Appeal! Appeal! Appeal!

 

The value of HMRC tax penalties surged by 25 per cent between 2022 and 2023 to its the highest level on record, new data shows, as the government faces criticism for unfairly fining struggling businesses.

HMRC imposed £851m in penalties between November 2022 and October 2023, up from £681m in 2021/22, according to data obtained by accountancy firm UHY Hacker Young through a freedom of information request.

Penalties were also extended to nil or repayment returns that are received late, which Hacker Young said made it easier to trigger fines through simple paperwork errors.

Sean Glancy, a partner at Hacker Young, is quoted by City AM: 

“HMRC is often not reasonable in removing penalties for genuine errors – they sometimes seem to operate with a ‘shoot first, ask questions later’ approach. Once a penalty is issued, the process is quite draconian, however about half of penalties are withdrawn on appeal.”

Given the Post Office scandal, it is all too evident that people can neither trust automated systems nor state run bodies. As such, if on the receiving end of a penalty that you feel is not justified:

Appeal! Appeal! Appeal!

Tax does have to be taxing.

Tax Investigation Insurance

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• Attend any meeting with HMRC
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Landmark Victory Against HMRC

 

Accountancy Age reports a “landmark” court judgement has been delivered against HMRC after its denial of £1m worth of SME R&D tax relief to construction firm Quinn London Limited.

HMRC’s denial of the relief was based on its recently tightened interpretation of subsidised R&D expenditure. It contested that, because Quinn’s R&D projects are typically carried out for clients, any expenditure on that project should be treated as subsidised.

Appealing the judgement, specialist R&D tax relief consultancy ForrestBrown argued that HMRC’s interpretation of the legislation was too broad and will narrow the scope of SME R&D tax relief.

Accepting the appeal in favour of Quinn, Judge Morgan stated in her verdict: “It would be wholly out of kilter with the overall SME scheme if an SME were to be denied relief solely because it seeks to recover some or all of the relevant costs under its commercial contracts with its clients.

“If HMRC’s approach were to be adopted, the circumstances in which an SME could claim enhanced R&D relief would seem to be confined to those where it has no prospect of exploiting the R&D for commercial gain.”

HMRC had adjudged that, despite meeting the criteria of the SME R&D relief scheme, Quinn’s subsidisation of expenditure meant it was only eligible for the far less generous R&D Expenditure Credit (typically claimed by larger organisations).

Over the period in question, the difference in value between the two was calculated to be worth more than £1m.

Which rather proves the old adage, don't let the bastards grind you down!

Tax does have to be taxing.

Tax Investigation Insurance

Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Tax Investigation Insurance is an insurance policy that will fully reimburse your accountants (your tax return agent) fees up to £100,000 if you are subject to enquiry by or dispute with HMRC.

A Solar Protect policy will enable your Accountant (your tax return agent) to:

• Deal with any correspondence from HMRC
• Attend any meeting with HMRC
• Appeal to the First-tier Tribunal or Upper Tribunal
• Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly

Please click here for details.

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"

IT Contractor Wins £240K Appeal Against HMRC

The Register reports that IT contractor Richard Alcock has won an appeal against HMRC after HMRC said he owed more than £200,000 in national insurance contributions (NICs) and income tax under off-payroll rules.

The IR35 legislation states that individuals who work alongside PAYE staff in similar roles should pay the same amount in income tax and national insurance contributions as employees. However, as contractors, they are not entitled to the same holiday and sick pay benefits.

Alcock contracted with Accenture and the Department for Work and Pensions as a consultant via his company, RALC Consulting, between April 2010 and April 2015, working on the Universal Credit IT project.

In March 2017, HMRC determined that Alcock owed income tax and NICs of £164,482 and £78,842 respectively for that period. However, it is unlikely he would have had to pay the entire sum because of offsets for tax already paid.

In its ruling, the tribunal stated that it was "satisfied on balance that the hypothetical contracts between Mr Alcock and his end clients, DWP and Accenture, would be contracts for services (self-employment)".

It concluded:

"All HMRC's Determinations, decisions and notices are cancelled. The Appellant is not liable to pay the Income tax and NICs assessed by HMRC. The appeal is allowed in full."

