Plans For Quarterly Tax Returns Rubbished

In a report published on 5 April, the Administrative Burdens Advisory Board (ABAB) has warned that the plans announced by George Osborne to introduce a new digital tax system for the self-employed (including mandatory quarterly updates) would create a significant added burden in terms of accounting records and costs for SMEs.

Quoted by the Guardian:

“Compulsory digital record-keeping and quarterly online updates is not an approach we can endorse.

We are concerned that the proposals for quarterly updates will be more burdensome than they currently are with increased record-keeping and compliance costs. This will have a big impact on the smallest of businesses.”

The Federation of Small Businesses doesn't think much of the idea either.

Mike Cherry, national chairman, said:

“Forcing small firms to pay for expensive digital accounting software so they must submit extra tax returns is not going to help anyone. It will simply add to the cost of doing business in the UK. When every independent body and expert is lining up to tell you to stop, slow down and think again, it might be time to take a breather and listen to their concerns.”

A spokesperson from HMRC said:

“We are focussed on creating a tax system that is more effective, more efficient and easier for taxpayers and we will work closely with stakeholders to address their concerns. 99% of businesses already file their corporation tax online and 98% of VAT returns are filed online. 

The new digital accounts, which are not being introduced until 2018, will simply integrate the different information businesses already provide to HMRC into a simpler, streamlined system. This will reduce the burden of updating HMRC for small businesses.”

Let's see how that works out in reality 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"

HMRC Is Unhelpful

A study by R3 (the insolvency trade body) has found that 54% of insolvency practitioners (IPs) think that HMRC makes it harder to rescue businesses rather than wind them up.

The survey also highlighted that 71% of IPs believe that HMRC has made the insolvency process harder to manage over the past few years, with just 10% believing that HMRC was ‘helpful' when it comes to business rescue.

IPs estimate that a third of the estimated 480,000 letters and forms they send to HMRC for a year's worth of cases are duplicates of lost or ignored post, or are copies of letters that have to be sent to multiple HMRC addresses. This is the equivalent to approximately 160,000 excess forms and letters for a year's worth of new cases.

Some 54% of insolvency practitioners reported that they had to wait over three months for clearance from HMRC to close their last case, while 25% waited between six months and a year.

43% said their requests for information from HMRC - to which they were entitled as office holders - were rejected.

Phillip Sykes, president of R3, is quoted by AccountancyAge:

"The government, as a creditor, can do much more to help promote a business rescue culture. At the moment, it can be responsible for lengthy paperwork delays, and creates extra costs for itself, the insolvency profession and other creditors, while its lack of commercial decision-making capabilities undermines business and job rescue proposals.

The insolvency profession believes the government's behaviour as a creditor makes it harder to manage insolvency processes and rescue businesses. It's one of the creditors the insolvency profession looks forward to working with the least - which is a problem given how often the government is a creditor in insolvencies."

What Mr Sykes doesn't grasp is that the government does not give a flying fig for businesses, unless they are multinationals giving the government a large scale discounted contract or providing jobs for ex government ministers.

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"

Tax Advice For Pensioners? - Sod Off!

Tony Hazell, writing in the FT, has issued a heartfelt plea for people (pensioners in particular) to be given some help by the state wrt filling in and understanding the ever more complex tax forms that are being spewed out by HMRC.

"I am currently helping a pensioner who in the space of a few months was sent a tax rebate, then an overdue tax demand and then asked to make a payment on account.

She is now owed several thousand pounds by HMRC, but the initial error stemmed from a mistake she made in filling in her tax return. This was compounded by another error when she did not understand how to account for tax HMRC was already collecting through her code. 

The whole affair has caused her untold stress.

The difficulty is that as more people are forced to fill in self-assessment forms, there will inevitably be more mistakes. Yet HMRC is itself under financial strain and does not appear to have the resources to help those who need it.

