Interest For Late Payment Rises To 3.25%

Following the increase in the Bank of England base rate to 0.75% from 2 August 2018, HMRC has announced an increase in the rates of interest on late paid tax. 

The rates of interest for late payment will increase from 3.00% to 3.25% from 21 August 2018.


The exception is quarterly instalment payments of corporation tax, for which the rate rises from 1.50% to 1.75% from 13 August 2018.

Repayment interest remains unchanged at 0.5%.


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 To Avoid Paying £5BN In Refunds

Citywire reports that HMRC could avoid paying up to £5 billion in interest on tax refunds after a landmark Supreme Court judgement at the end of a 15 year legal battle with insurer Prudential (PRU).

The Supreme Court yesterday ruled against applying compound interest to the bulk of the refunds due to the insurer on taxes paid to HMRC over nearly two decades that was later judged unlawful.

Yesterday's judgement carries major implications for HMRC, which is facing a series of similar pending legal challenges over tax refunds. HMRC has estimated the cost of paying compound interest on all these claims at up to £5 billion.

HMRC had already conceded a refund was due on tax that was applied on dividends paid by foreign companies held in the funds managed by Prudential for policyholders.

This tax was ruled unlawful by the European Court of Justice, as it discriminated in favour of dividends from UK companies, on which insurers were not taxed.

The Supreme Court ruled on five issues, finding in favour of HMRC and Prudential in two each, with the fifth rendered redundant by those judgements.

Prudential was successful in arguing that the tax refund be calculated according to the ‘nominal’, or headline rate of tax paid on those dividends from foreign companies, rather than the actual tax paid, which could in many cases be lower due to tax reliefs and exemptions.

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"

Stand and Deliver

As taxpayers know, when it comes to tax nothing is ever as simple as it first may appear.

This lesson was learned by savers who earn cash bonuses from their bank accounts. In a simple view of the world these payments would surely be counted as interest, and therefore eligible for the £1,000 tax-free allowance.

Would they not?

Ermmm..no, sadly not.

HMRC contends that bonuses from bank accounts are ineligible for the £1,000 tax-free allowance, because the rewards are classed as 'annual payments' (not interest) and are as such fully taxable.

What the state gives with the one hand, it takes with the other!

Here endeth today's lesson.

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"

FCO's Fruitless Payment To HMRC

On Friday I wrote that the SFO had been fined by HMRC because of non payment of VAT liabilities.

It seems that the SFO isn't the only government department that has a little trouble understanding the tax system, and paying its "fair share" (to use the meaningless phrase that the politicians have grown fond of over the last few months). Step forward the Foreign and Commonwealth Office, which has been charged £820,522 in interest by HMRC for a £15M unpaid tax bill.

The Telegraph reports that the bill arose because of a dispute between HMRC and the FCO over the status of locals employed by British embassies overseas.

Under HMRC rules, crown servants are subject to UK taxes, wherever they are employed in the world, in addition to the local taxes. The only exemption is in countries where a double taxation treaty is in place.

The FCO usually pays the UK tax on behalf of its employees. However, a backlog of unpaid taxes dating back to 2008 has left it with a large interest bill, which was paid this year.

The liability relates to around 500 locally engaged employees, who are often junior and support staff in non-diplomatic roles, in 80 countries.

The interest charge is rather amusingly recorded as a “fruitless payment” in the annual accounts, “arising on the late payment of income tax over a number of years by the FCO in respect of certain members of our locally engaged staff in countries not covered by a double taxation treaty".

The Foreign Office stressed there was no overall loss to the taxpayer, with the money moving from one public body to another.

Well that's all very well, maybe, in the eyes of the civil service. However, in reality as I noted on Friday:

The net result to the taxpayer?

A loss, given that this has cost time, money and resources to resolve!

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

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

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



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

HMRC vs Littlewoods

HMRC has lost a High Court case against retailer Littlewoods, and will have to pay Littlewoods £1.2BN in compound interest on VAT overpayments made by Littlewoods between 1973 and 2004.

Lawyer Giles Salmonds said the ruling by Mr Justice Henderson could have significant implications, because it takes into account the interest's increased (or compounded) value over the years. He is quoted by ITV:

"Littlewoods claimed that based on principles of EU law they were entitled to the compounded use value of money they had paid to HMRC as VAT.

Today's judgment means that HMRC will be liable to pay billions in interest to other taxpayers who have already claimed overpaid VAT going back to the early 70s, but have only been paid simple interest based on a reduced average of bank base rates."

