Move Over Darling II

As predicted, HMRC have issued a revised version of "Darling's bankers' bonus tax".

Sneaking it out late last Friday, thus trying to minimise their humiliation, HMRC said:

"The bank payroll tax announced at PBR 2009 applies to retail and investment banks (including building societies), and to banking groups. It does not apply to non-banking companies outside of banking groups (for example, insurance companies, asset managers, stockbrokers etc.)."

Doubtless this clarification will have greatly reassured those who try to do business in the UK that our tax laws are well thought through, and professionally drafted.

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"

Move Over Darling

As I predicted, Brown's and Darling's plans for a bankers' bonus tax (levied to divert attention from the 1% rise in National Insurance) is rapidly falling apart.

Both HMRC and the Treasury have been forced to admit that that the draft legislation on bank bonuses is poorly written, and will have to be revised in the New Year.

It seems, as ever with Labour's shoddy legislative drafting, that the net for this tax could be drawn very wide indeed (eg more than just "bankers").

HMRC are stressing that asset management firms (including those owned by banks), hedge funds, investment advisers, private equity and family offices would not be hit by the tax.

However, no one believes them!

Do you?

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"

Thought For The Day

Good luck to HMRC in trying to levy a "bankers' bonus tax", in the event that Darling implements one in his "Pre Budget Report" today.

Disregarding the fact that taxing one specific "class" of worker is contrary to the concept of taxes being non discriminatory, the tax will be unworkable:

1 There will be a wholesale exodus of banks, other financial institutions and individuals from the UK.

2 What is the definition of a "banker"? Those who currently fall into Darling's definition of "banker" will simply have their employment status/title changed, to eg "admin clerk".

3 Pay rises will be backdated to mop up the bonus pool.

The tax will be shot to pieces, and HMRC will be forced to waste valuable time and resources trying to "pin a tail on the donkey" of the bankers.

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"

Lessons In Morality From Nu Labour

I see that Stephen Timms is making it very clear in all orifices of the media that in his, and the government's view, tax avoidance is immoral.

Using emotive words such as "rob" and "cheat" to describe tax avoiders, thus implying that tax avoidance is illegal, he signalled that Labour will now be going on the offensive over this issue.

Here are a few thoughts on the matter:

1 It is perfectly reasonable, sensible, moral and pragmatic to do your utmost to reduce your tax liability legally. Tax avoidance is a legal way to reduce tax liabilities (whether it be a complex scheme devised by lawyers/accountants, or simply using an ISA).

2 Tax avoidance is not an issue of morality.

3 During the years of plenty, Labour chose not to close the so called tax avoidance "loopholes" that they are now screaming about. Why did they sit on their hands then, if this is such an important issue?

3 This is merely a way for Labour to pass the blame, and take the heat off their own economic mismanagement, onto others for the fact that the country is now bankrupt.

During the years "of plenty" Brown had the chance to build up some reserves that could have eased the pain now. He chose instead to "spend, spend, spend", leaving nothing for the "rainy day". To try to blame tax avoiders for this failure in economic management is hypocritical.

4 MPs are not in a position to lecture the rest of the population on the subject of "morality", given their own "shortcomings" in this area (eg house flipping -Darling has flipped his four times in four years to make the most of his allowances, tax evasion, claiming the full cost of mortgage payments etc).

5 Labour is happy to consort and cavort with tax avoiders, eg it gave tax exile Philip Green a knighthood, surely he is an "immoral" person by their definition?

6 Many of the tax havens that Labour are so angst ridden over are actually still part of the rump of empire, as such we do have more than a little influence over them. Shouldn't they have tackled this issue many years ago, if it really is of such importance?

7 Tax avoiders have not bankrupted Britain. Brown's bankrupt Britain is entirely of his own making. No matter what extra tax Labour think they will be able to derive from their new found "moral crusade", it will be a drop in the ocean wrt balancing the books.

8 Lloyds the government funded bank offers tax avoidance advice to its clients.

Lessons in morality should not be delivered by hypocrites.

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"

Size Matters!

Congratulations to our "respected" Labour administration, they have laboured hard over the last 12 years to create a tax system that is truly record breaking.

Something to be proud of!

LexisNexis report that the 2009 edition of its tax guide, Tolley's Yellow Tax Handbook, contains a stonking 11,520 pages; twelve years ago it was a "mere" 4,998 pages.

