Dedicated to the taxpayers of Britain, and the employees of His Majesty's Revenue and Customs (HMRC), who have to endure the monumental shambles that is HMRC.
Fantastic news for tax simplification fans - this year's tax legislation is 1cm shorter than last year's, topping out at a diminutive 45cm. pic.twitter.com/jfYwL1zX3G
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.
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.
The latest handbook on tax legislation (as per Smith & Williamson) now runs to a staggering 20,300 pages, and eight volumes
(as opposed to the two in 1994/95).
This excludes Finance (No.2) Bill currently going through Parliament
following the Summer Budget.
Back in 2010, when the book ran to a mere 11,000, George Osborne said that Britain had "one of the most complex and opaque tax
codes in the world" and it needed to be simplified.
"The tax
system created by the previous government was overly complex and has
made the tax affairs of millions of families and businesses across the
UK extremely complicated.
We need to reduce the complexities in our tax system and the coalition is committed to delivering that goal.
The
Office for Tax Simplification will provide important advice that will
help inform us in making the right reforms to the tax system that will
help to pave the way to bringing more international business to the UK,
which will give our economy the boost it so urgently needs in the years
ahead."
Osborne in 2011 described the 11,000 pages as a "spaghetti bowl"
"Britain has one of the most complex and opaque tax codes in the world.
And he wanted a "permanent body to push against the forces of complication" and make life easier for firms.
Announcing
the new body, Mr Osborne said his "dream" was "that people might
actually understand the tax laws which with they actually being asked to
comply with".
How's that working out for you then George?
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.
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.
Time for George Osborne to add a few more pages to Britain's great big book of tax legislation. As I noted in January 2013:
"Tolley's Tax Handbook, the bible of British tax, now 11,500 pages long.
Doubled under Gordon Brown. And still growing under G Osborne."
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.
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.
Citywire reports that thousands of Prudential with-profits investors could be in line to receive a share of around £150M after a High Court judge ruled that HMRC had unfairly taxed ‘several thousand dividends’ between 1990 and 2009.
Quite remarkably this case has been running for 10 years, and might affect other providers of similar with-profits funds eg; Aviva, Royal Sun Alliance, Standard Life and Legal & General.
Mr Justice Henderson ruled that HMRC had unfairly taxed the funds in question, and should reimburse Prudential policyholders the tax paid with compound interest.
The judgement read:
‘The Revenue remains unjustly enriched until the date of actual repayment… the interest forms part of the restitutionary claim itself. I would reject the Revenue’s submission that the claimants’ only entitlement is to simple interest...compound interest forms part of the principal sum that needs to be awarded in order to achieve full restitution.’
The ruling is open to appeal by HMRC, which said it was considering the judgement ‘carefully’ before deciding whether to appeal.
Thus it may well continue to run for several more years!
Tax does have to be taxing.
Professional Cover Against the Threat of Costly TAX and VAT Investigations
Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.
Ken Frost has negotiated a 10% discount on any polices that may suit your needs.
However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.
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.
In March I noted that as from 6 April 2013 fund investors face paying income tax on "loyalty bonuses" paid by
fund supermarkets, after HMRC ruled that the payments are "annual payments" and should
therefore be taxed as income.
Hargreaves Lansdown (the UK's largest fund supermarket) has taken advice from counsel and decided to challenge HMRC's "discount tax", as the tax threatens their
ability to pay loyalty bonuses and offer discounts on fund charges.
"The introduction of the 'discount
tax' was extremely disappointing news and an attack on the small
investor. The 'discount tax' is anti-competitive. Loyalty bonuses have
been hugely popular with investors and helped them save money on
investing in their favourite funds.
We feel it’s important to take a stand
on behalf of investors. When we introduced loyalty bonuses we consulted
on its tax position and it was clear, as a refund of charges, it should
not be subject to taxation."
Hargreaves Lansdown believes that it has saved investors over £1 billion in discounts and loyalty bonuses.
The legal challenge, unsurprisingly, is expected to take several months. The tax due to HMRC is being held in a fund while the issue is resolved. If Hargreaves Lansdown loses, the money will be paid to HMRC otherwise it will be returned to its clients.
Tax does have to be taxing.
