HMRC Glitch Impacts Bonus Payments

As those who have had snafus with their pension drawdowns can attest to, HMRC's software fails to recognise one off payments and instead assumes the person will receive the same amount every month.

Hence, middle-income earners who then receive a bonus may find themselves being taxed as if they are taking home a much higher salary.

Former Liberal Democrat MP Sir Steve Webb, who now works at pension firm Royal London, said three of his colleagues had been impacted by the miscalculation.

“HMRC has a habit of taxing first and asking questions later, and this is yet another example. 

It is absurd to assume that a one-off bonus received at the start of a financial year is going to be repeated throughout the year and to tax people on that basis. 

People affected by this issue can have their monthly paypacket cut by hundreds of pounds with little or no notice and then have the hassle of contacting HMRC to get things put right.” 

Sir Steve claimed HMRC had failed to inform his team about changes to their “personal allowance”.

A spokesman form HMRC said if a customer’s tax code changes they are normally informed about this. HMRC said only a “small number” of people were affected by the glitch and issued an apology.

“We will work with the employer to investigate if a tax code notice was sent to these customers.”

This "quirk" has been known about for sometime, therefore I am a tad surprised that people middle managers in Royal London were not aware of it.


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.

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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's £3M Bonuses

Last year HMRC paid out £3M in bonuses to staff, the average bonus payment to employees was just under £250.

However, at the top end two staff received between £15,000 and £20,000, while another 17 received an extra £12,500.

I don't doubt that many were well deserved. However, given that the organisation is failing, I wonder if the top end payments were quite so appropriate?

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"

£10M Cumulative HMRC Bonuses Rewarding Failure

The Sun reports that bonus payouts to HM Revenue and Customs have hit a four-year-high

Former CEO Dame Lin Homer picked up the maximum bonus of £17,500 in each of the last two years on top of her annual salary package of £185,000.

Additionally, 80 of the most highly-paid civil servants were also handed lump sums of between £9,500 and £17,500.

The four year cumulative bonuses total £10M, bonuses in 2016 totalled £2.5M (the highest since 2012).

A reward for failure!

What say you loyal readers?

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"

The Curious Case of Facebook's £4K Tax Bill

Facebook paid £4,327 in corporation tax last year, this is less than the annual cost of travel for some people commuting to London from Brighton each day and less than many taxpayers (based on the average) paid in income tax.

Despite revenues of £105M in 2014, Facebook incurred losses of £28.5M.

This loss was partly in due to £5.6M of tax losses being brought forward from the previous year, and also due to the company's finances going largely through its European headquarters in Ireland where it's able to minimise taxes through the "Double Irish" loophole.

Unsurprisingly there has been a right old hoo hah about this.

However, £35M of bonus payments were made to British staff which I assume (depending on their tax arrangements) are taxable.

That aside, those who are in a flap over this should bear in mind that Facebook has not broken the law but has used the law to minimise its taxes.

The laws that Facebook uses have been passed by our "respected" MP's. Therefore, if people do not like these laws, they should have a word with their MP's and ask them to pass laws that extract higher tax bills from Facebook.

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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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"

Lin Homer's £20K Bonus

My thanks to a loyal reader who has posted that Lin Homer has been awarded a £20K bonus:

"Just to rub salt in to the wounds, Homer got a bonus over £20,000 for 14/15. 

That's on top of her £185,000 salary. 

She got an exceeded marking for her PMR lol"

Well deserved no doubt!

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"

Have I Got Old News for You - Courtesy of The Telegraph

A couple of days ago The Telegraph reported about HMRC staff's furious reaction to Lin Homer's £20K bonus:

"Lin Homer, the chief of HM Revenue and Customs, has been hit by a furious backlash from her staff after accepting a £20,000 bonus. 

Mrs Homer was asked how “you think you can justify” taking the reward on top of a £185,000 salary, while thousands of her civil servants saw the value of their pay packets shrink. 

In a question and answer session on the HMRC staff intranet, one employee pointed out that the package is more than the sum taken home by secretarial staff in a year. 

Mrs Homer acknowledged that the bonus has “generated some strong feelings”, adding: “I do get paid a lot”.