Advice services are springing up everywhere for pensions and investments, but I see no sign of government-sponsored help for those struggling to understand their tax.

This lady was not a tax dodger, she was simply confused and could not afford to pay an accountant to sort out the form for her.

If this government and its successors plan to continue dragging ever more pensioners into self-assessment, then it must make sure HMRC has the resources and training to help those who struggle to understand its forms."

Sadly this plea will fall on deaf ears, as I noted wrt HMRC's Building Our Future strategy, the policy of HMRC and the government is for pensioners to be told to sod off!

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"

Business Records Checks - Pissing In The Wind

Following on from my article on Monday about 73% of HMRC's business records checks being fruitless, a loyal reader has advised me of the following:

"Last September I submitted a client company's corporation tax return with the following additional information on it:

1. In our opinion the quality of the accounting records was below the Companies Acts requirements.

2. We were unable to assess the level of closing debtors and creditors.

We are just about to submit this year's return and will have to include the same note again.

Interestingly HMRC have done SFA to check the company's records."

You can lead a horse to water, but you can't make him drink!

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"

73% of HMRC Visits Fruitless

It seems that HMRC's visits to SME's, in order to carry out detailed checks of records etc, are not particularly popular, nor fruitful.

The number of firms forced to undergo a ‘business record check’ has increased by 62% since they were introduced in 2011, yet 73% of these visits have achieved nothing.

This is Money reports that over 5,500 companies underwent the checks in the year to April 2014 (up from 3,431 in the ten months between April 2011 and February 2012). However, 73% were found to have no significant errors (an increase from the 64% in the previous year).

HMRC say that things will now improve, as the checking system had been subject to revisions aimed at filtering out low-risk companies and preventing them from being exposed to the process.

"From November 2013, the BRC programme was scaled back to better target those at risk of having inadequate records. It will allow us to concentrate on those who need our help and reduce the burden on those customers who are keeping adequate records."

See, nothing to complain about 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"

HMRC Hypocrisy - Business Records

I recently wrote that HMRC have placed on hold their plans to carry out business records checks on  SMEs. Additionally they have also decided to exclude practices from any future checks, as and when the scheme is relaunched.

However, it seems that their own records may be a tad disorganised. Accountancy Age reports that Abbey Tax submitted a Freedom of Information request (FoI):

"How many accountancy firms have been subject to a business record check?"

HMRC were unwilling/unable to provide an answer.

The reason, if HMRC is to be believed, is that it would cost more than £600 to go through the data.

Does this mean that HMRC do not have decent records that are easy to analyse and access?

This being the case, should HMRC not get its own house in order first before subjecting SME's to business records checks?

Tax does have to be taxing.

UK EXPATS: Reduce tax on UK Pensions
HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

Quote ID code "ABC" when contacting a QROPS specialist.

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"

HMRC's Money Making Scam II

Now, as my loyal readers know, we are rapidly approaching the deadline (31 January) for the filing of online tax returns for tax year end 2011.

This year HMRC have added another money making string to their bow, in the shape of an automatic fine of £100 for any returns that are submitted late (even if there is no tax due).

In my very humble opinion fining people for submitting a late return, on which they have no tax liability, is a farking disgrace; and clearly is a blatant attempt by the bankrupt state to screw the taxpayer for as much money as possible.

As we know, the "state is unlawfully using late-payment penalty fines against tens of thousands of small firms who do not file their tax returns on time as a "cash-generating scheme" for the Exchequer."

Anyhoo, thus far, HMRC have stated that they are determined to collect these unjustified fines from anyone who misses the deadline (even if they owe no tax).

Given that there will doubtless be quite a few people (who owe no tax) who miss the deadline (human being are human beings, no matter what a government bureaucracy would like to turn us into), it will be very interesting to see what happens in February, March and beyond when the fines start dropping onto doormats.

