and quality of staff resources with HMRC.

As ever, views and comments are always welcome from everyone.

Here is the text in full:
 
"The UK tax system depends hugely on taxpayers complying with their obligations. For the tax system to operate effectively and efficiently there must be mutual trust between taxpayers, the tax profession and HMRC. It seems that trust has been severely dented. To improve things we need to make sure there is a proper balance between taxpayers, businesses and the tax profession on the one hand and the tax authority on the other. It is inevitable that the authority can be aggressive, and be endowed with overbearing powers – but these must be reserved for those who deliberately get things wrong. When these relationships which impact upon citizen, tax agents and HMRC go wrong the system is imperilled.

It is possible to restore that trust, but first there is a need to start a shift back to that ‘healthy tension’ between tax practitioners and HMRC.

Good governance is critical to restoring trust

HMRC must recognise that its governance is widely perceived as deficient. Hence there needs to be a fundamental review of the governance arrangements, not simply surrounding tax disputes but of the whole of HMRC. This is critical to start the process of regaining public trust; the most important element of trust being that taxpaying citizens having confidence in their tax authority.

A clear governance structure is the first step to a better public understanding. The main board of HMRC comprises nine members including a non- executive chairman and four non-executives. The non-executives are non-tax people. Operational tax experience for some of the non-executives of HMRC is essential. Having a number of non- executive tax experienced people on the main board would strengthen the governance.

There needs to be a balance on the board with business experience at chairman level but plenty of ‘deep’ tax knowledge elsewhere on the board. A non-tax CEO is likely to be a disappointment, but a COO non-tax ‘systems’ person would probably work well. The conflict of interest argument for appointing non-executive tax experienced people to the board is no justification nowadays not to appoint. If the will is there, a way can be found to address that issue.

Operational tax experience is equally essential on the HMRC Executive Committee (Ex-Com), being the decision-making body immediately below the main board and consisting of full-time HMRC executive directors. Insufficient ‘deep’ operational tax experience at this level has almost certainly resulted in poor decisions or communications leading to bad press comment. These difficulties may have been avoided by seeking external input. This could be supported by a couple of non-executive tax advisers to advise and strengthen the Ex-Com board. Some external appointment should provide balance and proper independent input to the decision-making process.

Genuine consultation really works

There is no doubt that consultation is vital to trust and efficiency in the tax system. The new Tax Policy Making document recognises this. While there has been significant improvement in some areas, it still sometimes appears that the decision has already been made by HMRC or HMT for example possibly on the 10% IHT rate leaving consultation merely on peripheral matters; that is not something which should be considered as proper consultation. If decisions have already been made, then please let us know so we do not waste time. The CIOT and other bodies put in a considerable amount of expertise and time into formulating a sensible and balanced response and it is exasperating when the combined efforts of experts are simply wasted.

Short response deadlines too are quite ridiculous on occasions, as is the sheer volume of change and hence consultations, which has grown enormously over the last few years. We do want to be consulted but is this really the best way to continue to seek the considerable input of expertise? For example, could HMRC/HM Treasury help by telling us where to focus our efforts? By following the Tax Policy Making procedures we are likely to avoid the problems.

One example of a consultation during 2011 that worked particularly well was the Alternative Dispute Resolution (ADR); all sides worked together and the pilot was extraordinarily well run. The HMRC personnel involved with this project are to be congratulated for their approach. The consultation comprised a considered piece of work and the ongoing pilot seems to be going well. This is the right approach to consultation and should be a model for future work on other consultations. Such an honest and fresh way of working is essential and could be very worthwhile.

HMRC and tax agents

I have major concerns about the HMRC tax agent strategy. The consultation worked well and we benefited from a huge involvement from CIOT and ATT members. We need to keep this involvement up: I cannot emphasise how important it will be for all tax agents to read, consider and comment on the next round of consultation in this critical area of future working. It is clear that there are major concerns around ‘self-serve’, IT security and the agent view. The ‘agent view’ could be a rather involved way to identify a few ‘bad apples’; we must ensure that HMRC does not evolve into a cross between an Orwellian ‘big brother’ and MI5.

The relationship between HMRC, tax agents and their clients is at serious risk of changing irrevocably. I know as an agent I have a responsibility towards the integrity of the tax system, but the main responsibility is to my client and not to HMRC and we must never lose sight of this important principle.

The tax agent strategy poses fundamental questions about the role of tax agents. The HMRC response to the consultation dodges a key issue of formal qualifications. It does not see a tax qualification as a necessary or single test of competence. This is something which needs proper debate.