It doesn't take a genius, or even a politician, to work out that despite claims by some in the Treasury and HMRC that strives are being made to simplify the tax system, the reality is quite simply the reverse.

The UK now has the longest tax code in the world.

Well done Brown and Darling!

As I have noted many times before, Brown doesn't do "simple". Until he and his party are kicked out of orifice, things will only become ever more complex and unwieldy.

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"

An "Exaggeration"

The BBC report that the Chancellor is expecting a windfall of £1BN in tax, being monies that should have been paid by those who have tried to evade tax by holdings secreted in Liechtenstein.

HMRC struck an agreement last month with Liechtenstein to exchange information.

The theory is that up to 5,000 British investors are thought to have funds in secret accounts in the country, this could mean an average pay-back of £200,000.

All very well, but the agreement between HMRC and Liechtenstein states:

"TIEA (Tax Information Exchange Agreement) goals and protections: The TIEA provides a number of protections designed to assure that exchange of information does not compromise the considerable privacy rights accorded to persons making use of the Liechtenstein financial centre.

Protection of existing clients:

The Liechtenstein Government has the right to decline a TIEA request for information for clients who have Liechtenstein accounts or Liechtenstein company or fiduciary structures as of 11 August 2009 (the date of signing of the TIEA).

o Purpose: This protection is designed to permit existing clients who are persons
connected to the UK for tax purposes to take the time necessary in order

(a) to consider carefully their particular factual situation and the substantial attractions of the unique and favourable disclosure facility negotiated between the Liechtenstein Government and HMRC and

(b) to obtain proper advice on the best approach for the specific client to addressing any tax irregularities.

o Criminal exception: This protection will not apply in cases that relate to a criminal tax matter in respect of which the requesting party has formally commenced a criminal investigation (as defined in the TIEA).

o Exit requirement: For those existing clients who decide to close their
Liechtenstein accounts and transfer out, liquidate or terminate their Liechtenstein
companies or fiduciary structures before April 2015, this possibility of protection
by the Liechtenstein Government of their information continues indefinitely in the
future....

Protection against retroactive application: Where neither of the protections above
applies, the information exchange is still limited to taxable periods that begin in 2010 in respect of criminal tax matters or after March 2010 for all other matters."

This means, to my reading anyway, that a determined tax evader can close his/her account and move it to another tax haven safe in the knowldege that the agreement with Liechtenstein guarantees confidentiality.

What about the fact that tax evasion is a criminal act?

HMRC will have to have commenced a criminal investigation:

"Criminal exception: This protection will not apply in cases that relate to a criminal tax matter in respect of which the requesting party has “formally commenced a criminal investigation” (as defined in the TIEA)."

Does HMRC really have the resources to start criminal investigations into the alleged 5,000 tax evaders sitting in Liechtenstein?

I doubt it.

The £1BN is most assuredly an "exaggeration" designed to grab the headlines.

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"

Downward Trend

My thanks to Serious Cat for going to the trouble of looking up the results of previous HMRC staff surveys, and comparing the results (where possible) with the most recent one.

As can be seen, the trend has been in the downward direction. The question that springs to mind is why the CEO of HMRC expresses "huge disappointment" at this year's results, when the trend has been downward for quite some time?

Is she so really out of touch with how staff feel about HMRC?

Given this downward trend, what really can be done to reverse it; given that the government is broke, and that many of those "running" HMRC have been in situ during this period and are therefore presumably "responsible" for the lousy staff morale?

As Serious Cat says:

"This is the HMRC that Gordon Brown has created.

This will be his legacy."

Serious Cat's comment:

"I present, for information purposes, a few figures selected from the last 6 staff surveys.

As previously stated, many of the questions/statements are different in each survey, but a handful are the same and capable of comparison.

(Please note, there were two staff surveys conducted in 2005, one in May and another in November.)