Despite the fact that the political "elite" have no intention at the moment of removing their snouts from the trough, I suspect that this blatant money making scam will come back to bite HMRC and the government on their bureaucratic arses. There will be some very heavy political backpedalling, when the politicians realise that this is a step too far.

Tax does have to be taxing.

UK EXPATS: Reduce tax on UK Pensions
HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

Quote ID code "ABC" when contacting a QROPS specialist.

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"

Jack's Back - By Popular Demand!

By popular demand the ever entertaining Dave "Jack" Hartnett made his encore yesterday before the Commons Public Accounts Committee (PAC).

Margaret Hodge (Chairman) made Jack feel very welcome, by stating that the committee would not "let matters rest from last week".

Hodge went on to say that the Cabinet Secretary (GOD - he who soon leaves orifice) had requested a meeting, and that the committee would decide after that meeting what ‘further action’ it was going to take wrt HMRC.

PAC could force open the settlement agreements that forgave the giant vampire squid (Goldman Sachs) £10M of tax and Vodafone £4.75BN. There are also two other companies with similar tax agreements with HMRC that remain secret.


Hartnett told PAC that HMRC was ready to talk in confidence, and would ‘support the NAO’ in its work.

How very "nice" of him and HMRC!

Does that not sound as though HMRC and Hartnett are getting a tad above themselves?

Have I not warned many times on this site about HMRC taking on powers and politicising itself, in an attempt to place itself above its brief of being a bureaucracy whose mission should be solely to collect taxes in an efficient and cost effective manner?

Anyhoo, Jack confirmed that he would write to the committee regarding legal advice received on taxpayer confidentiality. He claimed that he was in discussions with lawyers, and would clarify the precise rules governing taxpayer confidentiality "by Wednesday" (doesn't he know the rules after all those years in the job?).

Stephen Barclay MPO accused Jack of misusing confidentiality rules to "cover up his own mistakes".

Jack admitted that he had not sought legal advice before settling the case with Goldman, based on the view that HMRC could not pursue it because of the technicality.

Mr Barclay retorted that it "sounded like" he had "cut a deal and didn't tell anyone".

Jack blustered that there was "far more" to the case than had been discussed, but it could only be revealed in a confidential session.

Aha!

The whole case seemed "very odd", said Mr Barclay.

Quite!

Enjoy watching Jack's encore performance via this link Jack's Back.

Tax does have to be taxing.

UK EXPATS: Reduce tax on UK Pensions
HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

Quote ID code "ABC" when contacting a QROPS specialist.

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"

The Great Mortgage Con Trick

Another Monday morning crashes into our lives with the depressing inevitability of an unloved season. As such, what better time than to discuss two issues that are close to the hearts of every Englishman (and woman), namely tax and mortgages?

As many of you know (and were so keen to discuss over the weekend) HMRC and our "respected" banks/financial institutions have come to a nice little arrangement wrt mortgage applications.

Lenders who "reasonably suspect" that mortgage fraud may be taking place will now send details of the application to HMRC, who will check income details against information provided in income tax and employment returns. HMRC will then advise lenders whether or not the details match.

On the face of it a nice little "result" for both the banks and HMRC.

The banks get a second pair of eyes to check that they are not being defrauded by some scallywag intent on overstating their income, in order to falsely obtain a mortgage (a criminal offence I would point out).

HMRC get the chance to identify scallywags who understate their income on their tax returns.

Milky bars all round!

However, and there is always a "however" when I direct my gimlet eye towards such a scheme, there are one or two flies in the oinkment.

The banks may well think that they have passed the buck for checking the veracity of mortgage applications to the state. Thus, as and when frauds get through the extra layer of bureaucracy (and be assured they will), they will be able to turn to the government and say "your own agency checked it, don't blame us".

In fact, banks being banks, they will then doubtless sue HMRC for negligence.

