LITRG's 40 Pillars of Wisdom

 

Given that tax professionals have enough trouble trying to understand tax legislation and deal with HMRC, it is hardly surprising that the hapless taxpayers are completely at sea.

As such, the Low Incomes Tax Reform Group have come up with 40 recommendations  Good Guidance: The importance of effective guidance for unrepresented taxpayers, that they hope HMRC will adhere to in order to help the hapless taxpayers who fund the state and its organs. 

Here are the first 10 recommendations, the full report can be accessed via the link above.

Recommendation 1: The level of technical detail offered by a page of guidance should be immediately clear when landing on a page. 

Recommendation 2: HMRC should publish guidelines to help guidance writers decide what matters and circumstances to include and exclude. 

Recommendation 3: HMRC should consider how their user testing can be expanded to determine whether users get to the right answer, not just whether they find guidance easy to use. 

Recommendation 4: HMRC and GDS should review ‘user need’ requirements from the perspective of unrepresented taxpayers, to ensure they do not represent a barrier to effective guidance being published for this group. 

Recommendation 5: The GOV.UK feedback route which offers a reply to the user should be easier to find. 

Recommendation 6: HMRC should design and implement an ongoing process to help proactively identify areas where guidance is missing, and rectify these areas as soon as they are identified. 

Recommendation 7: Whenever any changes or new policies are introduced, there should be a published guidance assessment to ensure that any associated guidance is as complete as possible. 

Recommendation 8: The search function on GOV.UK should be much improved to ensure users are directed to the most appropriate pages, potentially by working with commercial search engines to improve underlying technologies behind it. 

Recommendation 9: Guidance should always clearly state its intended audience and scope. 

Recommendation 10: Where exceptions apply, links should be provided to more information on those exceptions

I wish the LITRG good luck in trying to get HMRC to implement these, given that had HMRC followed its charter the recommendations would in the main be unnecessary!

Tax does have to be taxing.

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Taxation vs Justice

My thanks to Anthony Thomas (Chairman of LITRG [Low Incomes Tax Reform Group], past president of CIOT and Master of the WcOTA) for providing me with the text of a speech about taxation that he made on the 1st of March at the Worshipful Company of Tax Advisers Budget Banquet where David Gauke was the main speaker.

Here is an extract of the speech:

I am sure you would be surprised if I did not make any comments about HMRC this evening, especially at a Budget Banquet and so very likely would our fellow diners.

Ever since HMRC was set targets for yield back in 2010, the “tax” world has been undergoing a significant transformation. There is an inevitable tension between maximising yield and maintaining fairness between taxpayer and state, and that tension is increasing. HMRC and the profession must work together to ensure a good outcome, which is bound to affect every person in this banqueting hall even if they do not practice tax or are guests of members. Of necessity, the transformative journey is a long one----perhaps infinitely long. It is crucial that both the objective of each step on that journey and the means are clear not only to those who are supposed to be leading it from the HMRC side, but also those impacted by the changes, taxpayers, tax agents and many more.

Chris Jones, the current president of CIOT has recently commented on the digital agenda. He quite rightly pointed out that the government’s digital strategy is most certainly not constrained by ambition. That must be the understatement of the year so far. In 2015 the Chancellor signalled the end of the tax return. That statement took the country by surprise. There was an emphasis on making tax easier, a slogan that promised to reduce the administrative burden.

Subsequently---one might say predictably---there appears to have been a change of emphasis---simplicity no longer features in the ambitions to make tax digital. Concerns have quite rightly been raised by many against the compulsory aspects. And not just by those in the tax profession. Even HMRC accepts that filing business records with HMRC on at least a quarterly basis cannot be made to work for everyone. HMRC’s own research published last August showed there are very significant numbers who for various reasons will be incapable of coping.