However, before those owed money rush off to make a claim, it is highly likely that HMRC will appeal the verdict. As per Mr Salmonds:

"This is an important victory for taxpayers, but it is very likely that HMRC will seek permission to appeal to the Court of Appeal."

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"

Sign Here, Where It Says "For The Rest of My Life"

How nice to read that, during this time of economic crisis, HMRC is advising struggling businesses applying to defer taxes to "max out" their company credit cards first.

This helpful advice needless to say costs the hapless businesses 20% or more in interest payments, plus a 1.25% credit card handling fee added on by HMRC.

This approach is of course "understandable"; the £4.8 trillion debt built up over the years by our elected representatives needs to be serviced, otherwise there would not be enough money in the kitty to pay our "beloved" MPs and subsidise their bars and restaurants at Westminster.

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"

Hartnett Speaks II - HMRC Backs Down

Oh dear it has been a "testing" few days from those "running" HMRC, hasn't it?

"Dame" Lesley Strathie (will someone please tell me why this person has been "Damed"?) and Dave Hartnett had to appear before the Treasury Select Committee yesterday for some ritual humiliation.

As a result of this, and Treasury orders, HMRC have now done a U turn and said that interest will not be charged on the tax underpayments caused by HMRC coding cock ups over the last two years.

Dame Lesley said:

"If they need time to pay, they won't pay interest. Ministers have asked us to put that in place."

As long as people facing a repayment contact HMRC to agree a timetable, no interest will be incurred.

Andrew Tyrie, the committee chairman, said:

"The fact that you have announced this today does look like a direct response to public pressure."

Quite!

Interestingly HMRC's upper echelons were told about the latest underpayments in July, yet the public only informed last week.

Funny though that the policy reversal re interest has only been cobbled together now, in the face of widespread ridicule and condemnation?

One would have thought that HMRC executives could have foreseen all of this, and had a plan in place to avoid the shambles that has been unfolding before our eyes over the last few days?

Hartnett said that he regretted his "insensitivity" in not recognising immediately that people affected deserved an apology. He went on to apologise for not apologising immediately the issue became public.

"I know how to apologise, I've had to do it before.

(Ken's reaction...ROFLOL!)

I did not do it then and I am sorry for that.

I think we could have done better in helping taxpayers to prepare for this."

Hartnett also apologised for how he handled the BBC Moneybox interview.

(Quotes sourced from The Telegraph)

The sad thing is that this is but the tip of the iceberg; other things will come out and, like a West End farce, this farce will run and run.

BTW, where's "Three days a Week" Clasper gone?

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 Teenage Tax Trap

The Observer last Sunday highlighted a rather obscure tax trap that can catch out teenagers, who rely on receiving their interest gross.

Savers of any age, who earn too little to pay income tax, qualify for interest paid gross by completing HMRC form R85.

The "nuance" to this opt out is that when the saver turns 16 the opt out ceases to be valid, and the individual must re complete another R85 in order to continue to qualify.

Needless to say, not everyone is aware of this. However, tax overpayments can of course be reclaimed from HMRC via form R40. Unfortunately, as with all tax overpayment reclaims, the Observer notes that it "is bureaucratic and slow".

Teenagers, you have been warned!

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"

Simple Interest

The Times has reported the result of the first adjudication issued by the new Upper Tribunal for Tax Matters.

Companies waiting to receive refunds from HM Revenue and Customs for VAT they overpaid because of errors made by HMRC will only receive simple interest on the debt in the first instance, instead of the compound ineterst that they have demanded.

The Upper Tribunal for tax matters said that although the businesses had the right to compound interest on their reclaims under EU law, UK statute did not oblige HMRC to pay it.

Instead, the businesses will receive simple interest from HMRC and have to bring a further claim in the High Court for that to be topped up to compound rates.

Thus wasting further time and money, as the companies will quite correctly claim something that is their right and will of course receive it.

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"

Gone Fishing

Nationwide and HMRC are having a few interesting exchanges over HMRC's request to Nationwide to disclose details of its customers with offshore accounts.

The Times quotes Nationwide:

"Nationwide has been in active discussion with HMRC on this matter.

However, we do not believe our records enable us to identify those customers who live in the UK and have an offshore account.

We have already informed HMRC of this, but inquiries are ongoing".

Doubtless the same discussions are ongoing with other building societies.

I wonder if the extra tax revenue earned will cover the admin costs incurred wrt this fishing trip by both HMRC and the building societies?