Re the concept of "reasonably suspecting" mortgage fraud, dare I suggest that if a bank has suspicions that a fraud may be being perpetrated then (under the terms of the remarkably "catch all" Anti Money Laundering legislation - wherein even the theft of a paperclip by an employee technically constitutes money laundering) it is legally bound to report the suspected crime to the authorities. Mortgage fraud and money laundering are becoming connected.

Passing on a mortgage application to HMRC does not constitute "reporting a suspected money laundering crime to the authorities". In short, if the banks really do suspect a fraud then they must report the suspected crime, and passing it to HMRC is in fact a potential crime in itself.

Based on the above are we therefore to assume that "reasonably suspect" in fact means that all mortgage applications will be passed to HMRC, or none at all?

Given how long it takes HMRC to deal with even the simplest of tasks/correspondence can you seriously see referred mortgage applications being turned around in the speed necessary for a house purchase to be completed?

In short the banks have rather shot themselves in the foot here, by adding an extra layer of tedious time consuming bureaucracy to an already moribund and dying market. They will end up lending less and thus make less profits.

However, from HMRC's point of view this is still a win win situation, given that they gain access to even more data on the hapless taxpayer.....or is it?

Taking into account the point I made earlier about being sued by banks when a fraud is perpetrated, HMRC should also be aware that if they deny someone a mortgage (because they tell the bank that the data does not stack up) they will also be liable to be sued if it turns out that the data anomaly is legitimate (eg fluctuating earnings) or down to a mistake made by HMRC.

Have HMRC really considered what the true costs (time and money spent on legal cases etc) of cock ups with this new scheme will be?

Rest assured there will be many cock ups!

As for the taxpayer/mortgage applicant, as ever they end up holding the shitty end of the stick. This scheme will add to the costs and time taken to obtain a mortgage, and will most likely kick the legs out from the very shaky housing market.

This scheme will backfire on all those involved (banks, HMRC mortgage applicants, house sellers).
  
Tax does have to be taxing.

UK EXPATS: Reduce tax on UK Pensions
HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

Quote ID code "ABC" when contacting a QROPS specialist.

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"

Beyond Pathetic

Freelance UK reports that the Forum of Private Business (FPB) is a "tad underwhelmed" by HMRC's many faults.

The FPB is of the view that the tax system is inefficient because it is "bogged down in bureaucracy" partly a result of HMRC's "complex, unwieldy" procedures for online taxpayers.

The FPB said that the tax system was no longer "fit for purpose".

Re HMRC's failure to pick up 43% of the calls it received (2008-09), the FPB said that it was "beyond pathetic."

This is not a state of affairs that can continue. Something is going to "break"; whether it is the staff (who are taxpayers), the taxpayers (who are not staff), the politicians or indeed Excomm.

Tax does have to be taxing.

UK EXPATS: Reduce tax on UK Pensions
HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

Quote ID code "ABC" when contacting a QROPS specialist.

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"

Groundhog Day

It seems that, as with the regular cycle of the seasons, there is yet another government "headline catching initiative" to reduce the red tape negatively impacting British business.

The Telegraph reports that the Treasury has asked the Orifice of Tax Simplification (OTS) to identify how bureaucracy in the tax system holds small businesses back.

Exchequer Secretary David Gauke, who is beginning to feature on this site a little too frequently, claims that wants the OTS to identify ways to improve the way that HMRC interacts with small businesses, including the processes involved in starting and growing new firms.

One of the major problems with the tax system, as it currently stands, is that it was set up with a "Victorian mindset" of people working for only one employer. In the real world many people are now self employed, or work for several employers.

Job "flexibility" and "getting on our bikes" has long been pushed by governments of all political persuasions. However, it is ironic that the tax system (under the control of these governments) remains rigidly inflexible wrt "portfolio" working.

As to whether anything tangible comes of this latest "initiative", remains to be seen. I would observe:

1 Governments, over the last few decades, have all claimed that they want to reduce the burden on business. Yet that burden has steadily increased over the years. These "initiatives" for reducing red tape make nice headlines, yet nothing ever seems to come of them.