I can understand the government wish to drive into the digital world and I support that. But the response from government on digital was a little disappointing. Their response to mandation was interesting—I quote—“quarterly updates will largely be a matter of checking data generated from record-keeping software or app and clicking send”. This simplistic response, by way of a “sound bite”, is worrying. There could be no clearer indication of HMRC’s failure to understand how businesses operate, especially smaller ones. Nor does it give any appreciation or recognition to the huge burdens and costs that would be placed upon ordinary citizens and businesses in trying to comply while at the same time attempting to run their business and deal with the vast array of other state-imposed bureaucratic burdens, which add absolutely no value to their businesses or day-to-day lives.

Every pronouncement focuses on how quarterly reporting will help taxpayers, of course. But I suspect the truth is that record information will be subjected to computer analysis and used as a further tax compliance tool in HMRC’s relentless, misguided and wholly unachievable quest to eradicate incomplete records, with penalties for those who get things wrong and needless enquiries when HMRC fails, as it inevitably will, to understand the numerous innocent reasons why records, accounts and returns do not seem to match. If the information is to be used simply to highlight the few tax evaders that HMRC already know about, then this seems to place a disproportionate burden on the tax compliant. Of course we all expect HMRC to do what it can to ensure that the right, rather than the maximum, amount of tax is paid. I would be a lot more relaxed if I was confident that HMRC is being transparent about its intentions.

I am confident that most taxpayers and the tax profession are supportive of the government ambition to exploit digital technology to assist tax collection and compliance. However, little thought appears to have been given yet to the immense communication programme that will have to be rolled out, if the changes are not to prove a disaster and harm the already fragile relationship between taxpayers and the fisc. It is no exaggeration to say that digital will not work easily despite assurances by HMRC that in many cases this will be simply done by clicking the “send” button. It is naïve to think that it will be that easy.

On a concern for tax litigants that I raised in September, I cautioned against the Ministry of Justice’s proposals for tax appeal costs. Regretfully they have been imposed more or less unchanged in spite of robust challenge by the legal, accountancy and tax professions. Access to law has become the preserve of the rich---and of course HMRC, whose costs we pay for anyway. The new appeal costs have been implemented and consequently justice will not be available to the less well off or the poor. This is the very constituency which crucially ought to have access to justice, particularly against an increasingly aggressive tax authority. The concern for justice is also worrying the Lord Chief Justice.

 In his annual report Lord Thomas noted “Our system of justice has become unaffordable to most. In consequence there has been a considerable increase of litigants in person, for whom our current court system is not really designed”. How right and how concerning. Particularly in tax cases, the technical issues are routinely beyond the understanding of non-professionals. Now HMRC Officers, perhaps with inadequate training and with one eye on yield targets, may find it all too tempting to leave to a Tax Tribunal the exercise of sound judgement that they should have exercised personally.

That of course might be an easier way to get a quick win, simply because a taxpayer might not have the money to have his case heard. That would be a sad day for the relationship between HMRC and the taxpayers it should be serving and a sad day for democracy. Anyone with a legitimate case but limited means now faces a huge burden. There was a time when the rule of law ensured that justice, rights, lawful judgment, liberties and security was available to all but regretfully, this is no longer the case.

The Latin phrase “Quis Custodiet Ipos Custodes” can be translated as “who will supervise the supervisors?”

On tax matter, the tax profession increasingly has to do that---Parliament certainly does not do the job effectively. Sadly, it is becoming very difficult and time consuming. The many who ought to be listening seem not to hear.

“Justice between citizen and State”, is the translation of the motto that appears on the CIOT cost of arms. The owls on either side of the shield signify the wisdom of tax officials on the one hand and of tax advisors on the other. They are shown as balanced to indicate the aim of both sides to achieve justice and impartiality. However, I do question whether, today, there is in reality equality as between tax adviser and HMRC. It is hard to detect on occasions. Our valid and carefully thought out comments are sometimes dismissed as obstructive or self-serving. HMRC needs to recognise that the tax profession is honest and does a worthy job and that sunlight is the best disinfectant. Marking your own homework is totally counter-productive, as HMRC discovered when it attempted to refresh the Charter.

