Friday 28 September 2012

HMRC's Head In The Clouds



HMRC have announced that it will be moving data currently stored in local offices to G-Cloud Services (a cloud based storage system), between now and Spring 2013.

A somewhat "challenging" timeframe I would have thought!

The contract has been signed with Skyscape Cloud Services.

As per the company website:
"The Skyscape Cloud Alliance partners; QinetiQ ,VMware, Cisco, EMC, and Ark Continuity bring together an end to end cloud solution which is Skyscape. This Alliance also provides a collaborative resource which drives innovation and our technical product development programme.....
QinetiQ is a FTSE250 company and one of the top 10 largest UK employers of science and engineering graduates. QinetiQ is at the heart of Skyscape and uses its domain knowledge to provide technical advice to clients in the global aerospace, defence and security markets. QinetiQ’s unique position enables it to be a trusted partner to government organisations, predominantly in the UK and the US, including defence departments, intelligence services and security agencies, where its world leading cyber security capabilities raise awareness of and deliver solutions for hacking and malware."
As per Wikipedia:
"In 2007 the National Audit Office conducted an inquiry into the privatisation of Qinetiq to determine whether UK taxpayers got good value for money from the sale. The NAO inquiry looked at the following issues:
  • choice of privatisation strategy;
  • management of the process (the split of the Defence Evaluation and Research Agency into two, the sale to Carlyle and the flotation);
  • costs incurred and the proceeds achieved; and,
  • whether the deal met its objectives.
In November 2007, the NAO reported that taxpayers could have gained "tens of millions" more and was critical of the incentive scheme given to Qinetiq managers, the 10 most senior of whom gained £107.5m on a total investment of £540,000 in the company's shares. The return of 19,990% on their investment was described as "excessive" by the NAO. The role of Qinetiq's management in negotiating terms with the Carlyle Group, while the private equity company was bidding for the business, was also criticised by the NAO. Carlyle bought a third of the business for £42m which grew in value to £372m in less than four years."
Here is the HMRC press release in full:
"HM Revenue and Customs (HMRC) has become the first Government department to sign a contract for the delivery of G-Cloud Services over the Public Services Network.

The department has signed a contract with Skyscape Cloud Services for centralised data storage in the G-Cloud. Moving to cloud storage will provide cheaper, more secure and greener data storage for HMRC. It will also enable the department to move forward with its deployment of the Government End User Device Strategy, designed to increase the efficiency of the public sector and improve front-line services.

The contract was awarded via the UK Government G-Cloud framework, which enables the rapid sourcing and deployment of secure, low-cost utility services to the UK public sector. This is the first major service contract to be awarded via the G-Cloud by an organisation as large as HMRC.

For HMRC the change will mean moving data currently stored in local offices to cloud storage between Autumn 2012 and early Spring 2013. This will be the first deployment of G-Cloud services over the Public Service Network, established to improve Government communication links and cut costs.

HMRC's Chief Information Officer, Phil Pavitt, said:

“This change will save over £1 million a year in running costs and will increase reliability and security of HMRC’s internal IT services. The Skyscape contract is a major step for HMRC in moving away from traditional ways of working with large service providers. And it’s a great example of how we’re exploring smarter, more innovative solutions that make life simpler for us and help us provide a better deal for our customers.”

Notes for editors

1. For more about the G-Cloud programme - http://gcloud.civilservice.gov.uk/"
As Barry Murphy, technology partner at PwC, warns in TechWeek:
Getting the technology in place is just the first leg of the process.  The biggest challenge is the behavioural change that needs to follow.

Too often the failure of new systems is blamed on the technology when more often it’s because people haven’t adapted to them.”
We shall see!

Tax does have to be taxing.



Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Taxwise.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

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"

Thursday 27 September 2012

Ian Barlow, HMRC and PA Consulting

In July I wrote about Ian Barlow's appointment to HMRC as the replacement to Mike Clasper, and listed the companies of which he is a board member. Amongst them is PA Consulting Group Ltd.