She is one of a number of senior civil servants to take home five-figure rewards.

The employee, writing anonymously, said: “Can you please tell everyone how you think you can justify the £20,000? This is when all my colleagues have had to put up with either a one per cent or no increase on their wages in the last few years, that in real money equates to a wage decrease. 

“The bonus you are receiving is actually more than an administrative officer or administrative assistant’s salary!”
The questioner added that, if her performance pay was calculated on the same basis as that for all other staff, it would be 1.95 per cent, or £3,607."

All very well and headline grabbing, except that it is somewhat old news.

For it was reported on this very site 1 August 2014.
 
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"

Homer Admits She Gets Paid a Lot

Around mid July Lin Homer was asked about her £20K bonus, she said that she should keep it as it reflected “a very good performance”.

Unsurprisingly, given that some HMRC staff do not receive basic pay that amounts to £20K per annum, the issue was raised at a recent HMRC Hotseat Q&A on the intranet.

My thanks to a loyal reader who passed on a transcript of the relevant part:

"Lin Homer Bonus

Can you please tell everyone how you think you can justify the £20,000 bonus that is widely reported in today's media?

This is when all my colleagues have had to put up with either a 1% or no increase on their wages in the last few years that in real money equates to a wage decrease. The bonus you are receiving is actually more than an AA or AO grades salary!

If you did receive an exceed for your PMR then you should be receiving £3607 bonus which is 1.95% of your £185000 salary.

I look forward as does everyone else to your response.
Anon

Answer

Thank you for your question. I know that pay is a really important issue for you at the moment so I’m happy to explain the position on SCS pay, which is handled differently to AA to G6 pay.

Some years ago, a pot of about 9 per cent was created by putting some of SCS base pay into a non-consolidated pot, which was then awarded only to top and achieved performers.

This Government decided to freeze all but a third of that pot and only makes awards to top performers. These awards continue to be distributed.

I should stress that pay and performance management for senior civil servants are handled centrally by the Cabinet Office. In the case of Permanent Secretaries, a remuneration committee – with an independent chair – recommends whether to pay an award and the amount, after considering a wide range of feedback and evidence.

During my time as a SCS, in line with that process, I have been awarded a bonus on a number of occasions and not on others. This is based on evidence and a comparative analysis across all Permanent Secretaries. The decision is reported our Annual Report, and it’s this that prompted the Telegraph piece.

On my visits to our offices and at events many of you tell me the public sector pay cap is making things tough for you financially. I understand why my performance award has generated some strong feelings as I do get paid a lot."

You will observe that Homer doesn't actually answer the question wrt "justifying" it, she passes the buck saying that others have approved it.

On the plus side, she does at least admit that she gets paid a lot!

All happy with that response then?

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"

Homer Deserves Her Bonus

I am pleased to see that Lin Homer, current CEO of HMRC, feels that she has done such a good job that she deserves her £15K-£20K bonus.

Homer said she should keep on to a bonus, saying it reflected “a very good performance”.

Homer is quoted by the Telegraph telling PAC:

“We have tried to make sure we are rewarding a very good performance from a number of people.

I’m confident the bonuses that were given out were deserved. I don’t feel that anything we’ve explained to you has warranted any review of that.”

What say you loyal readers?

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"

Hargreaves Lansdown Challenges HMRC's Discount Tax

In March I noted that as from 6 April 2013 fund investors face paying income tax on "loyalty bonuses" paid by fund supermarkets, after HMRC ruled that the payments are "annual payments" and should therefore be taxed as income.

Hargreaves Lansdown (the UK's largest fund supermarket) has taken advice from counsel and decided to challenge HMRC's "discount tax", as the tax threatens their ability to pay loyalty bonuses and offer discounts on fund charges.

Chief executive Ian Gorham is quoted by Citywire:

"The introduction of the 'discount tax' was extremely disappointing news and an attack on the small investor. The 'discount tax' is anti-competitive. Loyalty bonuses have been hugely popular with investors and helped them save money on investing in their favourite funds.

We feel it’s important to take a stand on behalf of investors. When we introduced loyalty bonuses we consulted on its tax position and it was clear, as a refund of charges, it should not be subject to taxation."