However, this may not be over as HMRC are considering appealing.

Tax does have to be taxing.

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

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"Scams For Scumbags" To Appeal Against HMRC

The Guardian reports that Ingenious, the investment firm that persuaded celebrities, sports stars and business leaders to invest in controversial film partnership schemes will today launch an appeal against HMRC that could cost  HMRC up to £1bn.

Stars from the worlds of sport and entertainment, including David Beckham, Ant and Dec and Jeremy Paxman, are among those who put money into investment schemes run by the Ingenious Group, a financing company that funded more than 60 films including Avatar and Brooklyn.

In what is set to be the longest tax tribunal appeal ever, Ingenious will fight to overturn the court’s decision that HMRC was correct in deciding that the investments should not give rise to tax relief for their investors.

Ingenious, which said it was offering legitimate investment in the film industry, has been accused by HMRC of tax avoidance (which is perfectly legal), with a former HMRC boss (David Hartnett) describing its schemes as “scams for scumbags”.

An estimated £620m worth of tax relief was claimed by investors, which, combined with interest, means £1bn is at stake if HMRC loses the case.

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 Tax Investigation Insurance.

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 Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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.

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HMRC Is Ridiculous

 

The Telegraph reports that Judge Nicholas Aleksander has told HMRC its behaviour was "ridiculous" and "a scandal" after HMRC attempted to fine a homeless man £1,600 for filing his tax return late. 

The man, who had been a self-employed electrician, briefly returned to his native Poland in around April 2014 where he said his drink had been spiked with drugs causing him to lose his job and exhaust his savings when he returned to Britain.

He said he was evicted from the house in east London where he had been living and all his belongings were lost or stolen, including important documents.

He said he had been forced to sleep on the streets until moving into a hostel in January 2017, which led to him finding a job and permanent accommodation in April of that year.

HMRC issued penalties of £1,600, saying it had sent reminders to his previous address.

Judge Nicholas Aleksander found against HMRC.

The judgement reads:

“HMRC's decision to pursue this man for penalties in the circumstances of this appeal is a scandal. For HMRC to expect a homeless person to keep HMRC up-to-date with their address is ridiculous – and just needs to be stated to show its absurdity.”

HMRC is ridiculous!

Tax does have to be taxing.

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

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 Solar Tax Investigation Insurance?

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HMRC Loses Retrospective Tax Demand On ATMs

The Guardian reports that three of Britain’s biggest supermarket groups have won a legal victory worth up to £500m, following a court battle over business rates on cash machines installed at their shops.

The court of appeal ruled on Friday that cash machines located both inside and outside stores should not be liable for additional business rates, which are a form of property tax on businesses collected by the government.

Several retailers including Tesco, Sainsbury’s and the Co-op had fought in the courts against the tax rules set by the Valuation Office Agency – the arm of HM Revenue and Customs responsible for setting business rates – which had claimed that ATMs should be additionally assessed.

The court verdict means the supermarket chains are in line for a multimillion pound windfall from tax refunds, which the property advisory company Colliers estimates is worth about £500m.

The case dates back to a 2013 decision by the government to charge rates on “hole-in-the-wall” cash machines, which was backdated to 2010.

SAY NO TO RETROSPECTIVE TAX!

Tax does have to be taxing.

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

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What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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 Solar Tax Investigation Insurance



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The Taxpayers Are Revolting!

The Telegraph reports that there has been a 36pc increase in the number of taxpayers taking HMRC to the High Court. HMRC faced 122 judicial reviews in 2017, up from 90 in the previous calendar year.

For why?

According to the legal firm RPC, HMRC's more aggressive stance when pursuing individuals is to blame.

RPC said the issues at stake in recent reviews against HMRC included it serving information request notices on taxpayers who were not in its jurisdiction. A separate legal battle arose when the taxman failed to follow its own rules on minimum wage payments.

Adam Craggs, of RPC, said that HMRC was under political pressure to increase tax revenues, and this had prompted HMRC’s new approach.