My thanks to a loyal reader who pointed out a couple of things about HMRC's relationship with PA Consulting.

PA Consulting has had a commercial relationship with HMRC, eg between April 2003 and June 2005 HMRC paid PA Consulting over £20M.

PA Consulting Group have been involved in a tax avoidance litigation case with HMRC for many years, which is now on its way to Supreme Court. Contractor Calculator quotes James Abbott, tax partner at contractor accountant Abbott Moore:
"In the 1990s, management consulting firm PA Consulting decided that it would pay its employees bonuses using dividends, so they could deliberately avoid Pay As You Earn (PAYE) income tax and National Insurance Contributions (NICs).

The firm set up an elaborate tax structure, allowing it to route bonus payments through a separate offshore company with multiple share classes and pay dividends to the employees, instead of bonuses as part of their PAYE pay packet.”
HMRC challenged the scheme via the tax commissioners, and then the courts, contending that the payments to PA Consulting’s employees were ‘earnings’ and should be taxed accordingly.

The case continues.

"Curiouser and curiouser!" said Alice.

Comments and views always welcome.


Tax does have to be taxing.



Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Taxwise.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

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"

Wednesday 26 September 2012

Guido Fact

As per Guido Fawkes:
"Guido Fact: the top 1% of earners pay a whopping 24.2% of all income tax, the top 10% pay over half of all income tax. via

Tax does have to be taxing.



Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Taxwise.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

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"

Post Haste - HMRC Goes Postal

As loyal readers know, the subject of communications with HMRC is often raised on this site. Sadly there are many who feel that the quality of both telephone and postal communications with HMRC are less than "stellar".

With regard to postal communications there is apparently some good news, as from October HMRC will be introducing a series of PO Box addresses to ensure that taxpayers direct their letters to the relevant HMRC office and team.

According to Economia this will speed up the time HMRC takes to receive and respond to taxpayers' queries.

Seemingly the rationale for this, and the confidence that it will work, comes from the results of a pilot scheme HMRC launched in 2011 for self-assessment and PAYE customers. The pilot will now be extended to cover post relating to specialist personal tax, VAT, criminal investigations, specialist investigations, debt management and banking and local compliance.

The new addresses will start appearing on correspondence from HMRC next month.

As ever, comments and views are very welcome.

Tax does have to be taxing.



Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Taxwise.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

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"

Tuesday 25 September 2012

Tax Planning In Retirement



Now that Dave Hartnett has retired he can use his experience of HMRC and this country's complex tax affairs to help others.

My thanks to several loyal readers who pointed me to the fact that Dave spoke last Thursday in New College Oxford, at the gala dinner of the Key Haven Publications tax planning conference.

Unfortunately Dave's speech was interrupted when a group calling themselves WeAreTheIntruders, posing as employees of Goldman Sachs and Vodafone, presented him with a bouquet of flowers and the "Lifetime Achievement Award to Corporate Tax Planning", otherwise known as the "Golden Handshake".

A video of the scene has been made by the group. One diner is heard to say:
"You will depart immediately, before we set the dogs on you." 
Another a diner is heard calling the protesters "trespassing scum". 

All a tad puerile, as Hartnett retired from HMRC in July and is perfectly at liberty to attend and speak at whatever functions he wishes.

Tax does have to be taxing.



Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Taxwise.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

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"

Monday 24 September 2012

HMRC's Penalty Farming



As noted before on this site, the government is skint and HMRC is looking for ways to increase the tax take.

Accounting Web warn of an increase in zealotry by HMRC wrt its imposition of penalties for errors on tax returns.

AW notes that there is now suspicion in some quarters is, such are the pressures on HMRC to increase tax take, that HMRC are not accepting that genuine mistakes can and do in fact occur:
"Critics point to incorrect tax return cases where HMRC accepts that a taxpayer might have made an innocent error, but still contend that he or she has failed to take reasonable care before signing the tax return.  

In such cases, a penalty of up to 30% of the extra might potentially be charged.  

