HMRC's Bloated Tax Code: A Monument to Inefficiency

 

The HMRC tax code is a behemoth of bureaucratic complexity, estimated to contain around 10 million words. To put that into perspective, it’s 13 times longer than the Bible and 17 times longer than The Lord of the Rings Trilogy. This labyrinthine code, which includes taxes dating back to the 17th century, is a testament to the inefficiency and outdated practices that plague HMRC.

A Monumental Waste of Resources

Managing this colossal tax code requires an army of 65,000 staff, costing taxpayers over £6 billion a year. This is an astronomical sum that could be better spent on public services, infrastructure, or reducing the tax burden on citizens. Instead, it is funneled into maintaining a system that is hopelessly convoluted and inefficient.

Confusion and Frustration for Taxpayers

For the average taxpayer, navigating the HMRC tax code is a nightmare. The sheer volume of regulations and the complexity of the language used make it nearly impossible for individuals and businesses to understand their tax obligations without professional help. This confusion leads to mistakes, missed deadlines, and, ultimately, penalties that further burden taxpayers.

The Need for Modernisation

It is high time that HMRC modernises, simplifies, and digitizes its tax code. A streamlined, user-friendly system would not only reduce costs but also deliver better value to the public. By eliminating outdated taxes and consolidating regulations, HMRC could create a more efficient and transparent tax system that is easier to navigate and understand.

Conclusion

The current state of the HMRC tax code is a monument to inefficiency and bureaucratic bloat. It is a system that confuses taxpayers, wastes resources, and fails to deliver value. Modernizing and simplifying the tax code is not just a necessity; it is an urgent imperative. The government must take decisive action to overhaul this outdated system and create a tax code that is fit for the 21st century.

 The UK desperately needs its own DOGE!

Tax does have to be taxing.

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HMRC's Integrity in Tatters: The Case of the Crooked Compliance Officer

The recent revelation that a former HMRC compliance officer, Joanne Connell, has been handed a suspended sentence for her involvement in a £3.3 million money-laundering operation is a damning indictment of the organisation's internal controls and oversight. Connell, who used HMRC's systems to produce letters with fake national insurance numbers, has exposed a glaring vulnerability within one of the UK's most critical institutions.

A Breach of Trust

The fact that an HMRC employee, entrusted with the responsibility of ensuring compliance and integrity, could manipulate the system for personal gain is a shocking breach of trust. This incident not only undermines public confidence in HMRC but also raises serious questions about the effectiveness of its governance and accountability mechanisms.

Inadequate Oversight

One of the most glaring issues highlighted by this case is the lack of adequate oversight within HMRC. How was it possible for an employee to produce fake national insurance numbers and facilitate a multi-million-pound money-laundering operation without detection? This points to serious flaws in the organization's internal controls and monitoring processes. It is imperative that HMRC conducts a thorough review of its procedures to prevent similar incidents in the future.

Impact on Public Finances

The financial impact of this fraud is significant. The £3.3 million laundered through this scheme represents a substantial loss to the public purse. At a time when the government is grappling with budget constraints and the need for fiscal prudence, such incidents of fraud are particularly damaging. The public deserves assurance that their hard-earned money is being managed responsibly and that those entrusted with its stewardship are held to account.

A Call for Accountability

This case should serve as a wake-up call for HMRC to tighten its internal controls and ensure that all employees adhere to the highest ethical standards. It is not enough to simply prosecute the individual involved; there must be a comprehensive overhaul of the systems and processes that allowed this fraud to occur. Only through rigorous oversight and accountability can HMRC restore public trust and demonstrate its commitment to safeguarding taxpayer funds.

In conclusion, the case of Joanne Connell is a stark reminder of the vulnerabilities within HMRC's operations. It is essential that the organization takes immediate and decisive action to address these weaknesses and prevent future breaches of trust. The public deserves nothing less than complete transparency and accountability from those tasked with managing their taxes.

Tax does have to be taxing.

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HMRC Staff Member Embezzled £200K

The recent revelation that Joanne Connell, a long-serving HMRC employee, embezzled £200,000 of taxpayers' money to pay off personal debts and her mortgage is a damning indictment of the organisation's internal controls and oversight. Connell, who worked for HMRC in East Kilbride, Lanarkshire for 15 years, managed to siphon off a substantial amount of public funds, raising serious questions about the effectiveness of HMRC's governance and accountability mechanisms.