Statement 1: I am proud to work for HMRC

Positive
05/2005 - 43%
11/2005 - 40%
2006 - 36%
2007 - 39%
2008 - 33%
2009 - 25%
Down 18%

Neutral
05/2005 - 36%
11/2005 - 36%
2006 - 34%
2007 - 38%
2008 - 36%
2009 - 38%
Up 2%

Negative
05/2005 - 21%
11/2005 - 24%
2006 - 30%
2007 - 23%
2008 - 31%
2009 - 37%
Up 16%

Statement 2: I would recommend HMRC as a good place to work

Positive
05/2005 - Question not asked
11/2005 - 37%
2006 - 28%
2007 - 30%
2008 - 25%
2009 - 17%
Down 20%

Neutral
05/2005 - Question not asked
11/2005 - 28%
2006 - 25%
2007 - 26%
2008 - 24%
2009 - 31%
Up 3%

Negative
05/2005 - Question not asked
11/2005 - 36%
2006 - 46%
2007 - 44%
2008 - 50%
2009 - 52%
Up 16%

Statement 3: I think HMRC is well managed

Positive
05/2005 - 26%
11/2005 - 22%
2006 - 20%
2007 - 19%
2008 - 15%
2009 - 11%
Down 15%

Neutral
05/2005 - 38%
11/2005 - 38%
2006 - 35%
2007 - 28%
2008 - 27%
2009 - 25%
Down 13%

Negative
05/2005 - 36%
11/2005 - 40%
2006 - 46%
2007 - 52%
2008 - 58%
2009 - 64%
Up 28%

I think these figures speak for themselves. In 2005, only a quarter of staff felt that HMRC was well managed. In just 4 years, that figure has dropped to a tenth. Nearly 90% of staff are unable to have confidence in HMRC's management.

Since the 2009 survey and its appalling results, what has the reaction of senior management been? Er, not much that I can see.

Despite these atrocious - nay, scandalous - figures, I actually have a small measure of sympathy for senior managers. They are faced with a department that simply doesn't have the budget to revolutionise itself and, thanks to Brown, Darling et al, that budget is being slashed year on year.

We are actually in the position whereby if a taxpayer e-mails us documentation in Word 2007 format, we can't read it. Why? Our version of Word is too old. Can we upgrade to 2007? No, there isn't enough money in our budget.

This is the HMRC that Gordon Brown has created.

This will be his legacy."

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"

Move Over Darling II

Congratulations to Alistair Darling for rubbishing my prediction, made earlier this week, about his long term future.

As to whether his staying in office is a sign of his strength, or the Prime Minister's weakness, is another matter.

Tax does have to be taxing.

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"

Move Over Darling

It looks like Darling will be out of office by Friday.

Tax does have to be taxing.

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

Advice To Alistair Et Al

Lads and ladettes, you might want to read this:

Source PA:

A HM Revenue and Customs (HMRC) spokesman said:

"It's a general principle of tax law that accountancy fees incurred in connection with the completion of a personal tax return are not deductible. This is because the costs of complying with the law are not an allowable expense against tax. This rule applies across the board."

How ironic that the Chancellor doesn't know the tax law!

In his defence, as I have noted before, tax regulations etc have become inexcusably complex and cumbersome (thanks in no small measure to his boss's ten year tenure at Number 11). It is scarcely surprising that cabinet ministers needed help with their tax returns.

Could this little "episode" provide the impetus for simplifying the tax system?

Ermmm...no...Brown doesn't do "simple"!

Tax does have to be taxing.

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"

Oh The Irony!

How ironic that the self same MPs, who have been bleating on and on about the "immorality" of tax avoidance, have themselves been using taxpayers' money (as a tax deductible item) to fund advice to ensure that they avoid tax themselves.

As we all know, though some of us don't like, tax avoidance is perfectly legal; no matter what Hartnett, Brown, Darling et al might try to have us believe.

Tax does have to be taxing.

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"

Fantasia

Yesterday's fantasy budget, based on an unachievable 2011 growth forecast of 3.5%, was remarkable in many respects.

Aside from the fact that national debt has now shot up to £1 Trillion (see below), it proposed among other measures:

- Fines for tax advisers who are incompetent.

- A requirement for Finance Directors (FDs), of large companies, to personally certify that adequate controls are in place to prepare accurate tax computations. They will be personally fined £5K if they fail to do so.

- HMRC to publish a quarterly list of names and details of individuals and companies who have been penalised for deliberate defaults.

Why are these proposals so wrong?

1 Re financial advisers, the onus is on the client of the adviser to claim redress for incompetence not HMRC/HMG. This is an unnecessary, and unwelcome, extension of HMRC's powers to levy fines and regulate commercial relationships between third parties.

2 Re FD's certifications, this goes against the principles of company law whereby the board has collective responsibility; and is yet another excuse to raise revenue by levying fines.