The public have increasingly exacting standards. They want justice to be done and to be seen to be done. It is not acceptable to be judge, jury and executioner. Some may feel that public shaming is a reasonable way to deal with tax dodgers. But we should be wary of government or departmental attempts to mobilise popular anger to extend state powers or toughen laws in ways that are questionable or Orwellian. History tells us that an ill-informed populist reaction
can be used all to easily as a stalking horse for oppressive or bad law.

The new strict criminal liability offence for failing to make offshore disclosures, and the new draconian GAAR penalties are clear and chilling examples----and it is a temptation that must be resisted until there has been a clear public debate into which all sides enter honestly and openly.
So where do we go from here? There needs to be a better way forward and I think there is one.
Our tax system could be much clearer. It could be much simpler. It should be easy to understand so that everyone knows how much tax they have to pay, why and when; and there should be proper, easily understood and realistic safeguards for taxpayers. Parliament needs to ensure that it does not over extend the might of the executive.

Taxpayers have a right to be able to understand how much they are paying and how it is calculated. The digital world will surely achieve that objective at least. There should also be greater certainty in tax so that businesses and individuals can plan ahead with reasonable confidence that the legislation will not be amended in the short and medium term. That is not an unreasonable goal, albeit that at the moment HMRC often seems to be driving tax policy in very much the opposite direction which is understandable if it is given a target to maximise revenue, which surely is the remit of Parliament, not the executive. In closing I readily confirm that the tax profession and tax professionals are willing to help achieve those laudable objectives of simplicity, certainty and fairness.

Comments and opinions are welcome.

Tax does have to be taxing.

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HMRC's Oppressive Fines

The FT reports that the Low Incomes Tax Refrom Group (LITRG) has described HMRC's automatic £100 fine for late tax returns as “nothing short of oppressive”, and has urged HMRC to overhaul the penalties imposed on nearly 1m people a year.

LITRG correctly notes that taxpayers, who cannot afford professional advisers, face being fined had missed the deadline because of ignorance, ill health or bereavement.

Additionally, around 200,000 people last year missed the deadline because they failed to press the “submit” button when they filed online.

HMRC announced plans in February to consider “whether we could better differentiate between deliberate and persistent non-compliers and those who might make an occasional error for whom alternative interventions are more appropriate”.

There is a world of difference between a taxpayer who misses a deadline by a day or two and someone who has made no attempt to comply at all.

 

Automatic fines should not be used as an easy means of generating extra revenue.

Tax does have to be taxing.

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LITRG Responds To HMRC's ESC A19 Proposals

On Wednesday I wrote about the ICAEW Tax Faculty's objections to the proposed revisions by HMRC of ESC A19.

My thanks to a loyal reader, who reminded me that the Low Incomes Tax Reform Group (LITRG) also recently raised objections to the proposed revisions:

"We welcome the opportunity to respond to the consultation document 'Extra-statutory Concession A19 review'. 

Extra-statutory concession A19 (ESC A19) performs a very important function, serving to provide fairness to taxpayers when HM Revenue and Customs (HMRC) have made a mistake. In particular, it is often the unrepresented taxpayer who is affected by the problems which lead to claims under ESC A19. 

Any review of the concession must take this fact into account.

We raise at the outset the question of whether the concession needs to be revised in the manner proposed. The revised text will make significant changes to the concession and the circumstances in which it will apply. 

Our response strongly reflects the fact that we do not believe there should be changes to when ESC A19 should apply; rather there should be improvements in its operation.

In order to follow ‘Your Charter’, HMRC should publicise ESC A19 much more widely, as those unrepresented taxpayers to whom it is often relevant are in many cases unaware of the concession’s existence.

We believe strongly that the exceptional circumstances test should be retained, and should be interpreted correctly, according to the current wording of ESC A19."

Yes, whatever happened to the Charter?

