HMRC Is Shite: goldman sachs

Showing posts with label goldman sachs. Show all posts

Thursday, 16 May 2013

UK Uncut Loses Case

UK Uncut Legal Action has lost its High Court action against HMRC.

"Not a glorious episode in history of Revenue."

Now we await the knighthoods and assorted gongs for those in HMRC who helped save Osborne embarrassment.

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"

Tuesday, 7 May 2013

Gauke's Smoking Gun

My thanks to a loyal reader who pointed me to another update on the Osita Mba debacle.

The Guardian reports that based on emails that it has seen, David Gauke seemingly approved a plan to brief a journalist with information to help discredit testimony from HMRC whistleblower Osita Mba.

The leaked emails were sent on 15 December 2011 by a senior figure in HMRC's media department to Gauke's private secretary, Oliver Haydon. The emails claimed that the imminent public accounts committee report would be highly critical of Hartnett, HMRC and the Goldman Sachs deal.

In one email, the HMRC executive wrote to Gauke's secretary saying there was a need for Mba's evidence to be challenged:

"The belief that Mr Mba has genuine and deep knowledge of the Voda [Vodafone] and GS [Goldman Sachs] settlements is growing when in fact the picture he presents is partial, incomplete and flawed.

Much of the PAC [public accounts committee] report on large business settlements is likely to be based on his submissions and we feel this must be challenged if HMRC's reputation is not to suffer very serious damage.

We propose to do this by having Dave Hartnett brief [a named Financial Times journalist] – on the record – with a view to a Saturday/Monday story. We would welcome your views."

Haydon responded:

"Thx — I've relayed to XST [Gauke] whose initial reaction was positive. I'll confirm when I speak to him in the next hour or so."

Sadly there is nothing new in politicians using (directly or indirectly) the media to undermine the reputation of individuals and to manipulate the opinions of those involved in reviews/investigations. It is though particularly troubling when parts of the civil service encourage the politicians to adopt such a strategy.

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"

Friday, 3 May 2013

Saving Face

As loyal readers know, politicians will do anything to save face. In fact so desperate are they to burnish their self perceived reputations and egos, that they pressurise their civil servants and departments to do all they can to protect their political masters.

Such is the case, as pointed out by a loyal reader, with HMRC and Dave Hartnett.

Documents released in court yesterday show that Hartnett and HMRC cut a deal with the giant vampire squid, Goldman Sachs, partly to avoid the embarrassment of the bank pulling out of a new tax framework.

Reuters reports that, based on an email sent by Hartnett dated 7 December 2010, Hartnett approved the deal to avoid embarrassment to himself and to George Osborne:

"The risks here are major embarrassment to the (finance minister), HMRC ... you and me, not least if (Goldman Sachs) withdraw from the Code."

Politics is an ugly business, that erodes the fabric of decency and honesty on which society should be based.

My thanks to a loyal reader who has provided a link to the Hartnett email and to Hartnett's witness statement.

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

Tuesday, 25 September 2012

Tax Planning In Retirement

Now that Dave Hartnett has retired he can use his experience of HMRC and this country's complex tax affairs to help others.

My thanks to several loyal readers who pointed me to the fact that Dave spoke last Thursday in New College Oxford, at the gala dinner of the Key Haven Publications tax planning conference.

Unfortunately Dave's speech was interrupted when a group calling themselves WeAreTheIntruders, posing as employees of Goldman Sachs and Vodafone, presented him with a bouquet of flowers and the "Lifetime Achievement Award to Corporate Tax Planning", otherwise known as the "Golden Handshake".

A video of the scene has been made by the group. One diner is heard to say:

"You will depart immediately, before we set the dogs on you."

Another a diner is heard calling the protesters "trespassing scum".

All a tad puerile, as Hartnett retired from HMRC in July and is perfectly at liberty to attend and speak at whatever functions he wishes.

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

Monday, 10 September 2012

HMRC Threaten Tax Avoiders

HMRC continue to push their anti avoidance mantra, with a threat to "customers" and "taxpayers" (even HMRC now seem to be confused as to what we are!) who use avoidance schemes.

The Telegraph quotes an HMRC spokesman:

"It is important that our customers know that if they choose to engage in tax avoidance we will be relentless in pursuing them.

We will challenge tax avoidance and will take legal action against [tax avoidance] schemes whenever possible. Instead of the tax savings they hoped to achieve, people who use tax avoidance schemes run the risk of wasting money on fees for a scheme that does not work, and will have to spend time dealing with an in-depth investigation by us into their tax affairs.