Professional Cover Against the Threat of Costly TAX and VAT Investigations
Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.
Ken Frost has negotiated a 10% discount on any polices that may suit your needs.
However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.
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.
Taxation reports that the government have issued a new protocol on unscheduled tax changes, which a.o. notes that changes to HMRC's interpretation of tax legislation will
not be regarded as legally significant unless they have been
prompted by court rulings.
"The government has made clear its aim to
strike the right balance between restoring the UK tax system's
reputation for predictability, stability and simplicity and preserving
its ability to protect the Exchequer by making changes where necessary.
In particular, changes to tax legislation where the change takes effect
from a date earlier than the date of announcement will be wholly
exceptional.
Ministers undertake to observe the following criteria when considering a change to tax law which will:
be announced other than at Budget; and
take effect before the legislation implementing the change is enacted.
Such changes to tax law will normally only be announced other than at Budget where:
there would otherwise be a significant risk to the Exchequer;
significant new information has emerged to identify the risk or indicate its scale; and
changing the law immediately is expected to prevent significant losses to the Exchequer.
Announcements will usually take the form of a written ministerial statement to Parliament before 2pm.
Legislative changes announced in this way will be confined to
addressing the risk to the Exchequer that has been identified. A change
in HMRC's interpretation of the law (unless prompted by a court ruling)
will not be regarded as “significant new information”.
Where ministers believe that such a change is justified, the process will be as follows:
a minister will make a public announcement of the intention to change
the law and make clear that the change will take effect before the
legislation is enacted;
the public announcement will be accompanied by the technical detail
necessary to amount to a sufficiently clear warning of the nature of the
change and its timing;
HMRC will publish the written ministerial statement and draft clauses
on the HMRC website as soon as practicable after the announcement to
Parliament. If, exceptionally, draft clauses cannot be published on the
day of the announcement, a detailed technical note explaining the nature
of the proposed change and the reasons for it will accompany the
announcement; and
legislation to give the measure effect will be included in the next available Finance Bill.
While the government will not invite comment on the intention to
legislate, the nature of the change or on its timing, it will consult
after the announcement to establish whether the draft legislation would
achieve its objective and change the law as intended. Subject to the
risk of forestalling, consideration will be given to consulting
informally in confidence before an announcement is made.
As part of the normal Budget process, the Office for Budget
Responsibility will scrutinise the estimates of Exchequer impact
associated with any change to tax policy."
Let's see how well this works then!
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.
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.
Oh dear, don't you just "love" politicians and the way that they twist things to suit their mood?
David Gauke, the Exchequer secretary to the Treasury, gave a speech on Wednesday at the annual ICAEW Hardman Memorial Lecture.
Gauke said that he knew that tax advisers often got frustrated with people conflating legitimate tax planning, avoidance and evasion. However, he said that the government was looking to clamp down on avoidance and would use the "bonfire of the the tax reliefs" (my words, not his) as a means to that end.
He tried to mollify his audience by saying that the government is really only trying to target instances where reliefs and exemptions are used in a "highly artificial way".
"There's also times when it's perfectly clear what the law intends - where reliefs and exemptions are then used in a highly artificial way.
In these instances, people use their resources - and their talents - to twist the law and create results that everyone knows are simply too good to be true."
Dare I say that as the law is made by parliament, theoretically on the basis of advice by HMRC, that it is up to the politicians to create legislation that is clear and not open to being "twisted"?
Sadly, most especially as there is a £4.8 Trillion debt, the law will be interpreted by HMRC and the politicians in the way that suits their purposes best. This is why (despite whining from Gauke et al) taxpayers need tax advisers to use their skills, talents and resources to their very best.
Tax does have to be taxing.
Professional Cover Against the Threat of Costly TAX and VAT Investigations
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.
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.
I see that certain dog whistle politicians and the shouty tabloids are whipping themselves up into a frenzy over tax avoidance. Seemingly if only avoidance could be eradicated all our problems (revenue shortfalls, at least) could be eliminated.
Dr John Pugh (according to the Southport Visiter* - see extract below) certainly seems to think that tax avoidance is the scourge of our time.
*For reason best known to themselves they spell their organ "Visiter".