2 HMRC's mess is the direct result of government interference, and the ever increasing complexity of tax legislation. The solution lies in the hands of the politicians.

3 Politicians thrive on complexity and tinkering with the law/regulations.

Why?

They need to show the voters that they perform a useful function, and that we cannot do without them.

In order for things to change/improve those who control the system (ie the politicians) must genuinely want things to change/improve.

The question is, do the politicians really want things to change and improve?

All views and comments, as always, welcome.

Tax does have to be taxing.

UK EXPATS: Reduce tax on UK Pensions
HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

Quote ID code "ABC" when contacting a QROPS specialist.

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"

Making It Up As They Go Along

ICAS have put a very well aimed and targeted boot into the "delicates" of HMRC, in respect of HMRC's Impact Assessment of Business Record Checks.

ICAS are of the view that business records checks could cost SMEs at least 10 times more than HMRC's guesstimate, and will impose an absurd administrative burden on SMEs.

In HMRC's fantasy land each visit, averaging half a day, will cost a business £54. However, ICAS has re-costed an average visit using realistic estimates of business disruption and adviser's time and have come up with a total of at least £560 per visit.

ICAS is also somewhat wary of HMRC's fantasy plans to visit 50,000 SMEs each year for four years.

That would be most assuredly bureaucratic bullying overkill, if HMRC really had the resources to do that. Additionally, ICAS is not particularly impressed with the "quality" of some of the people HMRC will be sending into the field and is concerned about the "intransigent attitudes" of these inspectors.

ICAS say:

"..the bases on which these proposals have been presented seem deeply flawed.

Assumptions made by HMRC regarding the incidence of inadequate business records are unsubstantiated by any detail, and estimated costs of the scheme are massively understated. It was not long ago that HMRC were assuring the Administrative Burdens Advisory Board that interventions would be well targeted to reduce red tape for compliant taxpayers, and we fail to understand why this policy has been changed...

HMRC's basic assertion that poor business record keeping is responsible for a loss of tax in up to 2 million SME cases annually seems to be a sweeping generalisation with little credible evidence provided to back it up. We would like to see evidence as to how this statistic has been arrived at, as the validity of the entire consultation document is based on it. Without such evidence, the proposals might appear burdensome and unjustified.

Experience of our members in practice suggests that poor record keeping (where it arises) does not necessarily equate with loss of tax – it can sometimes result in their clients paying too much tax...

We would take issue with HMRC's basic assumption that SMEs with poor records have chosen to have poor records. This is a misconception. Those with the courage and tenacity to embark on new business ventures are forced to battle from the outset against a mass of Government regulation and red tape. Typically they don't go into business because of their record keeping skills...

Anecdotal evidence has caused our members to question the skills and professional judgement of some HMRC representatives checking the business records of their clients. We understand that many of these members of staff have no significant accountancy or tax training. This can cause them to be on the defensive, and in these circumstances it is not unknown for them to adopt intransigent attitudes..."

As we can see, an unelected inefficient bureaucracy is allowing the excessive powers granted to it by a weak and incompetent political establishment to go to its head; and is attempting to use these powers to bully people and organisations that pay for its very existence.

Tax does have to be taxing.

UK EXPATS: Reduce tax on UK Pensions
HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

Quote ID code "ABC" when contacting a QROPS specialist.

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"

Bernard Ingham's View

Unedited, as per The Yorkshire Post:

"WHEN in doubt, set up a committee. That is the politician's answer to everything. It is often an elegant response to a knotty problem because, like Royal Commissions, committees can take minutes and spend years. Just what parties in power, if not the public interest, order.

And so, while his colleagues are culling quangos, Chancellor George Osborne has set up a new one. It's the Office of Tax Simplification, otherwise known as OOTS.