Taxpayers may find themselves being cross-examined before a tax tribunal and having their tax avoidance exposed to public scrutiny when the tribunal's decision is published."

Of course trying to understand what parliament's true intentions are is somewhat muddied by the incredibly complex tax system that we all have to endure.

Much of the time, trouble and expense incurred over "avoidance" by taxpayers and HMRC could be greatly reduced if the tax system were simplified.

That of course requires politicians to actually do something constructive, sadly that is something that is unlikely to occur in the foreseeable future!

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

Tuesday, 17 July 2012

Homer Defies PAC

I see that Lin Homer is attempting to defy requests from the Public Accounts Committee (PAC) to hand over documents detailing tax deals agreed with five large corporations (including Goldman Sachs and Vodafone).

Exaro News reports that Homer has personally rebuffed the request, and insists that taxpayer confidentiality prevents her from showing the documents to the cross-party committee.

Taxpayer confidentiality is, to my view, a principle that should be defended. However, PAC are of the view that it should be dispensed with for these five companies.

PAC held a private session with HMRC chiefs, including Homer, and Sir Andrew Park, the tax judge who had advised the NAO, at the end of last month.

Margaret Hodge told Homer:

“Our view is that you do have the discretion – I know that this is contested – and it is also in the public interest, to enable us to have at least the background documents that you gave to the NAO, so that we can understand better the systemic issues that have been of concern to the committee, by looking at the details of the particular cases.

The committee has discussed this, and, of course, we would be happy to look at the documents in confidence, if that is your wish. But we feel that we need access to those papers to do our job properly.

Are you willing to use your discretion to enable us to hold you to, what I consider to be, proper public account?”

Homer replied:

“Our duty to taxpayer confidentiality prohibits me from sharing, unless either I do so in pursuit of my function as a commissioner, or there is specific statutory gateway.”

The question arises is Homer taking this stand on the genuine basis of the principle of protecting taxpayer confidentiality, or is she using this as an excuse to avoid handing over documents that might embarrass HMRC?

It is not clear cut to my view, and I would welcome views and comments.

Tax does have to be taxing.

Thursday, 28 June 2012

Homer Gets Roughed Up At PAC

Poor old Lin Homer (CEO of HMRC) got a very rough ride at yesterday's Public Accounts Committee. Homer was forced onto the back foot by aggressive questioning from the committee, and had to repeatedly deny that HMRC enter into negotiations with large companies over how much tax they pay (although they do negotiate wrt other tax issues eg IHT "You should consider negotiating a settlement where the issues are not clear cut and the taxpayers cannot be persuaded that your point of view is the correct one.").

Well, sorry to say it, but unless things have changed since when I was a young internal auditor in the early 90's that simply isn't true (or at least she may be mistaken).

The standard practice between HMRC (the Inland Revenue as it was then) and companies was for IR to present a tax figure (detailing how they derived it) and for the company to present theirs. Where there were major discrepancies the two parties would keep "surprises" (eg write offs, hidden losses, hidden profits etc etc) in reserve to use during the discussions as to how much the tax bill would finally be. A final figure (midway) would usually be decided whereby both IR and the company felt that they had gone as far as they could without incurring costs of litigation etc.

That to me is a "negotiation", and there is nothing wrong with that if both parties act with honesty, integrity and commonsense.

Anyhoo, apparently, these "negotiations" do not occur now (according to Homer).

Hmmm!

Leaving that aside, Margaret Hodge (chairman of PAC) accused HMRC of letting large corporations off paying large sums of money and (as per the Huffington Post) said that there were "many question marks" hanging over the settlements reached in cases such as those involving Vodafone and Goldman Sachs.

Referring to the Vodafone case, Hodge said:

"It seems to me that you haven't pursued them properly and you have actually let them off a lot of tax."

Re the giant vampire squid, Goldman Sachs, she said that it had been "let off tens of millions".

Homer said that she accepted criticisms relating to governance arrangements and was aiming to increase the number of commissioners with tax law qualifications from one to three or more, as well as to recruit as many as 1,000 tax-qualified graduates.

Jim Harra, director-general of business tax at HMRC claimed that HMRC were investigating the tax affairs of “just over 4,000” companies

Homer said:

"We settle for the amount we think the Revenue is due. We do not settle for a lesser amount than we believe we could reasonably expect if we litigated."

To which Hodge retorted that Homer's position was "incredible".

"It is the committee's view that there are so many question marks over whether the settlements are in the public interest and properly defend the taxpayer's interests and are fair and equal under the law."