Hargreaves Lansdown believes that it has saved investors over £1 billion in discounts and loyalty bonuses.

The legal challenge, unsurprisingly, is expected to take several months. The tax due to HMRC is being held in a fund while the issue is resolved. If Hargreaves Lansdown loses, the money will be paid to HMRC otherwise it will be returned to its clients.


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"

Loyalty Bonuses Taxed

Here's an interesting development.

The Telegraph reports that fund investors face paying income tax on "loyalty bonuses" paid by fund supermarkets from next week, after HMRC ruled that the payments are "annual payments" and should therefore be taxed as income, starting in the new tax year - April 6.

Does this set a precedent for HMRC to tax cashbacks/loyalty rewards offered by supermarkets and credit card companies?

HMRC said claims that cashback in other industries could be targeted next were "complete rubbish".

So then, clearly HMRC won't tax cashback schemes ever.

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"

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"

Rewarding Failure - Bonus Season at HMRC

Oh the joys of the bonus season, when you are rewarded for your success and for meeting your KPI's.

Well that's the theory.

However, in reality there are some organisations that are more than happy to reward failure.

Aside from our "respected" financial institutions that mis-sell insurance, endowments, pensions, loans, sub prime debt etc there is another organ that is happy to reward failure.

Can you guess which one that is?

Yes, that's right, our old chums at HMRC.

Those running the organ of the state that lost 25 million data records, leaves months of post unopened and has screwed up the tax credit system have still been given bonuses.

The Treasury has paid out £3.1M to top civil servants and £19M to staff at HMRC.

The rewards have been agreed by the Cabinet Office, as part of a package to encourage the most senior civil servants to meet government targets set by the Treasury.

Well done lads!

Well deserved!

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 Fists of Fury

HMRC felt MPs' fists of fury last week over the recently announced bonuses to be paid to senior HMRC staff.

The bonuses went up by an average of 60% during the year. This was in spite of the fact that HMRC is in meltdown; complaints about tax credits have risen, VAT processing targets have been missed and personal data belonging to 25 million people was lost.

The Treasury Select Committee said that the payments were "completely unjustified".

Michael Fallon, who headed the probe, said:

"Sadly in some areas, such as the Value for Money Delivery Agreements, we have found them failing to lead by example.

If they can't get this right, how can any other department be expected to?"

Shadow chief secretary to the Treasury Philip Hammond waded in as well:

"From the tax credit chaos, to the missed targets, to the lavish bonuses paid to HMRC staff, it is clear that the chancellor (Alistair Darling) and his predecessor, Gordon Brown, have failed to deliver competent leadership."

The coup de grace was wielded by Liberal Democrat Treasury spokesman Vince Cable:

"It is clear that the days of prudence in the Treasury are well and truly over.

With millions of personal records lost, a tax credit system in chaos and the debacle of Northern Rock, why on earth does the Treasury think it is appropriate to increase staff bonuses by 60%?"

However, HMRC don't agree. One of their spokesmen said:



"In line with the wider civil service, bonuses are paid to encourage and reward performance and to enable HMRC to improve its service to taxpayers and the government.".

An interesting argument, unfortunately here's where the real world and HMRC's "Lah Lah Land" differ.

In the real world bonuses are paid after service levls have improved, and after targets set have been met. To pay a bonus before any targets have been met undermines the incentive point of the bonus, and makes a mockery of the bouns system.

They just don't get it do they?

Tax does have to be taxing.

HMRC Is Shite (www.hmrcisshite.com) is brought to you by www.kenfrost.com "The Living Brand"

HMRC Continues To Reward Failure

It seems that HMRC hasn't quite grasped the concept of performance related pay and bonuses.

In theory, rewards and bonuses should only be granted for above average performance. However, HMRC in wake of its ever burgeoning list of fiascos (eg datagate and systems crashes) has decided to grant its staff another series of undeserved bonuses (courtesy of the taxpayer).

Performance related payouts in HMRC have more than doubled in the last two years.

Michael Fallon MP, chairman of the Commons Treasury sub-committee, is not impressed and noted that the payments were "rewards for failure".

