Wooden Money

The Herald reports that a number of Scottish councils are getting very excited over the possibility of receiving tax rebates on VAT overpayments made during earlier periods (in some cases claims have been made dating back 35 years).

Seemingly councils, individuals and companies have received, to date, around £1.5BN in rebates from HMRC; eg Glasgow recovered £2.6M in VAT wrongly accounted for on hostel charges from 1974 to 1996, as well £3M in interest.

The councils will use the money to offset budget cuts.

All very well, maybe.

However, the rebates of "wooden money" are merely going from one organ of the state to another; no real income in the overall scheme of public finances has been received, the money "gained" by the councils will have to be saved elsewhere by the government and cuts then passed on to the councils.

They are spending time, effort and money scrambling after "wooden money"

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"

Interest Rate Hike

I see that the furore over HMRC raising interest rates on overdue tax to 3% won't die down.

Both the Independent and Guardian have published pieces about it in the last few days.

Clive Gawthorpe, a partner at UHY Hacker Young, said:

"This is simply about HMRC clawing more money from taxpayers because of the desperate state of the public finances.

The rate charged by HMRC on late payment will be six times higher than the Bank of England base rate for most taxes.

Banks found it difficult to justify this kind of behaviour and have faced accusations of usury from the Government itself.

Why not harmonise the rate at 1.5 per cent charged for some corporation tax?

That would seem reasonable in view of the current base rate."

Doubtless our very bankrupt government will listen...LOL!

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"

Hackers Steal £1M From HMRC

In August I noted the following:

"Be warned there is a nasty fraud going on whereby agents' online details are being highjacked, and tax refunds diverted.

'There is no reason to believe that the users' security details that have been used fraudulently were obtained from HMRC.'

As per an HMRC statement quoted on Accounting Web

Given the security risks, is compulsory online filing such a good idea?"

Last weekend This Is Money reported that £1M has been stolen from HMRC by hackers.

"The thieves filed returns online using the passwords of genuine self assessment taxpayers - then diverted the money to bogus accounts.

The sting prompted concern yesterday that the fraudsters may have obtained the passwords from one of the many Whitehall laptops stolen over the past few years."

I wonder if this is in anyway part of the same fraud I warned about in August, that HMRC tried to blame the tax agents' "poor" poor in house security for?

Somewhat of a coincidence is it not?

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

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

HMRC's Dump Account

My thanks to a loyal reader who has drawn my attention to a rather large backlog of unmatched P14 Forms (dealing with PAYE etc). held in HMRC's the Residual File (more commonly known as a "dump account").

The "dump account" contains unmatched details of salary, tax and NI Contributions which are not attributed to any individual.

The tax and NI Contributions have been deducted by employers and paid into the Treasury. However, the fact that these "unmatched" income details exist means that HMRC have not been able to determine the true tax liability for these individuals.

This means that some taxpayers may be liable to pay more tax, and others may be due a tax refund.

Surely only a few taxpayers are in this position though?

Ermmm..no!

My correspondent also copied me the results of a Freedom of Information (FoI) request relating to the matter. Seemingly, as at 5th April 2007, the number of forms P14 within the Residual File, was as follows:

- where the Pay figure was between £20K-£29,999K 365,091
- where the Pay figure was between £30K-£39,999K 148,570
- where the Pay figure was £40K or more 365,091

A grand total of 878,752 unmatched P14's.

However, the problem doesn't just stop there with the unmatched P14's. I draw your attention to The National Audit Office Report for 2007/2008 (Summary - Item 12).

"At the end of the tax year, the Department's computer system may identify discrepancies in taxpayer records or be unable to match a return to a record and so it will establish an 'open case' for manual checking.

Delays in clearing 'open cases' can mean that taxpayers are not notified on a timely basis of additional tax payable or refunds due.

At the end of March 2008 the Department had 16.2 million open cases, which exceeded its target of 12.5 million, because computer system developments did not deliver the reduction in cases expected, staff were released to other work and there was lower than anticipated overtime.

The Department plans to reach a steady state position by 2010 where open cases for each tax year are cleared within a year and there are no backlogs for 2006-07 and earlier years. The number of cases that will require manual intervention following the implementation of the computer changes cannot be predicted with absolute certainty, so the Department needs to consider the processing resources necessary to clear the backlog of 'open cases', should this exceed its current estimate."