Homer refused to handover documents detailing the precise tax arrangements of large companies which have come into the spotlight, insisting that she was not allowed to do so unless the papers entered the public domain as part of a court case.

Whilst Hodge threatened to refer HMRC lawyer Anthony Inglese to the Attorney General over claims he made under oath in an earlier parliamentary hearing that lawyers were involved "throughout" the Vodafone case.

"I think you should take this away and investigate further whether or not somebody who accounts to you did mislead Parliament and we will take away what we will do, with possible reference to the Attorney General, as to whether or not a particular individual accountable to you did mislead Parliament."

All in all a pretty lousy day for HMRC.

In my humble opinion, if "negotiations" are still conducted in the same manner as I described from the early 90's then Homer should have stated that forcibly and without shame.

A commonsense cost effective approach to gathering tax is surely what everyone wants, and should be aiming for, is it not?

As ever, comments and opinions from all are very welcome. I would be particularly interested to hear if the "negotiations" that I described are still carried out in the same way.

Here is the hearing for you to watch:

Tax does have to be taxing.

Thursday, 14 June 2012

NAO Publishes Settling Large Tax Disputes

In May I wrote that I had been advised by the National Audit Office (NAO) that their delayed report into "HMRC's Sweetheart Deals" ("Settling Large Tax Disputes") would come out in the beginning of June.

Well, here we are on 14 June (midway into the month) and the NAO have published their report.

The report into five major tax settlements by HMRC, including deals with Goldman Sachs and Vodafone, concludes that the final payments were “reasonable and the overall outcome for the exchequer was good”.

However, the report criticises HMRC for:

-failing to follow strict official processes,
-for refusing to consult its own lawyers before agreeing to drop litigation, and
-for weak internal communications that bred a climate of suspicion within the department.

The latter point is most certainly true, as it chimes with the regular comments/feedback from HMRC staff on this site and their emails to me; it is good that the NAO have picked this issue up and drawn attention to it. However, as to whether there will be an improvement within HMRC remains to be seen.

HMRC are quoted by the Telegraph:

“We welcome today’s report.

We have always maintained that the settlements represented good value for the UK.”

The phrase "welcome today's report" rather makes me smile and brings back memories of when I ran an internal audit department, for whenever anyone used that phrase to me they invariably meant that they were really pissed off that their shortcomings had been brought to the attention of others.

Notwithstanding the NAO report and vindication of Dave Hartnett, UK Uncut have been granted their day in court to challenge HMRC's decision on Goldmans. This decision will be subjected to a judicial review, where HMRC said it “will strongly contest” UK Uncut’s application to quash the settlement.

Whatever the outcome of that review Margaret Hodge, chairman of the Public Accounts Committee, has also flagged the issue of processes being bypassed and internal communications failures:

"This report confirms my committee’s concerns about the uncontrolled way that HMRC has been doing secret deals with large companies. If the final settlements in these cases were reasonable, as Judge Park has concluded, questions still remain over why officials bypassed the proper processes.

With billions of pounds of tax at stake it is extremely worrying that the department failed to involve its own specialists in the final negotiations and follow its own rules by settling for less than it could have won in litigation."

Here is the summary of the report

"On the basis of Sir Andrew Park’s reports, I conclude that the settlements reached by HMRC in these five cases were all reasonable. Moreover, in settling them, the Department successfully resolved multiple, long-outstanding tax issues.

However, our concerns over the processes by which the settlements were reached have been confirmed. It was not appropriate to set up governance arrangements specific to certain cases or to fail to apply processes correctly. Poor communication with staff also undermined confidence in the settlements."
Amyas Morse, head of the National Audit Office, 14 June 2012

The National Audit Office has concluded, on the basis of an examination by former High Court tax judge Sir Andrew Park of five large tax settlements, that all five settlements were reasonable and the overall outcome for the Exchequer was good. However, the spending watchdog has expressed concerns about the processes by which the settlements were reached and over poor internal communication of the reasons for settlement.

The NAO review of the settlements followed serious concern by the Public Accounts Committee about how HM Revenue & Customs had handled them or overlooked governance arrangements. The NAO also examined the basis of concerns expressed by whistleblowers.

According to today’s report, all five settlements were reasonable for the Department to have reached under the circumstances and at least one may have been better than reasonable. These large settlements are complex and there is no clear answer to what represents the ‘right’ tax liability. In each case, there was a range of justifiable positions the Department might have taken. The NAO’s examination included consideration of whether the settlement in each case was as good as or better than the outcome that might be expected from litigation, taking into account the risks, cost, uncertainties and timescale of the latter option.