Aside from the fact that people have the well established legal right to organise their tax affairs in such a way (legally of course) so as to minimise their tax liabilities, Dr Pugh makes a rather sweeping generalisation about "clamping down properly on tax".
What exactly does that mean?
Are not our own "respected" MPs no slouches when it comes to avoiding tax, and to minimising their liabilities (eg via CGT relief on second homes etc)?
Was it not the profligacy of the last government that caused the national debt to balloon, rather than the tax avoidance practices by individuals, companies and MPs?
He and the "Visiter" then confuses tax avoidance with tax evasion.
Sadly it is people like this who have devised, and will continue to devise, our complex and absurdly burdensome tax system.
If only a dog whistle could be created that would lead them to live abroad and out of our lives!
"SOUTHPORT MP John Pugh wants a crackdown on tax cheats.
In a Parliamentary debate he called for an anti-avoidance law to tackle an issue that is costing the Government billions of pounds.
He said: “There are potentially massive sums that could be obtained through clamping down properly on tax.
“In 2008-09, for instance when the Government did crackdown, 12 billion of extra revenue was made.
“This just shows how much avoidance is going on.
“At a time when we face dealing with a large deficit, consideration about how this money is recouped is essential.”
Estimates on how much money is lost by the Treasury in evasion, avoidance and outstanding debts – the tax gap – is put at £40bn a year.
Dr Pugh said many governments tended to take an “after the horse has bolted approach” to dealing with tax avoidance.
He added: “Having a law would ensure that things are far easier to regulate.
“The argument usually used against implementing such a law is that it would lead to capital flight.
“However, Japan and Australia have already implemented such a law and it has not lead to this.
“It would also mean that less time would be spent by the Treasury devising complicated defences against it.”"
Tax does have to be taxing.
Professional Cover Against the Threat of Costly TAX and VAT Investigations
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.
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.
Clive Gawthorpe (tax partner at UHY Hacker Young) warns that HMRC, in its desire to increase tax take from investigations by a further £4BN this year, will reinterpret the law in order to increase tax take from investigations.
"In many cases it is the result of HMRC reinterpreting tax law. If an individual or business can't afford to challenge HMRC's decision through the tribunals and court system, then HMRC wins."
You have been warned.
Tax does have to be taxing.
Professional Cover Against the Threat of Costly TAX and VAT Investigations
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.
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.
Following on from calls by ICAS to improve the tax system Vincent Oratore, the new President of the Chartered Institute of Taxation (CIOT), spoke at the Institute's AGM:
"The way tax law is developed and implemented in the UK is deeply flawed. There is not enough expert scrutiny and there is a shortage of parliamentary time for considering the effect that changes to the tax system will have before they are made law.
This year's pre-election Finance Bill, which was rushed through with just three hours of debate in the House of Commons, is a particularly glaring example, but even the usual process often results in tax law which lacks clarity or has unintended consequences.
It is a key aim of the CIOT to achieve a better, more efficient, tax system for all affected by it - taxpayers, their advisers and the authorities who collect tax. This is why I will be campaigning for improvements to the process of developing tax law during my Presidency of the CIOT and will shortly be publishing a paper on this subject, and engaging with politicians inside and outside government to build the widest possible support for reform.
Ministers in both parties in the new government have been sympathetic to reform in this area. Our aim over the next 12 months will be to provoke debate and provide a forum in which all those with an interest in tax law reform can contribute ideas and build consensus for the changes we need to make the tax system fit for the 21st century."
He also delivered an open letter to George Osborne, the new Chancellor, outlining the four key areas that Oratore believes need tackling:
- the tax system lacks a proper design - the system is too complex and is in need of a dedicated body to aid simplification - it needs an an improved law making process - there should be a focus on removing "uncertainty" from the way taxes are managed by the government.
However, as I noted earlier this week, Osborne's priority, rightly or wrongly, will be to reduce the budget deficit as quickly as possible. Sadly, simplifying the tax system will not be his number one priority.
Tax does have to be taxing.
Professional Cover Against the Threat of Costly TAX and VAT Investigations
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.
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.
HMRC, in their self righteous war against tax avoidance (tax avoidance is perfectly legal) have decided to change the rules to allow HMRC to interpret parliament's "true intentions".