The figure of 16.2 million represents approximately 50% of all PAYE records dealt with by HMRC, in other words 50% of the PAYE population have not had their PAYE liability reviewed.

This figure of unreviewed PAYE Tax liability has been growing substantially over the past few years. Computer Weekly provides a rather alarming set of statistics:

HMRC open cases

-1998: 2.5 million
-1999: 4.8 million
-2001: 8.5 million (1,250 extra staff were hired to reduce the backlog)
-2007: 11.5 million
-2008: 16 million
-2009: 20 million

The backlog means that HMRC, if they wish to resolve the matter, will have to divert money and resources into resolving the discrepancies.

One might question as to what the £8.5BN being paid to IT consultants is really being used for?

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"

Hanging On The Telephone II

I see that a whistleblower has told The Mail on Sunday that HMRC have issued orders earlier this month for call centre operators to handle incoming calls in a way that will make them last around three minutes longer.

All very well, except that as I noted in 2008 HMRC numbers are 0845.

According to Which? a 10-minute call from a BT landline to a normal geographic line costs about 40p at most, while the same call to 0845 number could cost up to 60p (50% higher).

HMRC state that they do not receive money from their phone service provider (Cable and Wireless).

I am sure that they don't.

However, it is more than likely that within their agreement with C&W their is a clause that states part of the revenue that C&W earns from calls should be used to offset the fees it charges HMRC.

I guess the cost of a phone call to HMRC is what one might call a stealth tax?

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"

Confusion

There appears to be a wee bit of confusion in the HMRC bunker over the rules wrt its recently announced tax amnesty for undeclared offshore accounts, and the treatment given to those with accounts in Liechtenstein.

International Adviser reports that the confusion may allow tax evaders to switch assets to Liechtenstein, in order to benefit from the less onerous fine.

There are two disclosure facilities:

- The Liechtenstein Disclosure Facility (LDF)

- The New Disclosure Opportunity (NDO).

Both require filing notifications of intention to disclose by 1 September.

There appears to be the opportunity for tax evaders to move their undeclared offshore holdings (outwith Liechtenstein) to Liechtenstein, and declare under LDF rather than NDO.

International Adviser (IA) asked HMRC about this and was told that the LDF was:

"only for new or existing investments [in Liechtenstein] at 1 August 2009".

However, in response to another IA query, HMRC apparently said that individuals with investments that have been made directly with offshore financial intermediaries "will be able to move their money to Liechtenstein after the end of the registration period for [the] NDO, and then use the full terms of the Liechtenstein disclosure facility".

The LDF offers a 10% cap on the penalties, compared with the 20% cap on NDO.

In its statement today, HMRC said:

"HMRC has the legal power to obtain information on investments where they have been opened through a UK branch or agency – say a branch of a bank in the UK.

Anyone with investments of this sort could move their investments to Liechtenstein after the end of the registration period for NDO, and use the Liechtenstein disclosure facility.

But they will get the same terms as the NDO.

People with investments they have made direct with offshore financial intermediaries will be able to move their money to Liechtenstein after the end of the registration period for NDO, and then use the full terms of the Liechtenstein disclosure facility.

They will of course have to disclose everything to HMRC in that case, or the new Liechtenstein laws will mean that they have to remove their investments or face sanctions."

Well, I am none the wiser.

Maybe HMRC are being paid commission for advertising Liechtenstein as a tax reduction opportunity?;)

Or maybe they simply haven't thought it through yet?

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"

Security and Outsourcing II

As a result of media reports about the possibility of tax work being outsourced to India, the following internal memo was issued by the CEO of Capgemini to all of its staff:

"To all Capgemini Aspire employees

Response to media reports today

You may well have read - or watched - media reports today about Project Quantum, the work initiated by HMRC to streamline and reduce the cost of all its IT services.

As HMRC's strategic IT partner, we are working closely with the Department to continue achieving sustainable value for money for the work we do.

Discussions about the Aspire aspects of Project Quantum have been underway for some time, and although good progress is being made between Capgemini, Fujitsu and HMRC no firm agreements have yet been arrived at. Once we have agreed any changes, we will naturally share them with you.