Specialist staff were sometimes excluded from the final settlement negotiations and the Department did not always ensure that these staff involved understood the reasons for settlement. Poor internal communication of the reasons resulted in a loss of confidence in the settlements, both internally and externally.

It is not clear that all settlements were fully compatible with the Department’s Litigation and Settlement Strategy. For instance, there are some disputes where the only possible outcomes are either that the taxpayer owes nothing or that it owes the full amount. In these circumstances, the Department’s Litigation and Settlement Strategy does not permit ‘splitting the difference’. In one settlement, the Department settled for less than if it had won in litigation. This was reasonable, given the costs and uncertainties of litigation, but was not clearly compatible with the Strategy.

In most cases, there was no need to seek legal advice before agreeing settlement terms. In one case, the Department did not consult its lawyers when it should have done because there was ongoing litigation.

The findings of today’s report confirm the NAO’s concerns regarding the governance arrangements operating in these cases. The Department has acknowledged that its governance processes need strengthening and is introducing new arrangements, including the appointment of an assurance Commissioner, who will approve all large settlements.

As ever, comments and opinions from loyal readers are very welcome.

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

Thursday, 17 May 2012

NAO Moveable Deadlines II

A week ago I wrote the following about the National Audit Office (NAO) report into "HMRC's Sweetheart Deals":

"My thanks therefore to a loyal reader who has pointed out the reason for the absence of the NAO report, it appears that the deadline has been quietly shifted back (without any announcement) to at least Summer this year.

"The C&AG aims to report the results of this work to the Public Accounts Committee in summer 2012."
By the way "aims to report" is not a very firm "deadline!

Is this "slippage" because the investigation is taking so long, or is it because they don't want the report issued before Hartnett officially leaves in summer?

Oh and by the way, they are only looking at five deals, not 10 originally discussed in 2011; so it's probably not the workload that has caused this "slippage".

I will ask NAO why they have delayed this, and will post their answer if I get one ."

I emailed the NAO, and received this response from the Head of Media:

"There was no deadline for this report. The information on our website on approximate timing, for guidance only, was posted at the beginning of our study when we could not know exactly how long it would take. Such guidance is commonly changed as studies progress. The date on which a report is to be published is decided by the Comptroller and Auditor General and for this report has yet to be announced."

I responded thusly:

"Thanks ****

Steve Barclay (a member of PAC) was under the impression that is was Spring as well (as per his website http://stevebarclay.net/?p=2260)

For clarity, now that your site says "Summer" this is not the deadline either?

http://www.nao.org.uk/publications/work_in_progress/larger_tax_settlements.aspx

As an ex auditor myself (KPMG, Philips, De Beers) I am rather surprised that you have yet to decide a deadline.

Thanks

Kind regards

Ken Frost"

He then called me, and advised that the report will probably be issued at the beginning of June and that PAC are aware of this.

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

Wednesday, 18 April 2012

HMRC In The Dock

HMRC is in court today, and will have to defend itself against allegations, made by UK Uncut, that it gave Goldman Sachs a sweetheart deal on the repayment of unpaid taxes worth up to £20M.

The Guardian sates that Goldman Sachs have not opposed the hearing or rebutted the claims directly.

However, HMRC are not happy to be in the dock and have stated that the National Audit Office should investigate the claims.

All very well, maybe, if the NAO has any power to quash the deal and force HMRC to reclaim the money in full. UK Uncut claim that it doesn't have that power.

Friday, 30 March 2012

HMRC Tax Degree

HMRC has been feeling the heat recently wrt negative publicity over their handling of a number of issues (eg tax deals with Vodafone, Goldman Sachs and losing the Harry Redknapp trial.

Therefore HMRC has decided to sharpen up its act and, in a joint venture with Manchester Metropolitan University, send some of its staff to university (or rather training centres across the UK) to study for a degree.

The part time course for a degree in tax is expected to yield £2M to £3M in extra tax revenues per graduate over four years.

How on earth do they come up with that figure?

Anyhoo, the staff studying for the degree (expected to total around 400-500) will not have to pay for it (unlike other university students).

Students will also be able to study tax courses up to the equivalent of A-level or a Higher National Certificate, accredited by the Association of Accounting Technicians.

Dave Hartnett, HMRC Permanent Secretary for Tax, said:

“We know we have great people doing great work that deserves to be recognised. We want to be seen as a leader in tax, both in the UK and internationally, and the launch of the Tax Academy is a really important step towards that goal.”

Does anyone know how the figures of £2M-£3M have been derived/calculated, or what grades of staff will be allowed to study for the degree?