A Breach of Trust

The fact that Connell was able to carry out this fraudulent activity over an extended period highlights a significant breach of trust. HMRC, as the body responsible for collecting taxes and ensuring compliance, is expected to uphold the highest standards of integrity and transparency. This incident not only undermines public confidence in HMRC but also casts a shadow over the entire tax collection system.

Inadequate Oversight

One of the most glaring issues exposed by this case is the lack of adequate oversight within HMRC. How was it possible for an employee to divert such a large sum of money without detection? This points to serious flaws in the organisation's internal controls and monitoring processes. It is imperative that HMRC conducts a thorough review of its procedures to prevent similar incidents in the future.

Impact on Public Finances

The theft of £200,000 is not just a financial loss; it represents a misuse of funds that could have been allocated to essential public services. At a time when the government is grappling with budget constraints and the need for fiscal prudence, such incidents of fraud are particularly damaging. The public deserves assurance that their hard-earned money is being managed responsibly and that those entrusted with its stewardship are held to account.

A Call for Accountability

This case should serve as a wake-up call for HMRC to tighten its internal controls and ensure that all employees adhere to the highest ethical standards. It is not enough to simply prosecute the individual involved; there must be a comprehensive overhaul of the systems and processes that allowed this fraud to occur. Only through rigorous oversight and accountability can HMRC restore public trust and demonstrate its commitment to safeguarding taxpayer funds.

In conclusion, the case of Joanne Connell is a stark reminder of the vulnerabilities within HMRC's operations. It is essential that the organisation takes immediate and decisive action to address these weaknesses and prevent future breaches of trust. The public deserves nothing less than complete transparency and accountability from those tasked with managing their taxes.

Tax does have to be taxing.

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Golden Age of Money Laundering is Over!

 

Golden age of money laundering is over, says Lammy. Pretty sure anyone looking at any U.K. high st would disagree.

— Merryn Somerset Webb (@MerrynSW) November 22, 2024

Feel free to comment!

Tax does have to be taxing.

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HMRC Puts Loan Charge Settlements on Hold

 

In a significant development, HMRC has announced that it will put Loan Charge settlements "on pause" by request until the conclusion of an independent review. This decision comes in response to mounting concerns about the detrimental impact of the Loan Charge on individuals' health and finances.

The Damaging Impact of the Loan Charge

The Loan Charge, introduced to tackle disguised remuneration tax avoidance schemes, has been widely criticised for its severe consequences on affected individuals. Many have reported significant financial strain, with some facing insurmountable tax bills that have led to bankruptcy and severe mental health issues. The stress and anxiety caused by the financial burden have been linked to cases of depression and even suicide.

Financial Hardship and Health Crisis

The financial hardship imposed by the Loan Charge has been profound. Individuals who were caught up in these tax avoidance schemes have found themselves facing retrospective tax bills that they are unable to pay. This has resulted in a cascade of financial problems, including the loss of homes, savings, and livelihoods. The mental health impact has been equally devastating, with many individuals experiencing severe stress, anxiety, and depression as they struggle to navigate the complex and often unyielding tax system.

The Independent Review and Its Implications

The independent review, commissioned by the government, aims to address these concerns and ensure fairness for all taxpayers. By pausing settlements, HMRC is acknowledging the need for a thorough examination of the Loan Charge's impact and the potential for reform. This review is seen as a crucial step towards rectifying the injustices faced by those affected and preventing further harm.

Conclusion

The decision to pause Loan Charge settlements is a welcome development for those who have been adversely affected by this policy. It provides a temporary reprieve and an opportunity for a more comprehensive review of the Loan Charge's impact on individuals' health and finances. The hope is that this review will lead to meaningful changes that will prevent such severe consequences in the future.

The pause also affords HMRC a break from negative publicity.

Tax does have to be taxing.

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Robert Venables KC: A Prominent Tax Lawyer Facing Tax Evasion Charges

In a surprising turn of events, Robert Venables KC, a distinguished tax barrister and senior member of Old Square Tax Chambers, is currently facing prosecution by HM Revenue and Customs (HMRC) for allegedly evading tax over a period of nine years. This case has garnered significant attention, not only because of Venables' esteemed reputation in the legal community but also due to the serious nature of the charges.