HMRC also argues that the concept of reasonable excuse (which in the past has typically applied to cases of death of serious illness of a relative or business partner) has no relevance to the new inaccuracy penalty regime."
Are we witnessing the establishment by HMRC of "penalty farming"?

Tax does have to be taxing.



Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise



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

Click the link to read about: Tax Investigation for Dummies

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

Friday 21 September 2012

How To Complain To HMRC

How to complain to HM Revenue & Customs
What to do if you disagree with an HMRC decision
Tax does have to be taxing.



Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Taxwise.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

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"

Thursday 20 September 2012

JJB Sports Under HMRC Investigation

JJB Sports, the retailer of choice for some of last year's rioters, is facing troubled times. It is currently under administration and now, according to the Telegraph, facing an investigation by HMRC.

HMRC are looking into allegations that the company wrongly charged VAT on children’s clothing, including Manchester United and Liverpool FC replica football kits. Tax is not applied to children's clothes.

These errors are understood to date back over a number of years to 2006.

In its annual report JJB Sports referred to a £5.3M provision associated with HMRC, relating to “a non-recurring matter which the group is currently discussing with HMRC”.

Given that the VAT should not have been charged, it seems unlikely that the £5.3M figure relates specifically to erroneous VAT on children's clothes.

However, if there is a VAT dispute with HMRC (relating to other matters) then it is possible that there is a "discussion" going on between HMRC and JJB over exactly what is owed to HMRC wrt VAT.

Tax does have to be taxing.



Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Taxwise.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

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"

Wednesday 19 September 2012

HMRC Goes Fishing



I see that HMRC seem to have gone on another of their little fishing trips, wrt using queries about possible errors on tax returns to find out financial information about the taxpayer and others (eg divorce settlements).

That at least is the view of the ICAEW Tax Faculty:
"We have received reports that HMRC is making informal enquiries which may amount to no more than thinly disguised fishing trips.

HMRC has staff working in Compliance Centres whose job is to make less formal enquiries, such as to query the amount of interest declared on a return where it does not agree with information in their possession. Robert Maas wrote about this in TAXline in May 2011.

Generally, we welcome this initiative as it can save a lot of time and expense in resolving simple enquiries. However, is HMRC over-stepping the mark and using this process as a convenient way to obtain information to which it would not normally be entitled? 

One example quoted to us is that of an enquiry being made into the return of a divorced woman to find out more about her divorce settlement and therefore her ex-husband.

Have you had similar experiences?"
In the event that you have had similar experiences please feel free to share here, and also let the Tax Faculty know.

Tax does have to be taxing.



Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Taxwise.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

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"

Tuesday 18 September 2012

Goal!!!!!


Goals Soccer Centres, a five-a-side football firm, has won an appeal against a tax ruling by HMRC.

In 2011 HMRC ruled that league block bookings were not exempt from VAT, this ruling negatively impacted Goals' tax bill.

However, having now won its appeal, the company (as per the BBC) is expecting to book an increase in pre tax profits for the current year of around £500K.

The Telegraph notes that ministers now have have 56 days to appeal to a higher tribunal. However, they may decide not to do so amid pressure from campaigners to drop the unpopular tax, which can see players having to pay an extra £1 each on top of the typical £4.50 cost of a game.

Tax does have to be taxing.



Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Taxwise.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

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"

Monday 17 September 2012

Power Corrupts

As loyal readers know, I have warned on many occasions on this site about giving too many powers to HMRC.

I am not alone in voicing fears over this issue.

The FT reports that in response to plans being drafted for curbing "artificial and abusive" avoidance schemes and a proposed advisory panel, which will give quick, non-binding opinions to HMRC and taxpayers about whether the Gaar should be invoked, John Overs, head of corporate tax at Berwin Leighton Paisner, said that the concept was “constitutionally unsound”:
"How much tax is due should ultimately be decided by parliament, whose intention is interpreted by the courts, not by HMRC and a group of unelected and unaccountable professionals who may have a professional interest in the matters they are asked to consider."
Quite!

Tax does have to be taxing.



Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Taxwise.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

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"

Friday 14 September 2012

HMRC Resort To Telling Porkies

Oh dear, it seems that some of HMRC's staff are so keen to raise tax revenue that they are resorting to telling porkies to taxpayers.

That at least is the conclusion to be drawn from this article on Tax Hell:
"I was approached by a reader who who was in a real fix with HMRC. I won’t give the details because it’s an ongoing case, but I can tell you that HMRC said they were going to take the investigation back over 19 years. 

Na-na-na-na-na 19! 

Well they just can’t do that and they were duly told so. 

Honestly those investigators at HMRC, they are so cheeky!"
It is not very "nice" of HMRC to tell porkies like that.

Evidently things must be becoming somewhat desperate in the HMRC bunker!

Tax does have to be taxing.



Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Taxwise.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

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"

Thursday 13 September 2012

The Malaise Within HMRC



Despite the ongoing spin operation by HMRC to puff up its reputation, the reality is far from rosy and happy.

Economia, the professional magazine of the ICAEW, has published an article outlining the problems facing HMRC and the malaise within the organisation.

Loyal readers will recognise many of the issues raised eg; moral, leadership, strikes, restructuring, Pacesetter etc etc.

I reproduce the aricle in full below:
Without a shadow of a doubt people will withdraw from work quite easily.” These are the words of warning from a front-line worker at HM Revenue Customs, making it quite clear that there could be future industrial acton if conditions at HMRC do not improve.
The insider’s comments come as HMRC staff and accountants monitor developments at the nation’s taxman, which is under orders from government to cut 10,000 jobs by 2015. 

Speaking to economia on condition of anonymity, the civil servant, a 20-year veteran at HMRC, made his points emphatically. The workforce is demoralised, feeling ill-served by recent reforms to pensions, terms and conditions and efforts to make them more efficient. Most of all, the taxman’s workforce, he said, is dejected by the dwindling head count of staff working at HMRC, the prospect of more cuts and their impact on the department’s work.

The travails for the Revenue have been making headlines in recent weeks, most of all when poor relations between workers and management broke down to such an extent that workers decided on industrial action. 

At the end of June members of the Public and Commercial Services (PCS) union voted 52% in favour of walk outs in opposition to the job cuts, which come on top of 30,000 positions that have been removed since 2005, the year the Inland Revenue was merged with Customs and Excise following the O’Donnell Review. 

Workers and the PCS union are also concerned about the introduction of private sector companies to take over some civil service functions. Pilot schemes were decided in January giving the chance for contractors Sitel and Teleperformance to run call centres in Lillyhall, Cumbria and Bathgate in Scotland. 

Concern for HMRC stretches from the union, and workers to accountants. Many feel that the job cuts are planned for a time when the HMRC is being asked to improve performance on beating tax avoidance and improving collection. 

Inside the department one of the main concerns among HMRC staff is that what they see as under resourcing leading to mistakes. 

“The pressure we’re under to hit targets and get post turned round leads to errors because we’re having to do it that fast,” says the insider. “The emphasis is placed on getting rid of the stuff whether it’s right or wrong.”

Contributing to the problem, according to the tax veteran, is HMRC’s working system know internally as Pacesetter. Staff have to work according to a script detailing which steps they must take to resolve a query. The system lays down targets and is viewed as being too rigid, excluding experienced staff from using their judgement even when it's possible that the script will produce a problematic answer. According to Ken Frost, an accountant who writes a blog called HMRC is Shite, Pacesetter is seen as “nonsense”. 

“It applies manufacturing principles to a civil service department with targets that are not related to the real work issues,” he says. 

The insider adds, “We want to see improvements to the system to make the whole process better for the tax payer. There’s got to be investment. I would like to see more staff, more money, better IT and better tax policy.” 

ICAEW technical manager for SME tax, Anita Monteith, questions whether frequent dramatic changes among tax staff have been handled well. 

"One of the issues I have with HMRC is that during each of the mergers we have had, they not only amalgamate two different kinds of tax but also two different cultures," she says. "Cultural change in a big organisation is very difficult to achieve. We have added significant redundancies so I am not sure how succesful they have been in taking their staff with them." 