“HMRC’s increasing aggression and intransigence mean that judicial reviews are becoming far too common and are all too often the result of simple errors by HMRC and a dogged refusal to correct them.

This substantial increase in Judicial Review challenges would suggest that taxpayers are not prepared to be treated unfairly by HMRC and are willing to challenge its decisions and seek redress from the High Court.”

I can only imagine that this will get worse!

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 Tax Investigation Insurance.

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 Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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 Solar Tax Investigation Insurance



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

HMRC Shoot First, Ask Questions Later APN Policy

HMRC has found a very nice little earner wrt its accelerated payment notices (APNs) scheme, which extracted £1.3bn from taxpayers and SMEs in 2016/17.

This is a 21% increase from the previous year, when HMRC extracted £1.07bn from APNs, according to research from accountancy firm Moore Stephens.

APN's are more than a little controversial, as they give HMRC the power to demand tax it believes it is owed before the dispute is adjudicated. Those affected have only 90 days to pay the sum, and have no right of appeal.

"Ironically" HMRC's prime targets are not large businesses but the low hanging fruit of individuals and SME's. The compliance yield from the Counter Avoidance Directorate rose significantly for individuals, whilst the amount collected from large businesses fell significantly from £943m in 2015/16 to £19m in 2016/17.

Dominic Arnold, head of tax investigations and disputes at Moore Stephens, is quoted by economia accusing HMRC of making full use of its powers to “shoot first and ask questions later”:

“Its ability to demand accelerated payments remains a draconian, but clearly increasingly effective mechanism for HMRC to clamp down on what it sees as abusive tax schemes.

That’s all well and good for the Treasury. However, it’s a heavy price for taxpayers to pay before they have even had a chance to put their case. Small businesses and individuals can be put under immense strain, financially and emotionally, while the process is ongoing.

Whether they have crossed a line or not, they don’t have long to find what can often amount to thousands of pounds in disputed tax.”

HMRC is more than happy with the arrangement, its spokesperson said:

"HMRC has an excellent record in supporting those in genuine difficulty, including offering more time to pay if appropriate.

APNs change where the disputed tax sits while the issue is being investigated, ensuring that those who have used avoidance schemes are in the same position as everyone else who pays their tax, up front, and on time. The regime does not change taxpayer appeal rights."

Last year HMRC was forced to withdraw 4,300 APNs issued in error out of a total of 60,000. 

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 Tax Investigation Insurance.

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 Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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 Solar Tax Investigation Insurance



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"

Another Sorry Tale of HMRC Institutional Incompetence and Inefficiency

Incredible and justified attack on HMRC's "institutional
incompetence and inefficiency" by Upper Tribunal judge..https://t.co/p1boTU4dA4

— John Andrews (@jmalitrg) September 18, 2017

HMRC have been given a sound, and well deserved kicking!

"1. Well, here we go yet again.

2. I used the phrase “Well, here we go again” with a sense of frustration, bordering on despair, to open my decision in NI v HMRC [2015] UKUT 160 (AAC), a case in which I criticised Her Majesty Revenue and Customs (HMRC) for both its decisionmaking processes and its conduct of appeals in relation to tax credits claims. That phrase has been echoed in other tribunal jurisdictions where HMRC’s conduct has come under similar critical scrutiny: see e.g. Pandey v Revenue and Customs (Income Tax/Corporation Tax: Penalty) [2017] UKFTT 216 (TC).

3. So, yes, in short this is yet another sorry tale of HMRC institutional incompetence and inefficiency which could well have led to injustice, were it not for the persistence of the Appellant.

A summary of Upper Tribunal’s decision 4. I am allowing the Appellant’s appeal to the Upper Tribunal. The First-tier Tribunal (“the FTT”)’s decision involves an error on a point of law. That Tribunal’s decision is set aside. Fortunately I can make the decision that the FTT should have made and do so. Although this is now a supported appeal, I am giving my reasons in some detail as a warning to Tribunals handling tax credit appeals as to what to look out for in other cases......