3 Re the "name and shame" suggestion, as "morally satisfying" as that may appear, it may well breach human rights legislation and goes against the central tenets of HMRC; ie never to reveal an individual's/firms' tax affairs. It will also be open to abuse by HMRC, who will use it as a stick to threaten people who they "suspect" (but don't have proof) of misstating their tax declaration.

So much for KPMG's call for "simplification"!



Tax does have to be taxing.

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"

Happy Budget Day!

Expect higher taxes, broken promises, flawed statistics, fanciful forecasts and "bigging up" rhetoric from Darling and Brown today.

Despite the fact large segment so the budget have already been leaked to a compliant media, the devil will of course be in the detail; which will only become apparent once the professionals have gone through the reams and reams of documents, relating to the budget, produced by the Treasury.

Tax does have to be taxing.

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"

Pissing in The Wind

As the budget looms, KPMG is calling for tax reform; it wants the government to reduce the level of complexity and uncertainty in the tax system.

Good luck with that then!

This Administration does not do "simple".

Tax does have to be taxing.

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

The Secret VAT Increase - Darling Tells a Porky?

In an emergency Commons debate on the pre-Budget today, Chancellor Alistair Darling said that Stephen Timms', the financial secretary to the Treasury, name had ended up on the web document outlining the 18.5% VAT rate by mistake.

Darling claimed Timms had not seen it, or authorised it.

Ahem!

The Guardian says that the web document contained Timms' signature.

Is Darling saying that Timms signs documents that he doesn't read?

Tax does have to be taxing.

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

The Secret VAT Increase

Gordon "Smiler" Brown and his Darling Chancellor were somewhat humiliated yesterday, when it emerged that they had been planning to increase VAT to 18.5% in 2011.

This embarrassing plan was revealed when a document signed by Stephen Timms, a junior Treasury Minister, was published on a government website. The hard copy version, also signed by Timms, shows no VAT rate of 18.5%.

The web version has now been removed.

Now here is where the politicians seek to cover their shame. Treasury minister Angela Eagle said that the publication had been:

"..a pure administrative error on the part of HM Revenue and Customs.

For anyone to think it is anything else is complete scaremongering and opportunism of the worst sort."

HMRC stated (as per the Guardian) that the VAT increase had been a fully worked-up option, that had been ditched at the last moment in favour of the 45% tax rate on those earning more than £150,000.

I am of the view that the buck should stop with the people who claim to be in charge of HMRC. Given that these plans were discussed at Treasury level, and signed off by a Treasury Minister, then the responsibility for the dissemination of the "correct" plans lies with the Treasury.

This is not an HMRC cock up, but a Treasury cock up; for Eagle and her colleagues to "rat out" HMRC in this way is a pretty lousy trick. However, many politicians are pretty lousy anyway.

Doubtless some poor sap in HMRC will be ritually sacrificed to protect the "honour" of the Treasury.

Tax does have to be taxing.

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

The Tangled Web - Deplorable Failures

What a tangled web we weave, when at first we practice to deceive.

I am sure that those "in charge" of HMRC are wishing that they had remembered the above phrase, before they tried to blame the datagate fiasco (where the personal records of 25 million people were lost by HMRC) on the actions of a junior employee.

I have stated here on several occasions that this was clearly the result of senior management incompetence, rather than the actions of a junior. Two reports issued yesterday confirm that view.

The reports state that the loss was "entirely avoidable", of course it was, and that the loss was due to "serious institutional deficiencies" at HMRC. They went on to blame senior management for not explaining data protection rules to junior staff.

This is the crux of the failings within HMRC, as I keep repeating on this site, that the senior management within HMRC and indeed those within Treasury allegedly "in charge" of HMRC are not up to the job of managing HMRC.

Investigations by the Independent Police Complaints Commission (IPCC) and Keiran Poynter, the chairman of PricewaterhouseCoopers, concluded that there was no evidence of malice or misconduct and blamed systemic failures at HMRC.

The IPCC found "no coherent strategy" for mass data handling. Poynter said that data security was not a "management priority" and morale at HMRC was "low" (rock bottom I would say).

Richard Thomas, the Information Commissioner, said he would serve an enforcement notice on HMRC over its "deplorable failures" on data security, a move which could result in criminal prosecutions unless it improves its record.

The reports contradict what Brown and his lackey, Darling, said at the time about the loss:

"This was ... not about a failure in the procedures as such".