Such is the sense of dejection among staff it has has made its way into official reports. Leaked documents made public last year revealed only 18% thought the department was well managed. An internal report obtained by the Sunday Herald in Scotland said employees felt their voices were not being heard. 

However, there is currently a lull in hostilities after the PCS decided at the end August to suspend any further action on job cuts. The decision came following an offer made by HMRC to reinvest in new staff and a commitment to make further bids for fresh investment. 

The deal is subject to further negotiation which means the prospect of future strike action has not entirely receded. Observers and commentators believe problems at HMRC go back to the merger and original job cuts. 

According to Frost, jobs were cut “wildly” and with little planning, meaning that considerable expertise was lost as highly skilled staff were allowed to opt for redundancy without much thought for the future of HMRC. 

“It’s easy to say cut resources in an economy drive, and to some extent it is a good thing. But HMRC is quite a particular kind of beast,” says Frost. 

Monteith agrees, saying, "I'm not sure that giving people a little bit of training on how to use a script is enough given the complexity of our tax system. 

"From what we have seen there has been a lot of poor training and a lot of poor service coming out."
She says the crucial difference is between having an idea to make the system more streamline and cheaper to operate, and making that happen with no thought for practicalities.

Other advisers see the same issues. According to Mike Warburton, tax director at Grant Thornton, it would have been politically difficult for HMRC to remain untouched when government had taken a cleaver to costs in all other departments. But he believes the cuts are causing problems.

The reductions have come when the government is asking HMRC to achieve many goals at once and when tax legislation is increasingly complex. “It’s unsurprising there have been difficulties,” he says.

Government has moved on some of the complaints. In August it announced fresh recruitment plans for call centres, agreeing to take on 1,000 extra workers. That made headlines. Others have questioned how long it will take before the new staff are on top of their work. 

George Bull, a partner at Baker Tilly, welcomes the recruitment, but says, “I reckon it will take 18 months before they are competent. They will be new to the job and not very experienced in dealing with queries.” 

Only a third of the posts will be appointed in the current financial year. But Bull sees a larger issue - the recruitment tackles the quantity of calls being answered. It does not necessarily address the “quality” of the response, he says.

There are other “quality” issues in the minds of advisers. Ken Frost casts doubt on the ability of outside contractors to uphold the standards of security and confidentiality required of HMRC hands.
He cites the notorious loss of two disks containing 25 million child benefit records, including names, addresses and bank account details in November 2007. The incident, which dominated news headlines at the time, placed enormous pressure on then chancellor Alistair Darling and forced the resignation of acting HMRC chairman Paul Gray. Frost’s point is that the farrago also involved a private contractor providing the internal mail service where the disk went missing. 

Security bothers Mike Warburton too. “I’m a great believer that the HMRC, through training at the outset, is very focused on security. I’m not sure I will feel confident that an outside body will have the same high standards of confidentiality.” 

Naturally, the arrival of private sector contractors has concerned existing HMRC employees worried that their jobs are threatened not just by cost cutting but a shift in approach.

But George Bull takes the personnel worries a step higher. He says recent recruitment ads for senior management reveal an organisation under paying for the best people, and in some confusion over the brief. Bull observes the job descriptions recognise the need for people to manage complex structures but fail to mention that this will need to done at a time of declining resources. 

Leadership is a crux issue for Ken Frost, who believes HMRC has failed to define a strategic direction and instead settles for a succession of short-term tactical changes. To resolve this requires political leadership. According to Frost, “There’s no cabinet minister saying "I’m the minister for HMRC" and until you get that you don’t get accountability.” 

HMRC told economia that it takes security “extremely seriously” and that third party contractors are always subject to the same “clauses and controls” that in-house staff abide by. 

The Revenue also says that it is fully committed to a “quality” service. In a statement, HMRC said, "The recently announced investment in HMRC contact centres is designed specifically to achieve a target of answering 90% of calls two years earlier than originally planned and is not intended to be a substitute for technical expertise.