To read the full LITRG response, please use the link below:

The LITRG response

Tax does have to be taxing.



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Hanging On The Telephone - LITRG Mystery Shopper

As loyal readers know, the subject of contacting HMRC via the telephone has been discussed on this site on numerous occasions over the years. In the halcyon days of the Inland Revenue, back in 1997/98, a call to them would be answered within 30 seconds 91% of the time. However, that was then, and now is now.

Approximately a year ago, Mike Clasper (the all but invisible chairman of HMRC) promised the Treasury Sub-Committee that he expected to see a “period of steady improvement” in HMRC’s performance in answering the telephone.

Here we are in 2012 and step forward the Low Income Tax Reform Group (LITRG) which, a couple of days ago, decided to test HMRC's helplines by using a "mystery shopper".

On Tuesday 10 April 2012, LITRG made three calls to HMRC helplines using the routes taken by an ordinary PAYE caller, a pensioner and a tax credit claimant. On average the wait was 29 minutes. LITRG note that on a PAYG mobile that could have cost £11.60 per call, which could equate to half a day’s income for a pensioner (my advice here is that you should avoid calling HMRC using a PAYG mobile).

LITRG state:

"No doubt, HMRC will claim that there was pent-up demand over Easter. But a customer-centric organisation (as HMRC claim to be) would add extra resources in anticipation.

HMRC will also say that three calls are not statistically valid. But until they do their own mystery shopping and publish the results, we are quite prepared to consider a half-hour wait as not unusual."

LITRG offer some advice:

"People who cannot get through after a short period of waiting should make a note of when they rang. And if any adverse consequences occur because they were not able to do what HMRC required them to do, they should complain and ask to be compensated."

Good luck with extracting compensation!

Tax does have to be taxing.

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HMRC Failure To Help

The Low Incomes Tax Reforms Group (LITRG) have recently issued a warning about tax credit changes.

As from 6 April 2012, HMRC will stop working tax credit (WTC) for most couples with children who do not work at least 24 hours a week between them. This includes some who will still be entitled to tax credits from 6 April, because they are covered by one of the exceptions to this rule.

LITRG note that HMRC have failed to tell these claimants that they must contact them by 6 April if one of those exceptions applies to them.

Under the current rules, a couple with children qualify for WTC if one person works at least 16 hours a week. As from 6 April, couples with children will be required to work at least 24 hours between them, with one person working at least 16 hours a week in order to continue to qualify for WTC.

However, there are a number of exceptions to this new requirement. Anyone who qualifies for WTC in another way should continue to receive WTC by working at least 16 hours a week from April 2012. This applies to people who:

• are aged 60 or over, or
• qualify for the disability element of WTC.

There are four other situations where the new 24 hour rule will not apply. One person only needs to work at least 16 hours if the other person is:

• incapacitated (meaning they are in receipt of certain benefits due to ill health),
• an inpatient in hospital,
• in prison, or
• entitled to carer’s allowance.

In November 2011, HMRC wrote to some 280,000 claimants telling them about changes to working tax credit from April 2012.

The letter (TC 1139) fully explained the change for couples, and listed all the exceptions to the new requirement that were known at that time.

However, HMRC left one rather important piece of information off from that letter; namely that for tax credits to continue from 6 April, claimants covered by one of the exceptions must contact HMRC.

Failure to contact HMRC will result in WTC payments being stopped as from 6 April.

LITRG note that HMRC have a duty under their Charter to ‘help and support you get things right’. This includes providing information that helps claimants understand what they have to do and when they have to do it.

In LITRG's view HMRC have failed to do that in this instance, and as a result some of the lowest paid most vulnerable claimants may miss out on payments.


Tax does have to be taxing.

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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

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Plain Speaking

The Low Income Tax Reform Group (LITRG) has called for there to be a simplification of the language used in HMRC's forms and communications.