Unfortunately, we are in no position to grumble about OOTS. Osborne said he would establish it two years ago because, as was his wont, Gordon Brown had taken a complex system and complicated it. The new Chancellor has appointed a former Tory Minister, Michael Jack, and John Whiting, a former PriceWaterhouse tax partner, to sort out the mess.

So far so good. But what sort of dog's breakfast has Brown left behind? OOTS' usefulness turns on the answer.

It goes without saying that the tax system is complicated. There are a lot of vested interests behind its complications. As an eminent Scottish lawyer once told me over dinner, budgets were his bread and butter. I gathered that the more impenetrable they made the system, the fatter he became. Gordon Brown was God's gift to tax lawyers.

Since the 1999 Finance Bill, tax legislation has grown at an alarming rate. So have the penal regulations introduced since self-assessment tax returns were issued in 1997.

On top of this came the merger of the Inland Revenue with Customs and Excise in 2004. Rubbing shoulders with tough Excisemen brought up on nabbing smugglers has, it seems, done nothing for the taxman's dubious PR skills.

The result, according to accountants I know, is a deterioration in the relationship between taxman and taxpayer. HMRC are the masters now. I cannot personally testify to this since, in my lazy way, I employ an accountant to devil for me. He is not a complaining sort.

But I am clearly no more representative than is Naomi Campbell of models in taking post-prandial delivery of "blood diamonds" – or "dirty-looking stones" – on her bedroom doorstep. Last year, HMRC records it received 73,455 complaints and has even set aside £30.7m for legal costs in appeals that taxpayers are expected to win.

In the first half of last year, 20,778 taxpayers asked for an independent review – mostly for late filing of returns – and more than half either had the penalty withdrawn or cut.

These figures do not testify to respectful relations between the public and tax collector. Nor does the awesome total of 18 million unresolved cases covering both over- and under-payment Messrs Jack and Whiting clearly have their work cut out.

It may well be argued that, if – and hope springs eternal – they can simplify the system so that I can understand it, the problem will solve itself. But will it? All I hear suggests that it is not just a matter of complexity; it is also one of attitude. In other words, it is not just a matter of bad law; it is a matter of the public servant's approach to the citizen – as I fear it is in so many branches of our bureaucracy.

I speak as one who recognises that avoidance of tax is a national industry and that no Revenue officer should be born yesterday – or expect to be loved.

But the readiness to impose ever increasing penalties, some of which can have serious implications for contractors' continued operation in business, the difficulty of finding and reaching the appropriate office, the time taken to make simple repayments and the excuses offered demand more of OOTS than mere simplification.

It probably does not help that there are competing chartered institutes of accountants in this green and overtaxed land. They surely bear some responsibility for our tax system being up to its knees in the Brown stuff. Perhaps the public would have been better served if they had spent more time on insisting on good law and less on ever more complex methods of tax avoidance in pursuit of their own profit.

It is probably a good thing that OOTS is trying to simplify our hopelessly complex system of providing the wherewithal for the nation's operations. But I trust it also feels it must look at the spirit in which the Revenue conducts its essential business.

Unless it does, Osborne will not realise his ambition of showing the world that Britain really is open for business. It must clear the air as well as the Statute Book."

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"

Power Corrupts - Fit and Proper Test

It seems that our "respected" MPs have foisted another piece of bureaucratic tax legislation upon us that will do nothing to lessen fraud, but will do everything to increase the bureaucratic burden on legitimate charities and their trustees.

Third Sector reports that a new measure introduced in the Finance Act earlier this month, designed to ensure that tax relief is not given to bogus charities, is too loosely worded and gives HMRC too much power.

The legislation gives HMRC the power to carry out a 'fit and proper persons' test, every time a charity hires a new trustee or senior manager. If a trustee fails to pass the test, the charity can be denied tax relief.

Sam Macdonald, partner at law firm Farrer & Co, is quoted:

"Charities will never really know whether they are entitled to tax relief or not.