..I readily admit that the statement in the grant of permission that “regrettably on past experience the fact of the matter is I am not at all confident that all relevant evidence was presented to the Tribunal by HMRC” was ‘economical with the actuality’. The truth was I had no confidence whatsoever that HMRC had complied with its disclosure obligations under rule 24(4)(b) of the Tribunal Procedure (First-tier Tribunal) (Social Entitlement Chamber) Rules 2008 (SI 2008/2685).....

..Bitter, albeit anecdotal, experience in other appeals makes me conclude it is more likely that HMRC mislaid the documents than the Royal Mail lost them..."

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 Tax Investigation Insurance.

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 Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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 Solar Tax Investigation Insurance



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

HMRC Rangers Supreme Court Ruling Today

The Supreme Court is to announce its verdict in the case between Rangers and HMRC over the club's controversial use of a tax avoidance scheme.

Two tribunals had previously found in Rangers' favour.

But after an appeal, the Court of Session found in favour of HMRC - with the Supreme Court in London now set to make a final judgement on the case.

The ruling will be streamed live on the Supreme Court website at 9:45 this morning.

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 Tax Investigation Insurance.

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 Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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 Solar Tax Investigation Insurance



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

HMRC Manipulated Wikipedia

It appears that HMRC, contrary to their own self belief in their infallibility, are in fact fallible. Especially when they rely on Wikipedia to support their views.

Contractor Weekly reports that HMRC recently lost a First Tier Tax Tribunal case because of its over reliance on the Wikipedia definition of “electromechanical.”

The case of RJS Electronics Ltd v HMRC (February 2016) involved the classification of four switches for the purposes of customs duty. HMRC classified the switches as “push button switches” which attracts a duty of 2.3% whereas RJS contended they were “electromechanical snap-action switches” which attracts a duty of 0%.

In May 2014 HMRC’s Review Officer issued his decision based largely on the definition of “electromechanical” taken from Wikipedia and said, “there is little guidance on this type of product and the Wikipedia information is not altogether clear but all things considered I must…..uphold the decision.”

However, what HMRC didn't admit to was the fact that they used only a selected portion of the Wikipedia defitnion that suited them best.

RJS, during appeal, challenged the Review Officer’s reading of the Wikipedia definition saying, “the HMRC representative used Wikipedia to come to their decision, however they are taking the terms out of context……they have ignored [part of the definition] even though they have quoted it…..they have stated that their sources are not clear and have just chosen to read the outcome that suits HMRC best. It is very important that someone classifying electronic goods is not just reading some page on the internet but they have at least a minimal understanding of the electronic terms.”

A week before the Tribunal hearing HMRC asked for the hearing to be adjourned and that the parties be directed to appoint a single joint expert who would provide an authoritative opinion on the switches. Such an expert would have cost several thousands of pounds and even though the tax at stake was less than £1,000, HMRC justified their suggestion on the basis that it would help with future decisions. The Tribunal considered an expert witness’ costs to be disproportionate and both HMRC’s requests were dismissed.

The Tribunal found in favour of the taxpayer and pointed out that the Wikipedia and OED definitions were “not entirely consistent” and unreliable.

The lesson here is that HMRC manipulates sources and facts to best suit its own objectives.

Do not trust HMRC!

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 Tax Investigation Insurance.

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 Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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 Solar Tax Investigation Insurance



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"

Justice Costs - Charge For Tribunal Appeals

The government has proposed introducing fees for individuals appealing decisions to the tax tribunal as part of broader reforms to civil court funding, which also include increasing fees levied on divorce proceedings.

The Law Society has warned that the government’s plans to rebalance the costs of the judicial system threaten not only to undermine the principle of universal access to independent rulings, but also to tip the balance of power in disputes towards the tax authority.

As per the FT:

“The government is effectively selling justice by saying that you need to pay for the courts,” said Jonathan Smithers, the Law Society’s president.

To fight charges levied by one branch of government, you would have to pay another division of government . . . It leads to a feeling there’s a fairly heavy-handed state.”

Taxpayers can appeal to the first-tier tribunal, which is independent of government, when they dispute internal rulings made by HMRC. 