LITRG notes that HMRC have carried out numerous research projects to assess the needs of their customers. However, LITRG note that turning the feedback into reality has not happened.

They note that last October President Obama signed the Plain Writing Act 2010, which requires the US federal government to write all new publications, forms, and publicly distributed documents in a "clear, concise, well-organised" manner.

LITRG believe that were a similar act to be enacted in the UK, it would save LITRG countless hours of commenting upon badly drafted Government forms, leaflets and general guidance.

It would also give "the unrepresented taxpayer a fighting chance of helping themselves when trying to cope with HMRC obligations. It would certainly reduce error to a considerable degree".

Please feel free to post your examples of "confusing language" that you have encountered in HMRC communications.

Tax does have to be taxing.

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Click the link to read about: Tax Investigation for Dummies

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Check The Numbers

The Low Incomes Tax Reform Group (LITRG) has estimated that approximately 1.4 million people will receive a P800 document from HMRC (advising people that they have underpaid their tax for 2008-09 and 2009-10) before Christmas.

However, John Andrews (the Chairman of LITRG), very wisely points out that just because HMRC has issued an underpayment calculation "doesn't mean to say the figures it shows are right".

In other words, as with all tax communications, please make sure that you check that the numbers are correct.

Tax does have to be taxing.

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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

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The Death of The Enquiry Centre

Despite the fact that HMRC's call centres are unloved by both taxpayers and staff alike, those who "run" HMRC are determined to reduce the number of opportunities that taxpayers have for face to face discussions with a member of staff.

The Low Incomes Tax Reform Group (LITRG) report that HMRC has cut the opening hours in 58 of its 280 tax enquiry centres, with some now open for just one or two days a week.

They also note that another 117 might suffer cuts as well, as a result of a consultation that is currently underway.

HMRC told AccountingWEB:

"HMRC's customers across the UK are increasingly using our telephone and online services, rather than visiting our face-to-face enquiry centres, which has led to us reviewing the opening hours of those centres with lower footfall.

Face-to-face inquiries have reduced across the UK by 40% since 2006/07. During 2008, we piloted reduced opening in 10 locations with no adverse impact on customers, and in March 2010 we introduced shorter opening hours at 58 centres across the UK."

There's the "C" word again!

LITRG contend that the reduced demand is due to the fact that the quality of service offered is "pants" (so to speak), and that the hapless taxpayer is forced to go to the voluntary sector for decent advice.

Are call centres (if you can get through) better than a face to face enquiry centre?

Views and opinions welcome, as always.

BTW, HMRC contend that the staff who work in the enquiry centres facing cuts will be deployed to other duties (eg answering correspondence).

Do the members of staff facing these cuts actually believe that?

Tax does have to be taxing.

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What is TAXWISE?

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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"

Flawed Tool!

The Low Incomes Tax Reform Group (LITRG) are marginally unimpressed with HMRC's new website tool ("Do I Qualify?") that is meant to calculate whether an individual qualifies for tax credits.

LITGR claim that HMRC's tool is flawed, and that it produces the wrong answer in many cases.

LITRG claim that errors appear when income for 2007/08 is less than the current year. The answer given appears to be based on the current year figure instead of the previous year's.

LITRG also claims that the tool does not account for those with disabilities, or those who might be entitled to the 50 plus element of working tax credit and people who work 30 hours a week.

HMRC have partially addressed the problem, by adding an extra step for those with disabilities.

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

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"

A State of Denial

The Low Incomes Tax Reform Group recently stated:

"The Government are now eager to improve the tax credits system. Yet HMRC are in denial about the extent of the delays in dealing with overpayment disputes and appeals.

One welfare rights adviser sent nine overpayment disputes, one appeal and one backdating request to HMRC between February and June 2008. As of the start of last week, only two had been acknowledged as received, and only one had elicited any substantive reply."

Read more on the LITRG site.

Denial does not help anyone.

Maybe someone could organise an "intervention"?

Tax does have to be taxing.

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