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"

Taxing The Dead

There are two certainties in life, death and taxes.

The Treasury has, over the last 30 years, managed to combine the two via imposing the iniquitous IHT. However, until now, bereaved families have been at least given some time to pay it with penalties for late payment (six months after death) never going beyond base rate.

Sadly, since the government has managed to bankrupt the country it is now desperate for every penny that it can raise in order to pay its own wage bill. As such, HMRC will be increasing the rate it charges on IHT late payments to 3% (2.5% above base).

Ironically, where there is a tax overpayment HMRC will only pay 1% below base rate, with a floor of 0.5% (ie 0.5% at current base rate).

HMRC say:

"Interest is not a penalty but compensation for tax paid late.

We are streamlining the rates charged and paid for interest to simplify and make things fairer for customers.

This has been subject to extensive consultation over the last 18 months and has been largely welcomed by customer groups and their representatives.

The alignment of rates that will take place in September will mean that all tax paid late is subject to interest at the same rate, so ensuring all taxpayers are treated equally.

And in the interest of fairness we will also be introducing a repayment interest floor, to ensure that any taxpayer overpaying tax will receive interest."

- How is it fair to penalise the bereaved in this manner?

- How is it fair to charge 3% for late payments, but only pay 0.5% when tax has been overpaid?

- How can anyone seriously describe taxpayers as "customers"?

- How did HMRC manage to issue such a bullshit statement whilst keeping a straight face?

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 - Who Pays The Bill?

Aside from the civil liberties issues of granting HMRC (ie the state) more power to invade the privacy of individuals, for I suspect precious little reward, who exactly will end up footing the bill for HMRC's forthcoming trawl for information about offshore bank accounts?

This is going to be quite a large exercise.

As per Accounting Web:

Under Schedule 36 of the Finance Act (which came into Wednesday), HMRC now has the power to issue information notices to banks, forcing them to provide data on clients with UK addresses holding offshore investments.

Over 300 banks have been ordered to surrender information about customers with offshore accounts.

Brian Mairs, of the British Bankers' Association, said:

"No bank has any interest in shielding customers who would seek to evade their tax obligations. However, all of them have a duty under the law to keep their customers' affairs confidential.

The affected banks have yet to receive the notices, but once they receive them they will engage with HMRC to understand what information is being sought, whether it is in the power of the bank to provide it and, if so, in what time scale?"

James Bullock, tax partner at McGrigors, is quoted in The Times:

"For the financial institutions concerned this disclosure process is incredibly onerous and costly and they have to foot the bill themselves - even though they are doing HMRC's work for them."

Powers for invasion of privacy and spying should be in proportion to the results expected. I remain to be convinced that this fishing trip will net the government billions in evaded tax receipts.

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"

Simple!

Errmm...here is a story as per Tax-News.com.

Seemingly a 13 year project undertaken by HMRC to rewrite tax law (with the objective of making it easier to understand) is soon to come to a close.

Well, Timms is impressed and notes that "direct tax legislation is now far more accessible and easier to apply..."

What say you "Joe Public"?

After 13 years of activity, the HM Revenue and Customs (HMRC) Tax Law Rewrite Project is to end next year, the Treasury has announced.

Launched in 1996, the project is responsible for rewriting direct tax legislation, to make it clearer and easier for users to understand.

“The Tax Law Rewrite project has played a key role in modernising our tax legislation and its work has rightly been widely praised,” commented Stephen Timms, Financial Secretary to the Treasury. "The mainstream direct tax legislation is now far more accessible and easier to apply than the legislation that went before and when the project’s next two Bills are enacted, the time will be right to bring this work to an end.

Since its creation, the project has resulted in 6 pieces of legislation and tax regulations being rewritten, including: The Capital Allowances Act 2001; The Income Tax (Earnings and Pensions) Act 2003; The Income Tax (Trading and Other Income) Act 2005; The Income Tax Act 2007; The Corporation Tax Act 2009; and The PAYE Regulations.

The main goals of the project are to reproduce tax legislation in a clearer, more logical tax structure with use of plain language while attempting not to alter the main tax policies.

A high level Steering Committee, chaired by Lord Newton of Braintree, oversees the project. A Consultative Committee, consisting of representative bodies and other interested parties, also meets on a regular basis to consider issues and the draft legislation in more detail.

“With the completion of the project’s work, legislation for the mainstream direct taxes will now be much easier for users to navigate and understand,” Timms continued. “This is a very significant achievement and I am grateful for the contribution of everyone involved in it.”