New guidance from HMRC now tries to define tax avoiders as those seeking to pay less tax than "if Parliament turned its mind to the specific issue in question".
This change of definition will lead to many taxpayers, who have made perfectly legal tax arrangements, being subjected to HMRC investigations.
This change in the rules undermines parliament's right to legislate.
The new "code of practice" for tax inspectors defines tax avoidance:
"Avoidance is not defined in the Taxation Acts...One definition is 'a situation where less tax is paid than Parliament intended, or more tax would have been paid, if Parliament turned its mind to the specific issue in question.
At a practical level the problem is then essentially one of deciding what Parliament would have intended and identifying who should be asked to decide this.
Inspectors need to have in simple terms a working concept of 'avoidance' in order to properly identify cases which can be worked...The starting point should be that one would normally expect taxpayers to pay tax on their income or profits...It is reasonable to assume that where a commercial transaction is carried out in a particularly convoluted way, then avoidance is afoot."
Slowly but surely HMRC are attempting to put themselves above statute and parliament, and take on the role of judge, jury and executioner wrt taxation and the interpretation of tax law.
This is an "evolution" that must be stopped.
The bedrock of dictatorship is an overempowered, arrogant, unaccountable, unelected bureaucracy populated by "little men" who believe that they are working for a "greater cause".
Issues wrt tax legislation are for the elected members parliament to address, not the unelected bureaucrats of HMRC.
Tax does have to be taxing.
Professional Cover Against the Threat of Costly TAX and VAT Investigations
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.
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.
"We are deeply concerned about any move that seems to erode what is one of the cornerstones of the UK's tax system: that taxpayers should be taxed according to the letter of the law.
Case law and documents going back to Magna Carta recognise this. In recent years, case law has developed its way of looking at the statute, towards a purposive interpretation of the transactions under consideration.
This has been a significant evolution, and one with which taxpayers and HMRC are managing to deal; it seems to deliver a good deal of what HMRC presumably hope to achieve with the current document.
However, any move to tax by the 'spirit' of the law is a major further step. HMRC need to recognise and justify the significance of the change."
Slowly but surely HMRC are attempting to put themselves above statute and parliament, and take on the role of judge, jury and executioner wrt taxation and the interpretation of tax law.
This is an "evolution" that must be stopped.
The bedrock of dictatorship is an overempowered, arrogant, unaccountable, unelected bureaucracy populated by "little men" who believe that they are working for a "greater cause".
Issues wrt "faulty" tax legislation are for the elected members parliament to address, not the unelected bureaucrats of HMRC.
Tax does have to be taxing.
Professional Cover Against the Threat of Costly TAX and VAT Investigations
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.
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.
The ordinary taxpayers, who can't afford high cost legal eagles to protect them from overzealous tax investigations, are going to face a tough time in the future with HMRC.
That is the view of Nichola Ross Martin, Accounting Web's UK Tax Editor, who spoke at recent tax conference at the ICAEW in London about new HMRC powers.
"Unrepresented taxpayers will not stand a chance under HMRC's new penalty regime.
Many accountants are in for a bit of a shock too.
It was an unhappy coincidence that shadow home secretary, David Davies happened to chose the same day to resign his parliamentary seat on account of 'the insidious erosion of civil liberties in the UK'."
The new tax penalty system allows abatements/reductions from a statutory maximum penalty, by decreasing penalty charges according to taxpayer behaviours. However, HMRC will be required/allowed to pass subjective judgement on the affairs of taxpayers.
This subjective judgement will be fraught with dangers.
The taxpayers themselves will be expected to know if they need professional help or not in their tax affairs, they will then also be responsible for the selection a suitably qualified accountant.
HMRC's Compliance Handbook is not easy reading, even for those who are tax specialists, and is designed to obfuscate rather than help. A sure sign, if ever one were needed, that HMRC is loading the dice in its favour.
Frank Haskew of the ICAEW concluded that HMRC "is consulting but not actually listening" and that "there are diametric views as to what is actually a safeguard" within HMRC.
The dice are well truly now loaded against the ordinary taxpayer.
Just you watch Brown and his cronies running HMRC bleed us dry, as they desperately scrabble in the mud for extra tax revenues to prop up Brown's expensive failed economic model.
Tax does have to be taxing.