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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

Thursday, 15 March 2012

War Is Declared II - Hodge Speaks Out

As I noted on Tuesday, today is the day when Margaret Hodge (Chairman of the Public Accounts Committee) is going to make a speech at Policy Exchange (a think tank) in which she fans the flames of the war between the mandarins in Whitehall and PAC.

I understand that she will call for the Freedom of Information Act to be extended to companies and other organisations that deliver government services.

Now this would be very useful for those of us with an interest in HMRC, given that a large number of crucial functions (eg IT, printing etc) have been outsourced to the private sector. It would be very interesting for example to learn if contracts with these companies have penalty clauses for when projects are delayed, fall apart or when services fail (eg printing errors etc).

Anyhoo, by way of a taster for today's speech the BBC have provided some extracts:

"Lately, it seems that the Public Accounts Committee has been rattling the cage too much for some.

There are those who say that shows we're doing our job properly, but there is a real challenge from the civil service on how we are approaching our work on behalf of Parliament and the taxpayer.

Some have upped the ante, even asserting that the PAC's activism affronts some constitutional principle - of which the civil servants consider themselves custodians. Anonymous briefings suggest that some would even like to dismantle the committee itself...

But it's our job to blow the whistle and shout loudly when the evidence before us is that the executive is not doing a good enough job. That is going to be uncomfortable for both ministers and the civil service."

Regarding GOD, now Lord O'Donnell, she will say that in a letter he wrote to her shortly before retiring he:

"..berated me for the way in which the Public Accounts Committee was seeking to hold the executive to account.

He was particularly exercised about the hearings we had held during the autumn involving HM Revenue & Customs investigating how it had tackled tax disputes with large corporations and specifically the settlement it had made with Goldman Sachs.

It was as if he had taken on the role of shop steward for aggrieved permanent secretaries.

...old doctrine of accountability isn't fit for the 21st Century.

It's our job to blow the whistle and shout loudly when the evidence before us is that the executive is not doing a good enough job. That is going to be uncomfortable for both ministers and the civil service.

Rather than responding defensively, the civil service should embrace the opportunity. It is in all our interests for this to happen. It will help all of us to deliver better public services with better value."

Regarding the exchange of letters between Ms Hodge and GOD, Exaro have a copy of Hodge's response:

"Dear Gus,

Thank you for your letter of December 20, which I now understand has been widely circulated across the civil service.

I was rather surprised by your criticisms about the way the public accounts committee conducted our inquiry into HMRC’s handling of tax disputes with large corporations. As you are aware, £25 billion is outstanding in unresolved tax bills and the role of HMRC governance is critical in explaining why this substantial sum remains unresolved.

As a direct result of the committee’s inquiry, major systematic failures in the governance of HMRC and the way it handles tax disputes with large companies were uncovered. In several of the largest settlements examined by the National Audit Office, the department did not comply with its own procedures, and the same senior officials were involved both in negotiating and in approving deals, which is simply inappropriate.

In the case we looked at, Goldman Sachs, there were extremely serious questions about the role played by the permanent secretary for tax [Dave Hartnett], whether appropriate legal advice was sought and acted upon, and the veracity of the evidence he gave to the Treasury select committee.

The committee was very disappointed by the failure of senior officials to assist us actively and answer our questions in a spirit of openness and transparency. Some of the evidence given to, and seen by, the committee was, at best, inconsistent and, at worst, misleading.

First, there was a clear discrepancy between Dave Hartnett’s statement to the Treasury select committee on September 12, 2011 that “I know nothing of Goldman’s tax affairs… I do not deal with Goldman’s tax affairs,” and the internal minute of the meeting that took place in Anthony Inglese’s office on December 8, 2010, which referred to “a deal on which DH had ‘shaken hands’ with GS” to settle an outstanding tax dispute.
Second, at our hearing on October 17, 2011 Mr Hartnett told us that he had informed Mr Inglese, as HMRC’s most senior lawyer, that there had been a mistake with the Goldman’s settlement on Monday November 22, 2010 – the day the mistake was identified – or “very soon after”. At our subsequent hearing on November 7, 2011, Mr Inglese told us that Mr Hartnett had not informed him of the mistake until December 7, 2010, more than two weeks after the deal had been done on November 19, 2010.
Third, at our hearing on October 12, 2011, Mr Hartnett said that no disciplinary action had been taken against anybody as a result of the mistake. However, at our hearing of November 7, 2011, he said that “the error was taken into account in someone’s annual appraisal… It affected their non-consolidated pay, because there was no pay rise that year.”