Background and Career

Robert Venables KC has had a long and illustrious career in tax law. Called to the Bar in 1973, he was appointed as a Queen's Counsel (now King's Counsel) in 1990. Venables has authored several books on tax law, particularly focusing on offshore and inheritance tax issues. He has also served as the chairman of the Revenue Bar Association and is a council member of the Chartered Institute of Taxation.

The Charges

Venables is facing two counts of "cheating the public revenue," a criminal offense that involves dishonestly evading tax. The charges relate to his personal tax returns for two distinct periods: from 2013 to 2022 and from 2018 to 2022. This is believed to be the first case of its kind involving a King's Counsel.

Venables' Response

In response to the charges, Venables has vehemently denied any wrongdoing. Through a statement issued by his chambers, he expressed confidence that he has paid all tax lawfully due and emphasized that the charges pertain solely to his personal tax position, not to any of his clients. Despite the serious nature of the allegations, Venables continues to practice and has the full support of his chambers.

Implications and Reactions

The prosecution of a high-profile barrister like Venables raises critical questions about ethics and integrity within the legal profession. It underscores the importance of legal professionals maintaining the highest standards of compliance and transparency in their personal tax affairs. The legal community is closely watching the case, as its outcome could set a precedent for how similar cases are handled in the future.

Conclusion

As the legal proceedings unfold, the case against Robert Venables KC will undoubtedly have far-reaching implications. It serves as a reminder of the complex interplay between legal expertise and personal responsibility. The legal profession is founded on trust, and incidents like this challenge that foundation. Venables' assertions of compliance with tax laws will be tested in court, and the legal community, along with the public, will be watching closely.

The next hearing is set for 11 May 2025.

Tax does have to be taxing.

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HMRC Spunks £490K Up The Wall on Jets and Taxis in Two Months

 

The recent revelations about HMRC’s lavish spending on plane travel and private taxis are nothing short of scandalous. In July and August alone, HMRC splurged a staggering £490,700 on plane travel. Despite their claims that “the most cost-effective means of travel is always considered prior to bookings of this nature,” this expenditure is a blatant misuse of taxpayer money.

Adding insult to injury, HMRC has also been racking up a £65,703 tab on private taxis since July, costing taxpayers about £6,000 a week. This extravagant spending on private transport is a clear indication that HMRC believes public transport is beneath them. While ordinary citizens are encouraged to use public transport to save costs and reduce environmental impact, HMRC officials seem to think they are above such considerations.

A Double Standard

The hypocrisy is glaring. HMRC’s spending habits reveal a double standard where public transport is deemed suitable for the general public but not for the tax officials themselves. This “public transport is for thee, not for me” attitude is a slap in the face to hardworking taxpayers who fund these luxuries.

Financial Mismanagement

This level of financial mismanagement is unacceptable. At a time when the country is grappling with economic challenges, every penny of taxpayer money should be spent wisely. Instead, HMRC’s reckless spending on plane travel and private taxis shows a complete disregard for fiscal responsibility.

A Call for Accountability

HMRC must be held accountable for this wasteful expenditure. The public deserves transparency and assurance that their money is being used efficiently and effectively. It’s time for HMRC to justify these expenses and take immediate steps to curb such extravagant spending.

In conclusion, HMRC’s excessive spending on plane travel and private taxis is a stark reminder of the need for greater oversight and accountability in public sector spending. Taxpayers deserve better than to see their hard-earned money squandered on unnecessary luxuries.

Tax does have to be taxing.

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HMRC Community Noted For NI Lie on Twitter

 

HMRC recently tweeted a blatant lie about NI payments being a forward payment for the state pension. 

Unsurprisingly HMRC was duly slagged off by all and sundry, and also received a Community Note for their troubles.

Suffice to say, HMRC were forced to delete the tweet!

Tax does have to be taxing.

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Reeves Charges Taxpayers To Complete Her Tax Returns

 

Reeves has charged the taxpayers £1225 to complete her tax returns from 2014 to 2022.

Now if only tax wasn't so complicated, an ex tea lady from the Bank of England wouldn't need to pay an accountant and then charge taxpayers to do this!

Tax does have to be taxing.

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Back To The Future - Back To Paper With HMRC

HMRC is changing the way employees can claim PAYE employment expenses, by going back to paper submissions through the post to reduce fraud 

From 14 October 2024, HMRC will require employees to claim PAYE employment expenses using a P87 form and provide supporting evidence to prove their eligibility before the claim is progressed.