The New Statesman, Britain's leading political magazine is delighted to announce that HMRC Is Shite has been nominated for a New Media Award in the category of Campaign For Change. The campaign for change award will go to the individual or organisation that has most effectively influenced opinions and behaviour through the use of new media technology. The winner of this award will champion a cause and provide information and tools to instigate change.
The old adage "power corrupts" appears to have passed HMRC and Alistair Darling by, when they chose to ignore advice from the ICAEW about Darling's 442 page Finance Bill.
The Finance Bill gives HM Revenue & Customs more powers to raid businesses, without the need for a warrant.
The Institute of Chartered Accountants in England and Wales (ICAEW) is increasing its calls for a rethink after the Finance Bill, published yesterday, showed that its earlier advice had been ignored.
Advice to the ICAEW, this government (most especially the Treasury) doesn't listen!
The ICAEW stated that it is seriously concerned that the provisions "appear to be aimed primarily towards investigations of a 'criminal type' nature, as distinct from civil enquiries into a taxpayers' affairs."
The trouble stems from the fact that the "Revenue" side of HMRC is itching to attain the same powers as those enjoyed by Customs & Excise, before the ill fated merger in 2005.
The ICAEW notes that the provisions "give far too much power to HMRC without adequate safeguards for taxpayers".
Specifically:
-The power to enter business premises with only a day's notice -The ability to mount 'fishing expeditions' by inspecting the position of a taxpayer before a return is made -The right of HMRC to dictate record-keeping requirements
The ICAEW is concerned by the lack of safeguards, such as rights of appeal and the increasing tendency of HMRC to seek broad powers in primary legislation.
Given the government's track record, and the thirst by HMRC for new powers, it is unlikely that the ICAEW will get very far with its polite requests.
Nu Labour does not do "simplification of tax", and most certainly does not believe in "legislation lite".
HMRC has been politicised by this government, and is being used as the tool of government policy. It's actual role should be no more than that of an efficient, cost effective administrative function that collects tax.
The fundamental problem that taxpayers face when dealing with HMRC, is the fact that the centuries old principle of British law "innocent until proven guilty" is turned on its head.
The onus falls on the taxpayers to prove his/her innocence when faced with an HMRC investigation.
Nick Morgan experienced such a "Kafkaesque nightmare" himself, and wrote about his experience in yesterday's Sunday Times.
Here is the "Director's Cut" of the article, as published on Nick's own blog at www.tax-hell.co.uk
Why do our elected representatives allow HMRC to turn centuries of jurisprudence on its head like this?
Why do we not vote for parliamentary candidates who would put a stop to this?
As with all matters legal and financial, the devil is in the detail.
No one is better at playing this game than HMRC.
Take, for instance, the draft legislation issued by HM Revenue & Customs (HMRC) to claw back some of the £500M lost to income shifting every year.
This follows a pre-Budget report clamp-down on income shifting that came after the government lost the Arctic Systems case in the House of Lords in July 2007. In the draft legislation, income shifting between spouses is prohibited along with long-term partners, same sex partners and unmarried couples.
Neil MacGillivray, head of technical support at James Hay, recently stated that the draft was vague and ambiguous.
However, the wide legislation, being revised by a consultation, has thrown up a number of unanswered questions according to MacGillivray.
Quote:
"It makes you wonder what they are going to ask on your tax return. If you consider yourself in a long-term friendship, does this count as a long-term relationship?
The consultation is very ambiguous and it is widely drafted to the point of vague."
HMRC has offered no time guide as to what counts as a long-term relationship, nor what constituted a same-sex relationship.
MacGillivray noted:
"If you consider yourself in any type of relationship then you could be affected by the draft, including people at the same address or housemates. As it is at the consultation stage I am sure these issues will be raised."
As with all taxes, the more complex you make them the more people spend time and effort trying to avoid them, which in turn prompts HMRC to issue more rules and regulations thus adding to the complexity.
HMRC's other weapon is that of drafting vague legislation, which gives them the flexibility to challenge taxpayers' legitimate attempts to avoid tax. Thus stacking the odds in HMRC's favour.
Wouldn't it be better for everyone, and less costly, if the tax system were simplified?
The trouble is, simplification is not Gordon Brown's thing!