Darling wnet on to say at the time that the decision to send the two discs to the National Audit Office, where they never arrived, was taken "at a junior level".

Lies always come out in the end. How pathetic HMRC senior management and the government now look for trying to blame a junior.

What has happened to the poor sod that they tried to blame? His/her life was probably made hell on earth at the time. If I were in his/her shoes, I would sue the hell out of HMRC and the government for defamation and emotional damage.

That aside, what is clearly required is major culling of the senior management within HMRC; they are not fit for purpose.

Tax does have to be taxing.

The New Statesman, Britain's leading political magazine is delighted to announce that HMRC Is Shite has been nominated for a New Media Award in the category of Campaign For Change. The campaign for change award will go to the individual or organisation that has most effectively influenced opinions and behaviour through the use of new media technology. The winner of this award will champion a cause and provide information and tools to instigate change.

The full press release can be downloaded here.

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

The New American Revolution

The American Revolution began over a dispute about taxes.

Some 232 years later, it appears that there is another dispute over taxes between the US and the UK. The dispute is over Brown's and the Treasury's plans to tax airlines for transatlantic and other long haul flights; instead of each passenger paying a fixed levy per flight, the Treasury will instead tax each plane. Airlines will then pass on the tax to passengers.

This has displeased the US. There is in fact a very real risk that the US will sue the Treasury, if Brown doesn't back down on his plans.

An official letter sent by the US Embassy to the British Government, which was leaked to The Daily Telegraph, shows that the Americans have "deep concerns with the proposal". They threaten the Treasury with legal action over the planned tax increase.

In theory the tax is meant to be for the "greener good" of the country and the world. However, the US letter totally refutes the "green" claims of Brown and his sidekick Darling.

Quote:

"The Treasury's proposal, although cast as an environmental measure, appears in reality to constitute nothing more than a device for generating additional revenue from the airline community.

There is no linkage between the funds collected from airlines and the mitigation of any environmental impact of airline emissions or any other environmental problem…Moreover, the Treasury's proposal does not demonstrate that the new duty would influence airlines to adjust their fleets or their booking practices to achieve higher load factors...Nor are any data provided to justify the levy based on an assessment of damage from aircraft emissions."

As I have said many times, the tax policy of the UK is being driven by the overriding fact that the government is broke. The taxpayers and HMRC are the ones who have to pick up the pieces, and pay the price for Brown's mismanagement.

The US has warned the Treasury that the "proposed duty raises serious legal concerns".

The new tax, it seems, breaches a number of international tax treaties; the Americans have even sent the memo to other European governments.

How did this come about?

Whilst the government may well be broke, surely someone would have warned them that this plan would unravel?

It seems that the Treasury made a major mistake, and have been making policy up as they go along.

Another badly thought through "initiative", another backtrack and reversal; yet more mess and costs for the taxpayer and HMRC to absorb and deal with!

Tax does have to be taxing.

The New Statesman, Britain's leading political magazine is delighted to announce that HMRC Is Shite has been nominated for a New Media Award in the category of Campaign For Change. The campaign for change award will go to the individual or organisation that has most effectively influenced opinions and behaviour through the use of new media technology. The winner of this award will champion a cause and provide information and tools to instigate change.

The full press release can be downloaded here.

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"

What The Fark!

Dear oh dear, what a difference a day makes in politics and indeed in tax!

I must congratulate our "respected" Prime Minister and Chancellor for their astute footwork in trying to dig themselves out of their own "self dug" graves.

Quite whether they will still be in orifice by the end of this year remains to be seen.

Confused?

So am I!

In 1999, with much fanfare and hubris Gordon Brown (never one to hide is "accomplishments" from the world) announced the introduction of a 10p tax band...to help the less well off.

In 2007, Gordon Brown with much fanfare and hubris announced the reduction of the 22% tax band to 20%.

Hidden within the morass of papers spewed out by the Treasury was a wee note that said Brown would be abolishing the 10P band too.

Funny that he didn't mention that during the his 2007 budget speech!

Anyhoo, fast forward one year, facing meltdown in the local elections Labour MPs suddenly realised that the abolition of the 10p tax band was not going to be popular. They mounted a very noisy and vocal rearguard action to try to stave off electoral defeat, and appealed to Brown and Daring to rescind the 10p abolition.