The bonuses for the current financial year are estimated by HMRC to amount to £23.1M, which is 22% up on £18.9M (in 2005-6, bonuses were £11M)

Approximately £2.2M of the 2007-8 bonuses will be shared between just a few hundred senior officials.

All of this is rather embarrassing for HMRC, they should have learned their lesson in January 2008 when their bonus payments for last year were trashed on this site.

Evidently HMRC never learn!

Tax does have to be taxing.

HMRC Is Shite (www.hmrcisshite.com) is brought to you by www.kenfrost.com "The Living Brand"

Rewarding Failure

In the rarefied world of Whitehall, where reality has yet to cross the threshold of those hallowed corridors, rewarding failure is second nature to the politicians and civil servants who inhabit its warrens and bunkers.

Therefore it should come as no surprise to learn that, following hot on the heals of Richard Summersgill receiving a CBE and Paul Gray being re employed, staff in HMRC who lost the personal details of 25 million families have received a £19M performance-related bonus.

Some of the payments, worth up to £8K each, were made at the end of November; just after Datagate.

I would note that HMRC has publicly stated that there have been seven data breaches since April 2005 (there may well of course be others that have yet to be discovered/announced).

The good news for the staff of HMRC is that the payout is 70% up on the previous year, which was a mere £11M.

Value for money indeed, and doubtless well "deserved"!

Figures released show 220 senior HMRC staff received bonuses for 2006-7 worth £1.7M, an average of £8K each.

Nearly 38,000 other workers received bonuses worth £17.2M, an average of £453 each.

Those of you who are worried that, given the data losses and shambles over tax credits, these payments are not actually deserved need not fear.

Jane Kennedy, a Treasury minister, said that the increase was the result of a "pay assimilation exercise" after HM Customs and Excise and Inland Revenue merged in 2005.

In other words it's not a bonus at all.

So that's alright then, isn't it?

It is, after all, only taxpayers' money!

www.hmrcisshite.com is brought to you by www.kenfrost.com "The Living Brand"

The Litany of Disasters

Revenue & Customs has a long litany of disasters to confess, ranging from lost laptops to the tax credit 'nightmare':

October 2007

A laptop containing data on up to 2,000 people with investment ISAs is stolen. In Parliamentary answers Ministers reveal that 41 laptops were stolen from HMRC in the past 12 months

September 2007

A CD containing names, national insurance numbers, dates of birth and pension data of about 15,000 Standard Life customers goes missing. The data was lost en route from the Revenue office in Newcastle to the company's headquarters in Edinburgh

August 2007

Businesses registering for VAT for the first time face unprecedented delays because of the Government’s attempts to crack down on carousel frauds and cut costs. In extreme cases, businesses have had to wait more than six months for their VAT registration

May 2007

HMRC forced to extend the self-assessment filing deadline to 28 May and mitigate penalties for late filing, after tax agents complain that the online serivce is so slow that the only way to file a return is at 4am or weekends

May 2007

Parliamentary Accounts Committee reports again on the tax credit system. Committee says £5.8 billion was overpaid to claimants in the first three years of the current tax credits scheme, due to administrative errors by HMRC

February 2007

HMRC comes under fire for offering tax inspectors bonuses of up to £2,000 to encourage them to collect 25 per cent more tax during 2007

December 2006

A National Audit Office report indicates that 5.7 million taxpayers may not be paying the right amount of tax because they are using the wrong tax code. HMRC estimates are that taxpayers have overpaid around £500 million via PAYE, and that £1 billion of tax may have been underpaid

January 2006

HMRC apologises to 10,000 firms after fining them at least £400 each by mistake because of a basic flaw in the design of automatic systems that issue penalty notices

September 2005

The Public Accounts Committee denounces the tax credit system as a "nightmare". MPs say tax credits have been routinely overpaid to 1.8 million claimants and claims the system may be fatally undermined by its complexity. Follows reports from the Ombudsman and complaints from Citizens Advice.

May 2002

Ten months after its launch, the Inland Revenue's self-assessment online tax returns service suffers a major security breach when taxpayers filing their tax return online were able to view each others' personal information.

Source The Times