HMRC has said 'you'll have to trust us', but that's not a reassuring basis on which to continue."

Bill Lewis, tax consultant at Bates Wells & Braithwaite, said:

"HMRC should have consulted on the legislation before introducing it.

This is more unnecessary paperwork, and penalises only the innocent. The red tape this produces will have no effect on fraudsters, but it will cause trouble for law-abiding trustees."

Simon Weil, partner at Bircham Dyson Bell, said:

"This is dangerously subjective legislation. I think the sector needs to fight for its independence."

Poorly drafted legislation giving more powers to an unelected bureaucracy is a dangerous combination.

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"

Power Corrupts - Making It Up As You Go Along

HMRC, in their self righteous war against tax avoidance (tax avoidance is perfectly legal) have decided to change the rules to allow HMRC to interpret parliament's "true intentions".

New guidance from HMRC now tries to define tax avoiders as those seeking to pay less tax than "if Parliament turned its mind to the specific issue in question".

This change of definition will lead to many taxpayers, who have made perfectly legal tax arrangements, being subjected to HMRC investigations.

This change in the rules undermines parliament's right to legislate.

The new "code of practice" for tax inspectors defines tax avoidance:

"Avoidance is not defined in the Taxation Acts...One definition is 'a situation where less tax is paid than Parliament intended, or more tax would have been paid, if Parliament turned its mind to the specific issue in question.

At a practical level the problem is then essentially one of deciding what Parliament would have intended and identifying who should be asked to decide this.

Inspectors need to have in simple terms a working concept of 'avoidance' in order to properly identify cases which can be worked...The starting point should be that one would normally expect taxpayers to pay tax on their income or profits...It is reasonable to assume that where a commercial transaction is carried out in a particularly convoluted way, then avoidance is afoot."

Slowly but surely HMRC are attempting to put themselves above statute and parliament, and take on the role of judge, jury and executioner wrt taxation and the interpretation of tax law.

This is an "evolution" that must be stopped.

The bedrock of dictatorship is an overempowered, arrogant, unaccountable, unelected bureaucracy populated by "little men" who believe that they are working for a "greater cause".

Issues wrt tax legislation are for the elected members parliament to address, not the unelected bureaucrats of HMRC.

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"

HMRC Places Itself Above The Law

The Chartered Institute of Taxation (CIOT) is less than impressed with HMRC's consultation document on Code of Practice On Taxation of Banks.

"We are deeply concerned about any move that seems to erode what is one of the cornerstones of the UK's tax system: that taxpayers should be taxed according to the letter of the law.

Case law and documents going back to Magna Carta recognise this. In recent years, case law has developed its way of looking at the statute, towards a purposive interpretation of the transactions under consideration.

This has been a significant evolution, and one with which taxpayers and HMRC are managing to deal; it seems to deliver a good deal of what HMRC presumably hope to achieve with the current document.

However, any move to tax by the 'spirit' of the law is a major further step. HMRC need to recognise and justify the significance of the change."

Slowly but surely HMRC are attempting to put themselves above statute and parliament, and take on the role of judge, jury and executioner wrt taxation and the interpretation of tax law.

This is an "evolution" that must be stopped.

The bedrock of dictatorship is an overempowered, arrogant, unaccountable, unelected bureaucracy populated by "little men" who believe that they are working for a "greater cause".

Issues wrt "faulty" tax legislation are for the elected members parliament to address, not the unelected bureaucrats of HMRC.

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"

The American Way

Patrick Collinson of The Guardian tells us how the IRS (the US version of HMRC) run their call centres:

"A baffled reader this week asked for help filling in tax forms for the US Inland Revenue Service. Not being familiar with apostilles, notarizing and (fortunately, I feel) alien spouses, I was as baffled as him by the baroque language. The form is subject to the Paperwork Reduction Act, but in a triumph for bureaucracy you find separate information about this … on another piece of paperwork.