Alas their protestations were to no avail, Darling said in April that budgets cannot be rewritten - the 10p abolition was here to stay. Indeed, he stated very clearly that he could not even afford to compensate those who had been hurt by its abolition (by the way, Brown still contends that via his crappy tax credit system no one is disadvantaged - but that's another story for another day).

Can you guess what happened next children?

Yes, that's right, Labour were well and truly farked over in the local elections; they scored the lowest percentage of votes since 1349 (or thereabouts).

Moving forward but one month, Frank Field and his chums scented blood and threatened (a threat that was taken very seriously) to defeat the Finance Bill. The Finance Bill is of course sacrosanct.

On top of this Brown faced defeat at the Crewe by election, therefore a political and financial bribe of staggering proportions was required.

The solution?

So simple, so obvious, so expensive!

Raise the tax allowances by £600, thus offsetting the negative impact of the abolition of the 10p rate.

The good news is that this gives very basic rate taxpayer a nice £120 windfall, even those who were not negatively impacted by the 10p abolition.

The bad news?

1 The taxpayers will have to pay for the government's bribe (as this money is being "borrowed" from us).

2 This is only effective for this year, next year Darling will have to come up with another solution (want to bet he is no longer in the job?).

3 Had the Chancellor been able to target the relief to only those who were negatively impacted by the 10p abolition, it would have cost us a "mere" £1BN. The solution he has used will cost us £2.7BN.

3 It's messy, confusing and entirely an own goal given that this is a mess of Brown's own creation.

Confused?

Well, I don't blame you.

Given that HMRC have to deal with the never ending shit spewed out by this government, it is hardly surprising that the tax system is confusing, unwieldy and prone to terrible errors.

Call me naive, but wouldn't it be better for the government to simplify the tax system (reduce the bureaucracy, cut the rates, cut the number of taxes and to use VAT to soak up tax take shortfalls) and to stop farking around with it?

Wouldn't that really be best for the country?

The trouble is, Brown doesn't do "simple".

He is the architect of his own downfall, let us hope he goes quickly.

Tax does have to be taxing.

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"

Guardian Says Sorry

The Guardian has apologised to Tesco over its reporting of Tesco's tax affairs.

As noted on this site in April, the Guardian wrote an article about Tesco's alleged tax avoidance plans.

Seemingly the Guardian was talking bollocks, and has now stated that it no longer believes that Tesco's Cayman island structures allowed it to avoid up to £1BN in corporation tax.

"The original Guardian articles did not correctly explain the effect of Tesco's tax schemes. It was wrong to state that they were designed to avoid corporation tax. It would have been correct to refer to avoiding SDLT [Stamp Duty Land Tax].

As a result, the figure of 'up to £1bn' - calculated as the amount which could have been saved on the disposal of £5bn of property - is wrong. The loss to the exchequer is likely to be nearer the region of £90m-£100m."

All very well, but even if there had been a tax avoidance plan that could have saved £1BN, the Guardian has been duped by Hartnett and Brown into their web of deception that tax avoidance is somehow wrong.

So what if Tesco had in fact put together a tax avoidance plan for saving £1BN?

Tax avoidance is perfectly legal, we all do it each year by eg claiming our personal allowances.

Hartnett and Brown are keen to tar tax avoidance with the same brush as tax evasion (which is illegal) because they desperately need to increase the tax take, as the government's finances are blown.

Once they have cracked down on high profile schemes, they will turn their attention to the more "mundane" ones such as isa's and possibly even personal allowances.

The Guardian was duped into playing the government's and HMRC's game, yet they still don't see this. Their apology snidely refers to "clever accountants", thus leading the reader to conclude that tax avoidance is somewhat "dodgy".

However, being the Guardian, it chooses to cite their "righteous moralism" over "correctly reporting the facts" as being justification for the error.

"We remain ready to defend our journalism - in court, if necessary. We believe these matters should be subject to debate and scrutiny, and we invite further informed analysis from any readers with experience in accountancy or tax law."

They want input, I suggest that you give them some; here is their email tax@guardian.co.uk

Tax avoidance is legal!

The most effective way for the government to reduce the time, effort and money spent by HMRC on chasing tax avoiders is to simplify the tax system; thus making it unnecessary for companies and individuals to set up complex and costly tax avoidance structures.

Unfortunately, Brown and Darling don't do "simplification".

Tax does have to be taxing.

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"