These are serious concerns that should be addressed by the cabinet secretary. However, in this case, you told us your powers were limited because HMRC is a non-ministerial department. I would be grateful if you would set out how, in these circumstances, senior officials are held to account in carrying out their duties with “honesty and integrity”.

Your letter also makes various points about constitutional matters. Over recent times, Parliament’s role in holding the executive to account has strengthened. The public’s expectations in relation to transparency and accountability are greater, and this is reflected in the way select committees approach their work.

As a result, there have been useful developments in conventional practice that have improved accountability and public understanding. For example, on a number of occasions in recent years (such as with Sir John Gieve on the disclaimer of the Home Office accounts, Catherine Bell on government support for MG Rover and, very recently, Dame Helen Ghosh on the Rural Payments Agency) the committee’s inquiries have been materially assisted by the attendance as a witness of the department’s former accounting officer who had held responsibility and knowledge at the time of the matters under discussion. While such occasions are infrequent, I have no doubt that they have enriched the committee’s understanding and helped us to serve the public better.

If we accepted all conventional past practices we could not respond to expectations of the present. The civil service will merely be seen as having things to hide if it follows the outdated and defensive path of action you propose. Furthermore, past conventions would not help us in holding properly to account departments that do not have ministerial oversight. I hope you would agree that the lack of ministerial oversight makes parliamentary oversight even more important.

I have worked in many government departments and have the highest regard for the civil service. I have seen at first hand the commitment of civil servants, and, if you read all the PAC reports, you will see that we warmly acknowledge success and good practice. However, I believe it is the duty of the committee to pursue fearlessly the public and taxpayers’ interest whenever and wherever we deem it necessary.

You also raise concerns about our questioning of Mr Inglese. In taking evidence from Mr Inglese, our aim was simply to get to the bottom of a settlement that he himself is on record as suggesting may be “unconscionable”. His advice was at the heart of understanding the truth to a particularly tangled and unacceptable story. Requiring a witness to swear an oath should indeed be a rare step, taken only in exceptional circumstances. I am surprised that you are not more concerned about the circumstances that made it necessary on this occasion.

Finally, in your successful time as cabinet secretary and head of the civil service you have dedicated a considerable part of your tenure in trying to deepen its capacity – an enterprise in which the PAC has been an ally. Now you have moved on and I wish you well. I look forward to my committee working constructively with all those who succeed you and all those called to give evidence in the future.

Yours sincerely
Rt Hon Margaret Hodge MP
Chair of the Committee"

A well written and scathing response to GOD (BTW, Goldman Sachs rather hit the headlines yesterday courtesy of Greg Smith).

The key to the problem of oversight and accountability, is that HMRC is non ministerial department. However, the risk of placing it in the hands of a minister is that it becomes more politicised than it is already; when in fact it should be (at its "simplest") a non partisan bureaucracy that collects taxes in the most cost effective and efficient manner possible.

Tax does have to be taxing.

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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

Tuesday, 13 March 2012

War is Declared!

Now here's an interesting thing, last year's public drubbing of "Jack" Hartnett and HMRC's General Council Anthony Inglese (who was forced to take an oath) by the Public Accounts Committee (PAC) over HMRC's handling of the Vampire Squid and Vodafone has not gone down well with the civil service.

As I noted in December last year:

"When it comes to self loathing, no one and nothing does it better than politicians and the State; especially when they viciously turn on one of their own departments.

Therefore it should come as no surprise whatever to read the "public damnation" of HMRC by the Public Accounts Committee ."

Anyhoo, senior mandarins are less than gemused and have, according to Exaro, "declared war" on MPs over the constitutional implications of civil servants being treated in this manner.

Such is the anger felt by the mandarins that GOD himself (the recently retired Gus O'Donnell) wrote to Margaret Hodge (Chairman of PAC), at the end of last year before he was elevated to the Lords, to tell her that civil servants should not be accountable to Parliament and are only accountable to ministers.

In the letter to Hodge GOD accused PAC of using the hearings as a “theatrical exercise in public humiliation”, adding “praise certainly can be a more effective tool for change than blame.”

Hodge is making a speech this Thursday in which she is expected to reveal the contents of a dossier of anonymous, highly critical comments from civil servants and government lawyers who object to PAC's conduct.

At the very centre of the storm is the treatment of HMRC's Hartnett and Inglese.

Hodge is quoted:

"I would agree that Whitehall seems to have declared war on Parliament.”

Aside from Thursday's speech by Hodge, which will stir things up, PAC is adding further fuel to the fire with its ongoing examination of contracts that allow senior civil servants to avoid tax.