The Ministry of Justice, which is consulting on its proposals, has suggested fees of between £50 and £200 for referring cases to the first-tier tax tribunal, with hearing fees to range from £200 to £1,000 depending on their complexity. Appeals to the upper tribunal would incur an initial fee of £100, plus up to £2,000 for a hearing.

Justice now comes at a price, meaning that many people people will be put off appealing an HMRC ruling; which is exactly what the government wants!

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 Tax Investigation Insurance.

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 Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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 Solar Tax Investigation Insurance



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

HMRC vs UBS/Deutsche Bank

HMRC is going to the Supreme Court to appeal decisions made against it wrt two tax schemes operated by UBS and Deutsche Bank in 2003 and 2004, which were designed to avoid tax on bonus payments.

In the UBS and Deutsche cases, HMRC had claimed that the sums allocated to employees as bonuses at the start of each scheme were liable to income tax.

An earlier upper tribunal ruling had described both banks as adopting a (as per the FT) “carefully planned tax avoidance scheme which was designed to enable the [banks] to provide substantial bonuses to employees in the tax year 2003/04 in a way that would escape liability to both income tax and national insurance contributions”.

It is interesting that HMRC are going after schemes:

- that are over a decade old,
- no longer operate,
- were ruled legal by the court of appeal, and
- are based on restricted securities in that participants had to agree to waive their bonuses in return for shares which were locked up for a period of years. When the shares vested they were taxed on the value in the form of CGT.

The case will go before the Supreme Court later this year.

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 Tax Investigation Insurance.

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 Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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 Solar Tax Investigation Insurance



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"

49% of Automatic Late VAT Submission Fines Incorrect

It seems that HMRC is having a wee spot of bother wrt fining taxpayers for late VAT submissions, as in 2013 around 49% of appeals (8,000 cases) on automatic fines were successful.

UHY Hacker Young, which conducted the research into the incorrect fines, claimed that the computer based system used by HMRC was issuing fines for late submissions, regardless of circumstances.

Simon Newark, a partner at UHY Hacker Young, is quoted in economia noting that the onus on the taxpayer to prove his/her innocence does not go down well with the taxpayers:

“That’s perceived by taxpayers as being unfair, but unfortunately, that’s what the law says.

In a lot of borderline review cases HMRC is rubber-stamping the automatic penalty. 

Taxpayers should be allowed to explain their situation first before they are railroaded into a system of fines and penalties.”

However, HMRC is of the view that the system is “working well.”

An HMRC spokesperson said:

"Statutory penalties are sent out when a return or payment is late. Late receipt is a fact that triggers the penalty but of course we accept there can be valid reasons for being late and the taxpayer simply has to show they had a reasonable excuse for submitting late. 

If we accept the reason - and we do in 50% of cases - then there is no penalty to pay. 

This shows the system working well."

Wouldn't it save time and effort to check the reason for the late payment first, before automatically issuing fines?

Actually, no it wouldn't, because HMRC is aiming for maximum automation and minimum staffing levels.

Good luck to all if HMRC is allowed to raid bank accounts for unpaid tax!

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 Tax Investigation Insurance.

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 Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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 Solar Tax Investigation Insurance



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"

Reviews and Appeals Feedback

Yesterday's article about Reviews and Appeals prompted a loyal reader to write to me pointing out that a substantial part of the work involves reviews of late filing penalties, work which is carried out in Londonderry (the future of which after 2015 appears uncertain).

I have been asked if I would publish the feedback by the reader, but on an anonymous basis.

Here is the full text:

"A substantial part of this work involves reviews of SA late filing penalties and employer PAYE penalties and preparing the HMRC case for cases which are considered by the Appeals Tribunal Judges.

The office which carries out reviews of SA and Employer PAYE penalties is Londonderry.

HMRC say they do not see a future for the site after 2015.

But this is ongoing work, every year's SA and Employer filing deadline creates more review requests.

So, if Londonderry staff are let go on voluntary release terms, including costs of redundancy compensation, the work will definitely have to be placed at another location, involving:-

- further costs of retraining staff at that new location

- disruption to customer service during the transition period until new staff are fully competent.