Employees can claim this tax relief through PAYE if the amount claimed is up to £2,500. 

In a bid to crack down on fraudulent claims, HMRC is tightening the rules, requiring claims to be made by post on paper forms with supporting evidence.

Under the new process, HMRC will require employees who want to claim PAYE employment expenses to use a P87 form and provide supporting evidence to prove their eligibility for a claim. 

HMRC is currently writing to claimants (including agents and accountancy firms), whose claims have not been processed since 10 June when the system was halted, to inform them of this new requirement and to ask them to provide evidence to support their claim.

From 12 October, claimants will no longer be able to submit a PAYE employment expense claim using the digital form or make a new claim over the phone.

This approach quite clearly runs counter to HMRC’s digital ambitions. Given the theoretical risk of fraud from online claims, it makes you wonder what other security flaws are in other parts of HMRC's digital systems!

ax does have to be taxing.

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Loan Charge Five Years On - #WorldMentalHealthDay

Today is #WorldMentalHealthDay
Exactly 5 years ago today we went to see Sir Amyas Morse about the #loancharge and I explained to him the impact on a persons mental health & the very real risk of suicide. When will HMRC be held to account? https://t.co/woZXeAzgyS

— Gordon Berry (@wealthagent) October 10, 2024

Tax does have to be taxing.

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Bracken's Appointment To HMRC Smacks of Cronyism

The appointment of Mike Bracken (the founder of GDS) as a non-executive director at HMRC is nothing short of scandalous. This decision not only raises serious concerns about potential conflicts of interest but also undermines public confidence in HMRC’s supposed impartiality.

Bracken’s recent £100,000 donation to the Labour party casts a shadow over his appointment. It begs the question: is HMRC prioritising political allegiances over genuine expertise and qualifications? 

This move reeks of cronyism, and sends a clear message that money and connections trump merit in the public sector.

While Bracken’s background with the Government Digital Service is notable, it does not excuse the glaring ethical issues surrounding his appointment. The public deserves transparency and accountability in government appointments, and this decision falls woefully short.

HMRC must address these valid concerns head-on and prove that public sector appointments are not for sale to the highest bidder. Until then, the integrity and trust in HMRC remain deeply compromised.

Tax does have to be taxing.

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Jim Harra To Retire From HMRC

The head of HMRC Sir Jim Harra is going to step down as chief executive after 40 years working at the tax authority

He has confirmed that he will retire from the Civil Service in April 2025. He extended his term by six months from the usual five-year tenure, to lead HMRC through the general election and the following months.

Harra said in a LinkedIn post: ‘I am due to complete my tenure as first permanent secretary/chief executive in the spring, when I will be retiring from HMRC and the Civil Service.

‘The recruitment exercise to find my successor is now under way. If you have the right skills and experience, please consider applying – it’s a fascinating and rewarding role with national impact, for candidates of the right calibre.’

Harra has been chief executive and first permanent secretary at HMRC since 2019. He originally took the post on an interim basis in January 2018 after replacing Sir Jon Thompson when he left the Civil Service to head up the Financial Reporting Council (FRC).

Harra has led the organisation during a turbulent time with the budget under pressure and increasing criticism about a deterioration in customer service. Cost cutting saw a move to slash telephone helplines earlier this year, but the decision was overturned in days due to an outcry from professional bodies and the then chancellor Jeremy Hunt.

‘I have been exceptionally proud to work in HMRC for over 40 years and to lead the Department since I was appointed to this role in October 2019,’ said Harra.  

‘I’ve always been incredibly proud of the work we do to improve the lives of others right across the UK, supporting taxpayers and collecting the money which pays for vital public services. 

‘I will continue to focus in the coming six months to deliver the government’s priorities and our vision of a modern, trusted tax and customs authority.’

Harra has been at the tax authority for 40 years, having begun his career in the Inland Revenue as an inspector of taxes in 1984. In January 2009, he was appointed director of corporation tax and VAT, responsible for optimising the design and delivery of these business taxes. He became director of personal tax customer operations in March 2011, and director of personal tax operations in October 2011. He was appointed director general for business tax in April 2012.