This "war" between mandarins and Parliament will of course do nothing to help HMRC improve its service or internal moral; as its failings/improvements will be used as a political football by both sides.

Tax does have to be taxing.

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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

Monday, 13 February 2012

HMRC and Tax Avoidance

HMRC has rewritten its guidance to the disclosure of tax avoidance schemes (DOTAS) regime.

Although the number of schemes reported has reduced over the years, the government (ironically) is concerned that some avoidance schemes seem to be slipping the net (avoidance is of course perfectly legal).

Taxjournal reports that Graham Aaronson’s report on the merits of a general anti-avoidance rule (GAAR) concluded that "purposive interpretation [of tax legislation], specific anti-avoidance rules and DOTAS are not capable of dealing with some of the most egregious tax avoidance schemes".

Why does HMRC want to know tax arrangements, who has used such arrangements and how they work?

HMRC answer the question thus:

"On its own the disclosure of a tax arrangement has no effect on the tax position of any person who uses it.

However, a disclosed tax arrangement may be rendered ineffective by Parliament, possibly with retrospective effect."

Retrospective legislation is a step on the road to dictatorship, and the government would be advised to steer clear from that particular course of action.

Moreover it is more than a little surprising that HMRC and the government are still pushing the anti avoidance message, given that both HMRC and the government support tax avoidance eg:

- Ed Lester

- Deepak Singh

- Vodafone/Goldman Sachs

- Vodafone (again!)

Hypocrisy from the government and HMRC?

Surely not?

Tax does have to be taxing.

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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

Monday, 12 December 2011

Fare Thee Well Jack!

Despite "retiring" from HMRC, Dave "Jack" Hartnett can't quite shake off those annoying questions about his deal with Goldman Sachs (the giant vampire squid).

Jack claimed that the cost of the waived interest was less than £10M. However, Mr Osita Mba (the HMRC lawyer whistleblower) has told the parliamentary committee investigating the issue that it was "£20M in rough figures".

Mr Mba is of the view that "significant, inaccurate and misleading evidence" has been given to MPs.

Margaret Hodge, chairman of the PAC, wished Jack "well" she is quoted by the Telegraph:

"I wish him well in his retirement.

I think his departure is right for the organisation.

HMRC must now urgently address some of the systemic issues uncovered in our inquiry."

Says it all really doesn't it?

Will Homer be up to the job of sorting it out, given her handling of previous roles?

Views anyone?

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"

Friday, 9 December 2011

The Dangers of Dissent - HMRC Harassment

The Guardian reports that Osita Mba, a solicitor with HMRC who turned whistleblower on HMRC's deal with the giant vampire squid (Goldman Sachs), is facing disciplinary proceedings (possibly dismissal and prosecution) for telling the National Audit Office (NAO) and two parliamentary committees about his concerns over the deal.

Mr Mba has worked for HMRC for four years, and apparently has knowledge of the vampire squid deal.

Mr Mba made the disclosure to the NAO and parliament under whistleblowing legislation which, theoretically, is meant to protect whistleblowers from prosecution etc.

It seems that HMRC think otherwise, and have launched an inquiry into Mr Mba's conduct. He has been barred from entering his office at Westminster unless he has a personal escort from his line manager, and has been summoned to a meeting.

MPs are less than impressed with HMRC's treatment of Mr Mba. Margaret Hodge, chair of the committee, said:

"Whistleblowers play such an important role that the previous government brought in legislation to protect them.

Mr Mba's evidence has been crucial in uncovering not just specific but systemic problems in HMRC's secretive relationship with big corporations.

This is harassment and is completely unacceptable."

Stephen Barclay, a Conservative MP on the committee, said:

"We have already seen how whistleblowers from the health world have been stopped from disclosing information by their managers. It appears that a similar obstructive approach may now be being followed by Her Majesty's Revenue & Customs.

The committee will be making further inquiries to establish the facts to ensure that the will of parliament is being followed."

HMRC are quoted:

"It is essential that we establish the full facts in order to decide what action to take.

To this end we are carrying out a preliminary leak inquiry following the disclosure, including on the Guardian website, of internal departmental documents which may constitute a serious breach of confidential information.

This is the first time we have had an opportunity to see the documents and we will give careful consideration to this material."

I will be interesting to see which organisation has more power in this particular case and ends up winning, HMRC or parliament. Sadly for Mr Mba, he will be stuck firmly in the middle as the two organisations fight for supremacy.

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"

Thursday, 8 December 2011

Did HMRC Break The Law?