The second Corporation Tax Bill and the Taxation (International and Other Provisions) Bill, which rewrites provisions that deal mainly with international taxation issues, is expected to be enacted in the spring of 2010.

Work currently on hand will be completed by the end of 2009/10, with only minor amendments to existing rewritten legislation to be undertaken after that, the Treasury informed.

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"

Consultation

HMRC published their Consultation Responses Document to its draft Charter last week.

The consultation attracted an unprecedented 1900 responses:

– 124 online,
- 1748 youth (aged 15-24 years), and
- 54 written responses from representative bodies, businesses and individuals (including HMRC staff).

I am surprised that 15 year olds have even the slightest understanding/interest in matters concerning taxation.

Two phrases:

- "pursue relentlessly", and
- "bend or break the rules"

caused some angst amongst the respondents. HMRC have modified them accordingly:

"3.31 The phrase 'pursue relentlessly' is part of the HMRC Vision. The language is appropriate for internal use and it accurately reflects our role. Given the concerns expressed we have changed the term to 'tackle' in the Charter, however the sentiment remains the same.

3.32 The phrase 'bend or break the rules' is also part of the HMRC Vision. Internally HMRC staff understand the difference between evasion and avoidance.

We have amended the wording in the Charter to make a clearer distinction for an external audience between 'deliberately break the rules' and those who 'bend the rules' And the additional notes make more clear our approach to tax avoidance as compared to tax evasion."

Given this change in the Charter is not also appropriate that the HMRC Vision is also changed to reflect this, lest it cause confusion internally?

I would also note that the revised version now states:

"distinguish between legitimately trying to pay the lowest amount and bending the rules through tax avoidance".

Tax avoidance is legitimate, the above implies that it is illegal.

BTW am I seeing things, or is that Barack Obama in the top right hand picture on page one?;)

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 - ID Cards and HMRC

The Guardian highlights the dangers of government departments, such as HMRC, using the data gathered via the ID card scheme to go on fishing trips (outwith genuine enquiries, wrt serious criminal offences being investigated).

"The controversial ID card system, which has been amended over the last few weeks, may well be used by various government departments to track individual spending habits and assets.

In a relatively unpublicised move the UK government has given the Treasury department, and specifically tax inspectors, the ability to access the ID card database, which shows big-ticket items acquired by individuals in the UK.

It is believed that by using information on the database, the various tax authorities could ultimately create an audit trail of spending and assets for each individual in the UK."

It seems that the Home Orifice is reluctant to comment on this issue.

Using HMRC as a government spy will further undermine its reputation and indeed its effectiveness (as time will be wasted by HMRC staff who end up spending their time fishing in "uninteresting backwaters", rather than proactively targeting those who are known to be defrauding the tax system).

It goes without saying that the civil liberties implications of this are somewhat "worrying", to say the least.

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"

Consultation

FYI, from the HMRC site:

Two consultation documents on modernising HM Revenue & Customs (HMRC) powers, deterrents and safeguards are published today.

The first paper contains proposals for modernising and improving HMRC's information powers, and accompanying safeguards, in two key areas:

- bulk information powers – these allow HMRC to gather specific pieces of information about a group of taxpayers for use in risk analysis e.g. interest paid by banks without deducting tax; and

- specialist unnamed taxpayer powers – these allow HMRC, in certain tightly-described circumstances, to ask for information from a third party about an unnamed taxpayer, for example, to check a transaction where it’s not clear who the relevant taxpayer is.

The second consultation looks at ideas for a new and modernised excise checking framework, as well as ways of improving excise administrative procedures, in order to reduce admin burdens for business. The proposals cover excise duties on alcohol, tobacco, energy products, gambling duties and air passenger duty.

The consultations follow the introduction in April 2009 of a new compliance checking framework for a range of taxes, which brought in a new set of rules and safeguards for HMRC inspections, visits and enquiries across a range of taxes.

The consultation documents, and accompanying Impact Assessments, are available on the HMRC website at www.hmrc.gov.uk/consultations (click the "current consultations" option).

The deadline for submitting comments is 1 October 2009.

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"

Staff Illness Saves Money

This piece in publicservice.co.uk states that HMRC is suffering from an increase in staff being off through sickness.

However, apparently, this is a good thing. Seemingly the staff absence means that less calls from the public are able to be taken.

Why is this a good thing?

1 It seems that the National Audit Office found that between 15% and 40% of contact with customers was avoidable.

2 Reducing the number of avoidable calls by 15% could release up to £23M a year (11% of HMRC's annual spend on contact centres).