I gingerly rang the IRS helpline in Philadelphia. In the city of brotherly love, things started to improve. The helpline is staffed 20 hours a day, compared with HMRC's 12 hours a day.

My call was answered after just a few rings. And the (very helpful) individual who answered the phone immediately gave me his name and unique identification number.

The Americans could learn a thing or two from us about the use of plain English, but can teach us about running a call centre."

Whilst keeping HMRC call centres open for longer would cost more money, something which the government has run out of, I don't see why call centre staff cannot give taxpayers (sorry, "customers") a unique identification number.

Why can't that be done?

Tax does have to be taxing.

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"

Complexity Costs

The long running issue with regard to tax credits being overpaid by HMRC to low income families, and the financial problems caused by demands for repayment are well documented and well known.

However, another group of people are now also being hit by HMRC errors. This time it is pensioners who are on the receiving ends of demands from HMRC for payments of underpaid tax, resulting from errors by HMRC.

This Is Money reports that almost half a million people with small pensions have had slipped under HMRC's radar, as a result of this they are now facing demands for hundreds of pounds of unpaid tax.

Former nurse Olive Mader, 65, faces a bill of almost £7,000 after drawing her state pension for the past five years. She continued working full-time until she was 65, but was not taxed on her state pension. She says she cannot afford to pay.

HMRC is supposed to send out P161 forms to people approaching state pension age. However, Paddy Millard from TaxHelp for Older People says these forms can be lost in the post or left on the mantelpiece because older people don't understand their importance.

The errors stem from a breakdown in communications between the Department for Work and Pensions and HMRC.

Failure to comply with the bureaucracy means that HMRC fails to apply the right tax code, and pensioners don't pay the full amount of tax.

In an perfect world, of course we should all check that the tax that we pay is correct. However, this is not a perfect world:

-People do not understand the complexity of the tax system

-Not every elderly retired person is as good with bureaucracy as those who are still working

Whilst the underpayments do need to be addressed, there is a funadamental problem with how HMRC "connects/communicates" with real people and with other government departments.

This is yet another example of how the complexity of the tax system is causing distress, errors and extra work/costs in trying to sort out the mess.

A spokesman for HMRC is quoted:

"We issue a form called a P161 to every pensioner for whom we receive notification from DWP that payment of state pension is about to start.

We are working with the DWP to explore ways of making the service to people approaching retirement more joined up."

Let us hope that they really do find and implement a "joined up" approach pdq.

It is a pity that Brown doesn't do "simple".

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"

Judge, Jury and Executioner

I am amused to see that the people running HMRC are fans of Judge Dredd; where Dredd is judge, jury and executioner.

It certainly seems that HMRC have taken this fantasy story as being a fact based model, on which to base their new modus operandi.

Under new penalty provisions, HMRC will set the level of fines for tax offenders and also decide the degree of fault.

That's nice!

I assume that it will help cut down on all that time wasting bureaucracy, whereby a third party would have to become involved in assessing guilt and determining the level of fine (if appropriate).

The new provisions (published on 1st of April - no joke!) will result in a penalty of up to

-30% of the tax due if the error is "careless";
-a penalty of up to 70% of the tax due if the error is "deliberate";
-and a penalty of up to 100% of the tax due if the error is "deliberate and the customer conceals it".

The new penalties will initially apply to errors on returns and documents for income tax, VAT, PAYE, national insurance, capital gains tax, corporation tax and the construction industry scheme.

They will kick in on return periods starting on or after 1 April 2008.

The sting in the tail with the new penalties is not just the level of penalty, but also the fact that HMRC will decide the degree of fault.

HMRC state that their benchmark of "reasonable care", when determining the seriousness of the "error", will vary according to the person involved, their circumstances and their abilities.

Somewhat subjective, don't you think?

Don't worry though; HMRC, like the Pope, is infallible (in its mind anyway).



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"