Continuing his upward trajectory, he later was appointed tax assurance commissioner and director general customer strategy and tax design.

In July, Harra was knighted in the King’s birthday honours list.

At the time, Harra said: ‘I have always been incredibly proud of the work HMRC does to support UK taxpayers and to collect the money which pays for vital public services.

‘This recognition is very much a result of the collective hard work of everyone at HMRC – and I am truly honoured to receive it, in what is my 40th year anniversary with the department.’

The job is advertised on Civil Service Jobs with a salary of £185,000 to £200,000, and a civil service pension with an employer contribution of 28.97%. The closing date for applications is 22 October. The chief executive reports directly to the Cabinet Secretary.

Tax does have to be taxing.

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FreeGearKeir's £48K Freebie Tax Liability

In a political landscape where transparency and accountability are paramount, Starmer finds himself embroiled in a controversy that raises serious questions about his integrity and commitment to fairness. The revelation that Starmer has accepted £107,000 worth of gifts since 2019, and is allegedly exempt from paying £48,000 in taxes on these freebies, is nothing short of scandalous.

A Leader's Double Standards

Starmer, who has often positioned himself as a champion of ethical governance, now faces accusations of hypocrisy. The Labour leader's acceptance of gifts, including football tickets, luxury clothing, and accommodation, starkly contrasts with his public stance on financial propriety. This discrepancy between his words and actions undermines the trust of the electorate and casts a shadow over his leadership.

The Tax Exemption Controversy

Accountants have pointed out that there is no explicit rule exempting politicians from paying taxes on gifts. Yet, HM Revenue & Customs (HMRC) appears to have allowed such exemptions in practice. This preferential treatment is particularly galling when compared to the stringent tax regulations imposed on ordinary citizens and media personalities, who are required to pay taxes on similar gifts.

A Question of Fairness

The issue here is not just about the monetary value of the gifts but the principle of fairness. If Starmer, as a public servant, can receive substantial gifts without facing the same tax obligations as the average taxpayer, it sets a dangerous precedent. It suggests that those in power can operate under a different set of rules, eroding public confidence in the political system.

The Need for Accountability

Starmer's attempt to mitigate the backlash by paying back £6,000 worth of gifts falls woefully short of addressing the core issue. Taxpayers deserve a full accounting of all gifts received and a clear explanation of why these were not subjected to the same tax scrutiny as other forms of income.


Tax does have to be taxing.

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Media Enquiry Re Loan Charge

 

Looking to speak to loan charge victims who've been charged inheritance tax for a story in the Telegraph. Get in touch at charlotte.gifford@telegraph.co.uk #loancharge #loanchargescandal

— Charlotte Gifford (@charlotte_giff) September 30, 2024

Tax does have to be taxing.

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798 Years On Hold!

 

A highly critical National Audit Office report in May found taxpayers had spent a cumulative 798 years on hold to speak with call-centre staff in 12 months and were being "let down" by poor service levels.

Reeves has decided to appoint exchequer secretary to the Treasury James Murray as chair of HM Revenue and Customs’ board to “strengthen political accountability and delivery” – marking the first time the board has ever been chaired by a minister.

I doubt that this will make any difference.

As I have stated many times before, HMRC needs a member of the cabinet to be solely responsible for its activities.

Tax does have to be taxing.

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The Road To Ruin is Paved With Good Intentions - Labour's Non-Dom Taxation Farce

Starmer has promised a tax crackdown on non-domiciled individuals (non-doms), aiming to funnel more money into public services like schools and hospitals. However, recent reports suggest that this plan might backfire spectacularly, potentially leaving a £1 billion hole in the Treasury's budget.

The Non-Dom Dilemma

Non-doms are individuals who reside in the UK but claim their permanent home (domicile) is outside the country. This status allows them to avoid paying UK tax on foreign income, provided it isn't brought into the UK. Labour's plan to abolish this status is intended to close what they see as a loophole exploited by the wealthy to dodge taxes.

The Financial Fallout

Despite the "noble" intentions, experts and officials are raising alarms about the potential fallout. Treasury officials fear that the crackdown could actually reduce tax revenues rather than increase them. The reasoning is straightforward: non-doms contribute significantly to the UK economy, not just through taxes but also through investments and spending. Stripping them of their tax advantages will prompt an exodus of these high-net-worth individuals, taking their money and investments with them.