So all that HMRC have to do is to convince their "customers" (taxpayers to you and I) that their call is not necessary or, conversely, simply not staff the call centres in the first place and leave the calls unanswered.

Sorted!

Just out of interest, why are more staff off sick?

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"

Snouts in The Trough - No Special Rules For MPs

From the horse's mouth (HMRC) itself:

"There are no special capital gains tax rules covering MPs' homes."

Does this mean that MP's, in the event that they have underpaid tax, may expect a tax investigation going back several years? That is what would happen to the rest of us, were we to find ourselves in this situation.

It would be a salutary lesson for the people who gave HMRC its extra powers, and who politicised it, to be on the receiving end of one of its investigations. It might even bring MPs closer to the people!

I assume that the offending MPs will be named and shamed by HMRC!

Source The Times:

"Was HM Revenue & Customs warned several years ago that MPs were playing fast and loose with the tax system as regards their homes? So claims Thomas Casagranda, an HMRC employee, who says that he highlighted for his local compliance team the use of second homes by MPs and whether this should be taxed. "My idea was instantly shot down in flames by a manager and I was told that if I looked at a local MP’s tax returns, I would face conduct and disciplinary procedures."

As Ken Frost, a long-time critic of the taxman who drew Casagranda's letter to my attention, points out, if the profits from second homes are not taxable, then repayments by Blears et al would be a tax overpayment. If they are taxable, then they owe interest and fines.

The HMRC ducks the issue. "We cannot discuss identifiable individuals' tax affairs. The capital gains tax relief for people’s homes applies to only one residence at any one time," they tell me. "More than one home can qualify for relief at the same time but it will completely depend on the facts of the case. There are no special capital gains tax rules covering MPs' homes."

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"

Snouts in The Trough - Suggestion Ignored

My thanks to Thomas Casagranda for giving me permission to post a letter that he sent to the Mail on Sunday, re second home profits.

I wonder how HMRC are able to reconcile their reluctance to look into this issue, with the sudden "enthusiasm" of some MPs to now pay the tax on these profits? Either these profits are taxable or they are not.

In the event that the profits are not taxable, then the payment made by Blears etc will be classified as a tax overpayment. In the event that there is a tax liability, then the underpayments of tax are surely subject to interest/fines?

"Subsequent to Ian Galagher's article dated 11/05/2009, I feel compelled to write.

In 2005/06 I highlighted, for my local compliance team, as a revenue employee, the use of second homes by MPs as a viable revenue project. My idea was instantly shot down in flames by a manager, and I was told that if I looked at a local MP's tax returns, I would face conduct and discipline procedures.

In my opinion, it is too little too late, and if HMRC targeted the MPs a few years' ago, the foul scandals besmirching the Commons and Lords would, possibly , have not occurred to the extent that they have.

Thomas Casagranda"

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"

"Efficiency" Savings

There was a rather interesting take on the effectiveness and value of the "efficiency" savings being implemented by government organs, such as HMRC, in yesterday's Guardian.

In effect the Guardian reasons that costs are not being saved, but are being swept under the carpet and being passed on to others attempt to clean up the less left by a newly "efficient" and "cost effective" government organ:

"Look at the "cost savings" made at the Department for Work and Pensions and HM Revenue & Customs. Both these flagships of public-sector reform have been subject to top-down makeovers along approved factory lines. Dumbed-down "front offices" sort and feed incoming cases to specialised processing sections in the "back office" in the belief that these mass-production techniques will cut the unit cost of transactions and harvest economies of scale.

Even in manufacturing, economies of scale lost their grail-like allure when the Japanese discovered how to make small quantities of different, high-quality goods cheaply. In services the case is at best unproven (banks, anyone?), and so far the successes in shared services are few and far between. But even if they do make transactions cheaper, that's irrelevant if from the citizen's point of view the service is worse, requiring more transactions to put right. And it takes no account of the disbenefits of the efficiency measures elsewhere in the system.

Thus the HMRC and DWP cost savings recorded in official figures reappear, with interest, in the workloads of harassed local councils, housing associations, police, courts and advice agencies. They have to pick up the pieces left by the failure of HMRC and DWP's demoralised staff and fragmented processes to provide an acceptable (rather than cheap) tax and benefit service.

Much of the work of the UK's voluntary advice organisations now consists of dealing with mistakes affecting the most vulnerable in society perpetrated by New Labour's efficiency flagships."

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"