“We have developmental programmes for staff across HMRC, such as the Tax Academy, which offers two degrees both fully accredited by Manchester Metropolitan University. We are also committed to staff spending time with tax agents such as accountants in order to gain a better understanding of the challenges our agent customers face in dealing with HMRC.”

HMRC also says it was granted £917m in the 2010 spending to tackle avoidance. According to the HMRC insider, this money will come from savings made elsewhere.

Meanwhile the nation’s taxman remains some way from settling down. Gloom continues to afflict many staff. “I can see no cause for optimism,” says the insider. “They’ve got to invest in public services. They can’t just cut.


Tax does have to be taxing.


Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Taxwise.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

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"

Wednesday 12 September 2012

Poll - Backdated Taxes



Tax does have to be taxing.



Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise



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

Click the link to read about: Tax Investigation for Dummies

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

Tuesday 11 September 2012

HMRC Admits To Mistakes



As loyal readers know, agents, taxpayers and HMRC are all human and do on occasions make mistakes.

As loyal readers also know, there has been much banter on this site about whether mistakes made are the fault of agents, taxpayers or HMRC. Without specific statistics it is not always straightforward or easy to apportion blame.

At last some statistics, courtesy of Pinsent Masons, have entered the public domain:

- More than 58,000 complaints were received by HMRC in the year ending March 2011
- HMRC upheld grievances, at least partially, in over 33,000 cases (57% of total objections).

The grievances submitted by individuals and small businesses ranged from poor treatment by HMRC staff, to delays and errors in the tax bill.

George Gillham, legal director at Pinsent Masons, is quoted by Accountancy Age:
"The number of cases where HMRC has admitted it got something wrong is remarkable. It suggests that if you make a complaint to HMRC, they'll probably decide you're right, at least in part.

Taxpayers don't always use the opportunities they have to challenge HMRC. It's important that people remember they can complain directly to HMRC if they feel unfairly treated or if they feel HMRC errors have forced them to incur financial costs."
The Mail notes that many of the complaints concern HMRC’s Debt Management Office (DMO), which chases taxpayers who deemed to owe money to HMRC.
The DMO does not judge whether HMRC is right to claim the money back, and some taxpayers have complained that it has pursued innocent people in a ‘heavy-handed’ manner.

Mr Gillham said:
"The DMO aren’t there to negotiate, so even if HMRC has made a mistake, the DMO won’t back off until it has what it’s been asked to retrieve or been informed of a mistake by HMRC.

It’s a very unpleasant and distressing experience."
An HMRC spokesman said:
"HMRC serves millions of people every year, and received just under 75,000 complaints in 2011/12 (Ken says: 'Just to remind you, the number of complains in 2010/11 was 58,000').

About 2 per cent of these complaints were investigated by the Adjudicator, indicating that we successfully resolve the vast majority of complaints we receive from customers.

HMRC takes complaints very seriously; we want people to be able to tell us when we make mistakes and our service falls short.

Complaints not only allow us to put things right for the individual but also tell us where we need to learn lessons and improve our services for all our customers.

We are making real improvements to our customer services, boosting staff in contact centres by 1000 (Ken says: 'We know that this is bollocks, as the staff are being taken from elsewhere') and turning around post faster than ever. Such improvements will reduce the level of complaints going forward."
Problem solved then!

Tax does have to be taxing.



Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise



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

Click the link to read about: Tax Investigation for Dummies

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

Monday 10 September 2012

HMRC Threaten Tax Avoiders

HMRC continue to push their anti avoidance mantra, with a threat to "customers" and "taxpayers" (even HMRC now seem to be confused as to what we are!) who use avoidance schemes.

The Telegraph quotes an HMRC spokesman:
"It is important that our customers know that if they choose to engage in tax avoidance we will be relentless in pursuing them. 

We will challenge tax avoidance and will take legal action against [tax avoidance] schemes whenever possible. Instead of the tax savings they hoped to achieve, people who use tax avoidance schemes run the risk of wasting money on fees for a scheme that does not work, and will have to spend time dealing with an in-depth investigation by us into their tax affairs. 