As well as approx 70 Personal Tax staff in Londonderry, who deal with Appeal reviews and are being invited to apply for redundancy, Londonderry also houses a specialised VAT Overseas Repayment Unit of about 80 staff.

So unless HMRC decides to also release the VAT staff by 2015, by again moving ongoing work from Londonderry to another office, the Londonderry office will continue to exist with ongoing accommodation costs at current levels, but with only half occupation.

I see the PCS website has a report on staff stress levels in Wales. I reckon it's not just in Wales."

Comments and views are 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 Tax Investigation Insurance.

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 Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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 Solar Tax Investigation Insurance



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Reviews and Appeals 2013

In December 2013 HMRC published a paper entitled HMRC’s Reviews and Appeals 2012/13.

The paper contains information and analysis about appeals against HMRC’s tax decisions for the period 1 April 2012 to 31 March 2013, including internal reviews and cases taken to the tribunal.

As per the paper:

"Where a customer disagrees with a decis ion made by HM Revenue & Customs (HMRC), they can ask for a review, make an appeal to an independent tribunal, or take both actions. Every year HMRC makes millions of decisions. Customers ask for reviews and make appeals in relation to only a small proportion of decisions."

HMRC noted:

"Taxpayers asked HMRC for reviews of 38,975 decisions in 2012-13 and HMRC completed 39,156 reviews, which includes the clearance of some cases from previous years. The number of review requests has fallen from 55,764 in 2011-12.

The decrease in reviews requested was mainly caused by fewer customers asking for reviews of VAT Default Surcharges and late filing and late payment penalties for Income Tax Self-Assessment (ITSA) and Pay as You Earn (PAYE). The number of reviews for VAT default surcharges decreased from 30,345 in 2011-12 to 20,046 in 2012-13.

There were fewer VAT default surcharges being issued in 2012-13 as compliance improves. When the first late filing and late payment penalties were issued in 2011-12 the number of requests for review of such penalties increased. The number went down in 2012-13, as customers become more familiar with the new system."

Out of the 39,156 reviews completed 54% were upheld, and 6% varied.

Taxpayers made 7,560 appeals to the tribunal in 2012-13. 4,564 cases were closed, either by a formal hearing by the tribunal, or by settlement before the hearing. 17% were decided in the taxpayers' favour.

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 Tax Investigation Insurance.

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 Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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 Solar Tax Investigation Insurance



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

HMRC Loses 60% of VAT Penalty Appeals

The Tax Assurance Commissioner's annual report indicates that 60% of HMRC's decisions in VAT penalty cases are cancelled upon appeal.

Of 30,345 cases, HMRC's decision was overturned in 18,317, 60%, in 2011/12. Of the remaining 12,028, some 9,785 HMRC penalties (32%) were upheld the remaining balance of decisions varied upon appeal.

Jason Collins head of tax of Pinsent Masons is quoted by AccountancyAge:

"HMRC is operating under a lot of pressure to increase its revenues across the board, but this pressure is particularly acute in VAT. The NAO report highlighted the huge difference between the VAT HMRC believes it should be collecting, and the amount it actually does receive.

The fact that HMRC loses 60% of the penalty cases that businesses appeal shows that it may have become over-aggressive in hunting for cases of VAT evasion, and is making errors in issuing penalties. HMRC is also too quick to say a taxpayer has been negligent when it gets things wrong.

Unfortunately, it seems that thousands of UK businesses have been forced to challenge unfair fines as a result."

A spokesman for HMRC said:

"Only a small proportion of the millions of decisions HMRC makes each year are challenged. The review and appeal system provides a quick and easy way to resolve disputes.

Where we change a decision it is often because our customer has given us new information: for example, a reasonable excuse for their tax return being late, or fresh evidence to support a claim."

It is unfortunate that fresh evidence/reasonable excuses only seem to come to light during the appeal, as this wastes the time a resources of both the taxpayer and HMRC.

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 Tax Investigation Insurance.

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 Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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 Solar Tax Investigation Insurance



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

HMRC Appeals Rangers Tax Ruling

As per the BBC HMRC has filed an appeal against a tax tribunal ruling in favour of Rangers' use of Employee Benefit Trusts (EBTs).