A £1 Billion Shortfall

The most alarming aspect of this plan is the projected £1 billion shortfall in the government's budget for essential services. This gap could severely impact funding for schools and hospitals, undermining the very public services Labour aims to support. The Office for Budget Responsibility (OBR) has expressed concerns that the plan could end up costing the government money, rather than generating the expected windfall.

Unintended Consequences

The exodus of non-doms will have broader economic repercussions. These individuals often invest in UK businesses, real estate, and other ventures, contributing to job creation and economic growth. Their departure will lead to a contraction in these areas, further exacerbating the economic impact.

Conclusion

While the idea of taxing the wealthy more heavily is popular with socialist dreamers, Labour's non-dom taxation plan appears to be fraught with risks and unintended consequences. The potential £1 billion shortfall in funding for critical public services like schools and hospitals is a stark reminder that well-intentioned policies often lead to disastrous outcomes. It is crucial to consider the broader economic implications and ensure that any tax reforms are both fair and fiscally responsible.

Tax does have to be taxing.

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£50M Bung Helps HMRC's Call Centre Improvement - A Bit!

 

HM Revenue and Customs appears to have begun the tortuous process of improving its handling of telephone enquiries in July – two months after government approved a £50m-plus investment to support service improvements.

In recent months, performance has been falling, seemingly bottoming out in the first month of the new fiscal year, with a rate of just 53.5% in April. This has clawed its way back up to an underwhelming 60.4% and 59.5% in May and June, respectively.

HMRC’s newly published customer-service statistics for July show another imporvement to 66.9%. This figure is now ahead of the average for the whole of last year – but remains 18 percentage points below departmental targets (85%). The department received about 3.1 million calls during the month, the statistics reveal.

Tax does have to be taxing.

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Free Gear Keir's Tax Dilemma

 

Feel free to comment.

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LITRG Warns Online Sellers To Be Prepared For Chaos

 

As from January 2025 online selling platforms (eg Vinted, Deliveroo, eBay etc) will have to provide HMRC with information about the income of their sellers.

The Low Incomes tax Reform Group (LITRG) warns that HMRC has failed to do enough to make sellers aware of the fact they may need to file a tax return and pay tax on their online trading income. 

Although there is no change to existing tax rules, HMRC will have more information on who is earning income using online platforms and therefore may be more likely to find out who owes tax on their earnings.

Online Platforms – the changing landscape for the self-employed, argues that the new reporting rules – which caused widespread confusion when they took effect from January 2024 and fuelled the misconception that a new ‘side-hustle’ tax had been introduced – could cause chaos for taxpayers when the first reports are sent to HMRC and sellers in the New Year.

LITRG’s concerns include:

• Sellers receiving information on their activities from platforms based on a calendar year of activity, not by tax year, making it harder to understand and calculate when tax may be due.
• The lack of a standard reporting format, meaning sellers could receive different forms from different online platforms.
• Reports being produced during one of HMRC’s busiest times of the year, when it can be hardest to access help. LITRG is concerned that sellers could ignore the information, creating problems further down the line.

According to HMRC’s own impact assessment, up to 5 million ‘businesses who provide their services via digital platforms’ – including the self-employed – could be affected by these new reporting rules.

LITRG is calling on HMRC to strengthen its guidance for those using online platforms. It wants to see the information HMRC and sellers receive standardised across platforms so users can easily understand it and report their earnings by tax year.

LITRG is also concerned that the exercise will uncover widespread non-compliance, especially when the reports are fully rolled out. LITRG argues that HMRC should take a ‘measured’ approach towards dealing with instances of non-compliance. While such problems may be widespread, the actual amounts of tax due may be small and in some cases, uneconomical to recover.

Claire Thackaberry, LITRG Technical Officer, said:            

“There are just over three months to go until HMRC starts getting information about the income and activities of people who use online platforms to make money. We are concerned that we will see the same chaos and confusion that arose when the rules first came into effect.

Time is running out for HMRC to defuse this ticking time bomb.

The information that HMRC will receive from platforms will be presented by calendar year, therefore covering more than one tax year. This could make it more difficult to work out when tax is due. Many people will turn to HMRC for help. However, January is an extremely busy time for HMRC ahead of the self-assessment tax return deadline and this will make it harder to speak with someone.