The Guardian reports that the Public Accounts Committee (PAC) is looking into claims, from an HMRC whistleblower, that Dave "Jack" Hartnett's deal with Vodafone to waive £7BN of tax may have been outwith the powers (ultra vires) of HMRC (ie illegal).

The whistleblower also claimed that the agreement that HMRC claimed let the giant vampire squid (Goldman Sachs) off £10M was in fact worth £20M.

£10M here, £10M there; details mere details!

Margaret Hodge, chair of the committee, told the Guardian that she had received the new allegations from someone with an apparent detailed knowledge of the deals and confirmed that a senior counsel may now assess them.

"The main allegation is that senior officials at Revenue and Customs have acted ultra vires [beyond their powers] and we are duty bound to take that seriously."

I wonder if the whistleblower is part of "Dissent"?

Jack has thus far avoided detailed scrutiny by citing legal privilege. That defence, if the allegations are valid, has just been blown out of the water.

However, HMRC is standing by its guns and is quoted:

"We are entirely confident that our approach to large business tax settlements is the right one. This approach has brought in more than £13bn from large businesses since 2006.

We have not seen the material which the Guardian tells us may be referred for counsel's opinion so it would be wrong to comment further....

Dave Hartnett's evidence to the PAC [public accounts committee] is entirely consistent and accurate.

Mr Hartnett made clear that an error occurred and the comptroller and auditor general is on record as saying this error was between £5m and £8m."

This will run and run!

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"

Friday, 25 November 2011

Delays?

The Guardian reports that UK Uncut is concerned that HMRC is delaying a judicial review of the infamous £10M Goldman Sachs tax settlement.

UK Uncut claim that HMRC has twice extended the deadline for responding to its legal claim, even though the details of the settlement have already been challenged by MPs on the Public Accounts Committee.

The Morning Star reports that Leigh Day & Co (lawyers for UK Uncut Legal Action) wrote to HMRC this week, informing them that its ongoing delay in dealing with their claim is unacceptable.

Partner at Leigh Day Richard Stein is quoted:

"We believe that HMRC has had plenty of time to make 'enquiries' about the Goldman Sachs deal, particularly given its requirement to give evidence to the select committee about the issue.

We do not think their ongoing delay is acceptable."

A spokesman for HMRC said it had asked for a delay to the judicial review, because it needed more time to investigate the issues raised.

Methinks this will be one to watch!

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"

Wednesday, 23 November 2011

Jack in The Box

I see that things are hotting up for Dave "Jack" Hartnett, wrt the Goldman Sachs and Vodafone tax deals.

A senior judge is to be brought in to investigate the deals, and is apparently going to be given powers to examine the accounts of the Vampire Squid and Vodafone.

The National Audit Office (NAO), keen not be left behind the curve on this, is also considering looking at the tax affairs of other large companies in order to ensure that HMRC haven't signed off any other Vampire Squid deals.

This move is interesting, because it indicates that the government no longer trusts HMRC (which is itself a government body).

The NAO are now "scoping" the terms of the work, and determining who they need to actually do it.

Anyone care to volunteer?

Tuesday, 8 November 2011

The Truth

Members of the Commons Public Accounts Committee took the unusual step of making Anthony Inglese CB, General Counsel and Solicitor HMRC, swear an oath at yesterday's PAC hearing into HMRC Accounts and Tax Disputes.

For why?

It seems that the committee did no feel that they were getting answers from Inglese.

For why?

He repeatedly declined to answer questions, citing taxpayer confidentiality.

I am amused to read this about him in The Lawyer:

"The veteran lawyer does admit to getting a thrill from reading about his work in the national press.

'It’s exactly why I wanted to join government'.."

LOL!!

I guess he will be delighted to read this then!

Sir Gus O’Donnell (GOD) KCB, Cabinet Secretary, and Dave "Jack" Hartnett, Permanent Secretary for Tax, HM Revenue and Customs also appeared.

Inglese and Jack admitted admitted that mistakes had been made in the deals with Vodafone and Goldman Sachs (the giant vampire squid).

The committee chairman, Margaret Hodge, asked why HMRC appeared to have a special relationship with such big businesses that allowed them to do deals in a way that would not be possible for smaller businesses or individual taxpayers.

Jack managed to undermine what he said at a previous hearing (when he claimed that he had been advised by an HMRC official that there was a "legal impediment" to charging interest) by stating that an official from HMRC (not him) had lost his bonus as a result of the deals.

"The error was taken into account on someone's annual appraisal."

Why didn't Jack also lose his bonus, given that he signed off on the deal?

Farcical!

Watch the farce here The Farce.