HMRC had claimed the scheme, which was used from 2001 to 2010 to make £47.65M in payments to players and staff in the form of tax-free loans, was illegal.

Rangers disputed this and a First Tier Tax Tribunal (FTT) ruled the scheme did not breach tax law.
The case will now be heard at a Second Tier Tax Tribunal (STT).

If the dispute is not settled at the STT, it is possible that it may go all the way to the Supreme Court - a process that could take years.

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 Tax Investigation Insurance.

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 Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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 Solar Tax Investigation Insurance



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"

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"

Here Come The Penalties

For those of you who have still not sent in your 2010/11 tax returns to HMRC (apparently around 500,000 people have been "tardy/forgetful") you may soon expect to hear a light thud on your doormat as your penalty from HMRC arrives.

It seems that the penalties will be for a minimum of £1,200 per person (that makes around a minimum of £0.6M in penalties accruing to HMRC) being:

• the maximum £900 in daily penalties for non-filing
• a further late-filing penalty of £300 or 5% of the tax due (whichever is higher).

These penalties are of course in addition to the £100 late filing penalties for missing the 31 January deadline (which were issued in Q1 of this year).

However, be not alarmed, as HMRC’s Director General for Personal Tax, Stephen Banyard, said:

“We want the returns, not the penalties."

Here is the full text of the HMRC press release:

"Around half a million people who still haven’t sent their 2010/11 tax returns to HM Revenue & Customs (HMRC) will start to receive additional penalty letters from this week.

The number of outstanding returns has almost halved in 2012, down to 5.9 per cent, compared to 10.7 per cent in 2011. This means 518,000 fewer penalties are being issued. HMRC has also taken 273,000 people out of Self Assessment this year.

New penalties were introduced in April 2011 to boost the incentive to file and reduce the costs to taxpayers of chasing up missing forms. As a result, anyone who ignores their Self Assessment filing obligations is now liable to higher penalties than in previous years.

The penalties being issued from today will be for a minimum £1,200, comprising:

• the maximum £900 in daily penalties for non-filing
• a further late-filing penalty of £300 or 5 per cent of the tax due (whichever is higher).

People who receive a late-filing penalty can appeal against it if they think they have a reasonable excuse for not sending their tax return; for example, a family illness or bereavement.

Anyone who has received a late-filing penalty and has not sent in a return, but thinks they don’t need to be in Self Assessment, can still potentially apply to be taken out of Self Assessment. They can visit www.hmrc.gov.uk/latetaxreturn to check what to do if they think they don’t need to be in Self Assessment. If HMRC agrees, the return and any penalty will be cancelled.

HMRC’s Director General for Personal Tax, Stephen Banyard, said: “We want the returns, not the penalties. This year, half a million more people have filed their return – which means we are issuing 44 per cent fewer penalties.

“But, despite several reminders, nearly six per cent of people have not sent their 2010/11 tax returns to us and they’ll be getting a penalty.

“Where someone has a reasonable excuse for not sending a return on time, we will waive the penalty. We also recognise that there will be some people within this group who don’t need to be in Self Assessment, and we will be happy to remove them from the Self Assessment system and cancel their penalty.”

The penalties being issued over the next few weeks are in addition to £100 late-filing penalties for missing the 31 January filing deadline, which were sent out in late February and early March.

Notes for editors1. The new penalties for late Self Assessment returns are:

• an initial £100 fixed penalty, which now applies even if there is no tax to pay, or if the tax due is paid on time;
• after three months, additional penalties of £10 a day, up to a maximum of £900;
• after six months, a further penalty of 5 per cent of the tax due or £300, whichever is greater; and
• after 12 months, another per cent or £300 charge, whichever is greater.

2. There are also additional new penalties for paying late of 5 per cent of the tax unpaid at: 30 days; six months; and 12 months.

3. Further information on the new penalties is available from the HMRC website at http://www.hmrc.gov.uk/sa/deadlines-penalties.htm

4. Follow HMRC on Twitter at: @HMRCgovuk

5. Images are available on HMRC's flicker channel www.flickr.com/hmrcgovuk"

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"