I accept that there are many very able ‘qualified by experience’ agents. But the role of professional bodies in maintaining professional standards seems to have been sidestepped. Independent oversight is also something which cannot be ignored. It must be a line in the sand for all the professional bodies supporting HMRC in their future work in this area.

When reading the HMRC summary of responses it is hard not to think that it is all about regulation and that ‘self-serve’ is more of a sideshow. Ask yourself, regulation by whom? Would you rather be regulated by your peers or by HMRC? Do agents understand the implications of the proposals? You have been warned!

The impact of HMRC powers is worrying

The latest example of the ever-increasing powers being given to HMRC is the ‘dishonest conduct’ legislation. I totally support HMRC tackling dishonest tax agents. I remain unconvinced that this new legislation, apart perhaps from the information power, is needed, even though it is much improved. The rights of the taxpayer are important and new powers must only be introduced where the existing law is deficient or too complex. A lack of manpower or will to use the existing criminal powers of HMRC where criminal activity is an issue should not be used to justify new oppressive legislation.

The conflation by HMRC of evasion and avoidance must stop. 

A recent example was the HMRC statement on 22 November 2011 in connection with the launch of the new offshore unit. The comments in the public release were unhelpful and blurred the distinction between avoidance and evasion. This is wrong. Concern has been expressed in the past about such comments coming out of HMRC.

HMRC staff and training

Tax training is something which HMRC takes seriously. Getting its staff to better understand tax administration, processes and taxpayers and to apply the law correctly must be a priority. This requires commitment from the top and should not be ignored.

It is clear that HMRC is under-staffed and under-resourced, with further significant cuts on the horizon. Is cutting HMRC staff a sensible strategic move on the part of government? Staff morale and the tax collection engine are now under considerable strain. HMRC is the UK’s ‘moneybox’ and could end up being severely damaged. Any perceived or real weakening in the tax system could have a major impact for tax administration, collection and an adverse effect on taxpayer attitudes.

Business Record Checks (BRC) and Single Compliance Process (SCP)

I am hoping for a sensible resolution to the BRC project before any damage is done to professional and client relationships. This has been a difficult experience and it would have been much better if HMRC had been upfront and consulted over its strategic objectives from the outset. Expecting the smallest business to have perfect records is quite unrealistic so I welcome the recently announced review by HMRC.

The rush to go live with the SCP in 2012 is a concern. This is far too quick, needing further time to consider the impact and implications of the pilot. There is no point in upsetting the entire tax agent community with rushed and ill-considered processes.

HMRC service levels initiative

The current key areas under consideration are post, tax codes, repayments and bereavement. HMRC is totally engaged with this project and are ‘seized with the issues’ which is encouraging. There is support from the highest levels within HMRC, the professional bodies and tax charities. Any slowing down in 2012 would be a massive blow to the trust that is slowly being rebuilt; though there is so much more still to do.

There are certainly challenges ahead in 2012!"

Tax does have to be taxing.

UK EXPATS: Reduce tax on UK Pensions
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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"

A Judgement Worth Bookmarking

The Association of Corporate Counsel report the outcome of Nicholas Deluca v HMRC (TC01422), a First-tier Tribunal (Sir Stephen Oliver QC) which criticised HMRC’s conduct and directed that they make a contribution of half the costs incurred by Mr Deluca in connection with an HMRC enquiry into his tax return and his subsequent appeal to the Tribunal.  

Mr Deluca’s appeal to the Tribunal was successful and he applied for a contribution by HMRC to the costs.

The Judge concluded that HMRC had, throughout, pursued the wrong person for the tax.

Quote:

"I am satisfied that HMRC had no justification for pursuing Mr Deluca for the tax and consequently putting him in a position of having to appeal …

HMRC should have recognised at an early stage in the enquiry on whom (if they were correct) the tax liability would properly fall. Their action in pursuing him in effect driving him to incur the costs was unreasonable in the extreme."

What is particularly interesting about the the outcome of this case, and worth bookmarking, is the fact that the judgement can be used by taxpayers as a basis for making a claim to recover costs incurred in connection with an HMRC enquiry which normally precedes an appeal itself.

As said, this judgement is worth bookmarking! 

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"

Mediation The HMRC Way

HMRC is offering some SME's the opportunity of mediation in disputes about tax.

The Guardian reports that HMRC is running a pilot scheme in Wales, to see if tax disputes can be settled in a "gentlemanly" fashion before going to court.

All very well and decent of HMRC, until that is you look at the substance of the "mediation".

The adjudicator who acts as "watchdog" is staffed entirely by HMRC inspectors and administrators, and the "facilitators" of the mediation process are in fact HMRC staff.

Mediation only works effectively where both parties in the dispute are confident that the mediator is truly independent. In this particular case there is a complete lack of independence.

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"