Our concern is that people will either do nothing with the information they have been given or use it incorrectly, storing up problems for the future. HMRC needs to work with platforms and sellers to make this information as clear and easy to digest as possible so that people can comply with their tax responsibilities.

It is in no one’s interest for sellers to be non-compliant. Failing to pay the tax that is due threatens livelihoods and can impact HMRC’s ‘tax gap’, which is the difference between the amount HMRC expects to raise and the amount it actually gets.”

I predict chaos!

Tax does have to be taxing.

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HMRC Screws Up Student Loan Repayments

 

It seems that thousands of graduates are paying over the odds on their student loan repayments due to an HMRC.

An estimated 16,000 student loan holders have been overcharged by hundreds of pounds because of an issue that was first identified by HM Revenue and Customs (HMRC) last September, but remains unresolved a year later.

The problem affects student loan holders who pay taxes through self-assessment and receive benefits in kind from their employer, such as private medical insurance or a company car.

It arises because HMRC’s self assessment incorrectly includes these payrolled benefits in kind when working out the taxpayers’ student loan deductions. This results in the taxpayer overpaying by potentially hundreds of pounds.

The tax office says on its website: 

"Currently, our self assessment system is not able to tell the difference between these payrolled benefits in kind and the rest of the PAYE income. As a result, these are included in the student loan and postgraduate repayments calculations.”

Paul Slokan, of accountancy firm RSM, said: 

“As more employers have moved to payrolling benefits, it has become apparent that there is an issue in the self assessment system for those with student and postgraduate loans. Loan deductions are not due on payrolled benefits in kind that are not subject to Class 1 National Insurance.

As a result, a graduate earning £50,000 could be overcharged about £600 in one year,”

If a worker on £50,000 has a company car benefit worth £5,000 and private medical insurance of £1,500, then the student loan deductions should still be based on their salary of £50,000. However, in this example, HMRC’s self-assessment system would assume the graduate had an income of £56,500.

The majority of student loans have a repayment rate of 9pc. So a graduate earning £50,000 could overpay by £585, according to RSM’s calculations. HMRC said the median overpayment is £44.

HMRC has provided guidance on a temporary workaround on its website until it resolves the issue.

Mr Slokan added: 

"HMRC has provided a ‘temporary’ workaround on its website, but this relies on the taxpayer being aware of the issue in the first place which is unlikely to be the case for unrepresented taxpayers.

Twelve months seems to be a reasonable amount of time for HMRC to find a permanent fix to the problem.”

The rising popularity of side hustles means that many employees now file for self-assessment as well as being taxed through PAYE.

An HMRC spokesman said:

"We’ve written to those affected to apologise, offer a refund and provide a temporary solution so no-one is left out of pocket.  

A permanent solution will take effect from April 2025.”

A snail's pace!

Tax does have to be taxing.

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HMRC's Misconduct Issue

 

Dismissals for gross misconduct at HM Revenue and Customs (HMRC) are at a five-year-high, data reveals.

So far this year, 179 tax office workers have been sacked for serious breaches of workplace conduct, an increase of 43pc since 2020.

This is the highest number in at least five years, according to figures obtained by The Telegraph in a freedom of information request.

Gross misconduct is behaviour so serious that it can warrant instant dismissal.

Examples include bullying, theft, intoxication, damage to company property, gross negligence or other behaviours that could harm the organisation.

At HMRC, it could include the unlawful disclosure of sensitive taxpayer information or fraud undertaken using company systems.

Earlier this year, a tax office worker was jailed for two years and four months after abusing her role to defraud the taxpayer out of £300,000 in child benefit.

Tracy Ashbridge falsely claimed three of her children were disabled and also submitted false tax credit claims for another 15 children. She used details from her work computer system of members of the public to facilitate some of the frauds.

The 179 workers fired for gross misconduct in 2024 made up over half of all 321 dismissals at HMRC, which employs over 65,000 staff. But in 2020, only 28pc (125) of all dismissals (441) were for gross misconduct.

An HMRC spokesman said:

 “All large organisations will face occasional issues with staff behaviour, and we take all allegations seriously to ensure we work in an inclusive environment that is friendly, tolerant and respectful.

All our employees must ensure they follow our code of conduct alongside the civil service code, with breaches looked into and if necessary investigated, potentially resulting in dismissal.”

Meanwhile...

Tax does have to be taxing.

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