Taxpayers may find themselves being cross-examined before a tax tribunal and having their tax avoidance exposed to public scrutiny when the tribunal's decision is published.
Of course trying to understand what parliament's true intentions are is somewhat muddied by the incredibly complex tax system that we all have to endure.

Much of the time, trouble and expense incurred over "avoidance" by taxpayers and HMRC could be greatly reduced if the tax system were simplified.

That of course requires politicians to actually do something constructive, sadly that is something that is unlikely to occur in the foreseeable future!

Tax does have to be taxing.



Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise



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

Click the link to read about: Tax Investigation for Dummies

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

Friday 7 September 2012

The Joy of Retrospective Taxation



The Treasury, in its infinite "wisdom", has sought to clarify its stance on retrospective taxation in the light of queries raised by the Treasury Select Committee following retrospective taxes being raised on Barclays and new variations of stamp duty land tax (SDLT) which are retrospective.

The Treasury said (as per Step Journal):
"The government agrees that changes to tax legislation where the change is to have effect from a date earlier than the date of announcement should be restricted to wholly exceptional circumstances. The government has made a commitment to this effect in the Protocol on unscheduled announcements, published in ‘Tackling tax avoidance’ at Budget 2011. 

By observing the Protocol, the government aims to strike the right balance between the rights of taxpayers affected by the change and the interests of the generality of taxpayers. In doing so we ensure that our response to avoidance risk is proportionate and limited to what is necessary to address that risk. The Forum of Tax Professionals review announcements as a standing agenda item at its regular meetings and provide Ministers with a view on how the Protocol is being observed in practice."
All clear now?

Would anyone care to define what "wholly exceptional circumstances" might actually be?

Tax does have to be taxing.



Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise



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

Click the link to read about: Tax Investigation for Dummies

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

Thursday 6 September 2012

HMRC Webinar - Business Expenses For The Self Employed



HMRC will be hosting a webinar this afternoon (14:30-15:30) on Business Expenses For The Self Employed. It aims to:
"- show you what Business Expenses are
- give you a quick guide as to what commonly is & isn't allowable
- give you help on how to easily work out your motoring costs
- and much more!

There will also be the opportunity to ask the presenter questions.
"
Those wishing to participate need to register beforehand, via this link Business Expenses For The Self Employed.

Tax does have to be taxing.



Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise



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

Click the link to read about: Tax Investigation for Dummies

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

Wednesday 5 September 2012

HMRC Launches "Where's My Reply?"



Stung by criticism that its communications with taxpayers and their agents is shambolic and slow, HMRC have launched (with much fanfare) a tracking service called "Where's My Reply?".

In theory the service will enable taxpayers to:
"Find out when you can expect to get a reply from HM Revenue & Customs (HMRC) to a query or request you've made."
Can the eagle eyed amongst you spot the "catch" in the above?

Yes, that's right, the "tracking" system will not tell you when you WILL receive a reply but only when you can EXPECT to receive a reply; ie it is not a real time tracking system (in fact it isn't a tracking system at all).

Test the "tracker" via this link, and you will be given the following caveat:
"Please note: the date given is for the majority of enquiries and only a guide. It is not a measure of HMRC's performance."
There is also another "catch", the "tracker" is not available for all types of taxpayers. Only the following may use it:
"If you're an employee or you pay tax on a company pension through PAYE (Pay As You Earn - the system used by employers and pension providers to deduct tax from your wages or pension), you can use the tracker to check how long it will take HMRC to:
  • pay your Income Tax refund
  • reply to your general Income Tax enquiry
  • provide a copy of individual information, such as your tax code or pay and tax details
  • send you HMRC forms or stationery
If you're an agent, you can also check how long it will take HMRC to:
  • register you as an agent to use HMRC Online Services
  • process an application for authority to act on behalf of a client
  • amend your agent details"
Tough luck if you are not on the above list!

To reiterate, this is NOT a tracking service at all.

Tax does have to be taxing.



Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise



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

Click the link to read about: Tax Investigation for Dummies

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