The media coverage included reference to offshoring sensitive data. HMRC has strongly refuted claims that UK taxpayer data could be processed in India and most press reports carry this correction.

As you are all aware our contract prohibits delivery of any aspect of Aspire from outside of the UK.

Although the concept of offshoring has been debated and explored, there are no plans to change this contractual position as part of Quantum.

I should like to take this opportunity to remind you that, if contacted by the media, you should not make any comment, but ask the caller to contact the HMRC Press Office directly ..."

Aspire is worth about £8.5BN in total over its estimated life.

The key phrase in the memo is this:

"Although the concept of offshoring has been debated and explored, there are no plans to change this contractual position as part of Quantum."

There is a clear desire to outsource, to my view, as they would not have wasted time and money debating and exploring it. There may well be no plans at the moment (were they nixed as a result of the leak and media reports?).

However, plans and contracts can change.

Here, by way of information, is some further background on Project Quantum, a plan to cut costs at HMRC by at least £205M a year, and Aspire.

"Mutual collaboration" between HMRC, Capgemini and Fujitsu is deemed to be the "most expedient route to success".

"Success is predicated upon complex dependencies - so any arrangement has to be treated as a bundle. Many things need to be done in parallel - need do-ability check when choices [are] clear.

We need to create headroom to fund essential change - neither HMRC or [sic] Aspire has additional cash to do this.

We believe there is a solution but it complicates the dependencies.

Early savings drive investment pot for subsequent work. Timing [is] critical again."

The background (extracts of leaked papers) can be read on Computer Weekly.

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"

Computer Glitch Kills Tax Credit Claimant

HMRC have found a neat way to reduce the amount of money paid out via tax credits. They kill people off, not physically but by wiping them from their computer records.

Carol Buchanan, a part time cleaner, found this to her cost recently when she was told at her local Post Office that she couldn't collect her working tax credit because she was dead.

Ms Buchanan was also told that no emergency credit payment could be made, because she had already been wiped off the computer system.

HMRC have yet to give her a timescale to resolve this cock up, and it is likely that she will be without her tax credit for several weeks.

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"

Downward Trend

My thanks to Serious Cat for going to the trouble of looking up the results of previous HMRC staff surveys, and comparing the results (where possible) with the most recent one.

As can be seen, the trend has been in the downward direction. The question that springs to mind is why the CEO of HMRC expresses "huge disappointment" at this year's results, when the trend has been downward for quite some time?

Is she so really out of touch with how staff feel about HMRC?

Given this downward trend, what really can be done to reverse it; given that the government is broke, and that many of those "running" HMRC have been in situ during this period and are therefore presumably "responsible" for the lousy staff morale?

As Serious Cat says:

"This is the HMRC that Gordon Brown has created.

This will be his legacy."

Serious Cat's comment:

"I present, for information purposes, a few figures selected from the last 6 staff surveys.

As previously stated, many of the questions/statements are different in each survey, but a handful are the same and capable of comparison.

(Please note, there were two staff surveys conducted in 2005, one in May and another in November.)

Statement 1: I am proud to work for HMRC

Positive
05/2005 - 43%
11/2005 - 40%
2006 - 36%
2007 - 39%
2008 - 33%
2009 - 25%
Down 18%

Neutral
05/2005 - 36%
11/2005 - 36%
2006 - 34%
2007 - 38%
2008 - 36%
2009 - 38%
Up 2%

Negative
05/2005 - 21%
11/2005 - 24%
2006 - 30%
2007 - 23%
2008 - 31%
2009 - 37%
Up 16%

Statement 2: I would recommend HMRC as a good place to work

Positive
05/2005 - Question not asked
11/2005 - 37%
2006 - 28%
2007 - 30%
2008 - 25%
2009 - 17%
Down 20%

Neutral
05/2005 - Question not asked
11/2005 - 28%
2006 - 25%
2007 - 26%
2008 - 24%
2009 - 31%
Up 3%

Negative
05/2005 - Question not asked
11/2005 - 36%
2006 - 46%
2007 - 44%
2008 - 50%
2009 - 52%
Up 16%

Statement 3: I think HMRC is well managed

Positive
05/2005 - 26%
11/2005 - 22%
2006 - 20%
2007 - 19%
2008 - 15%
2009 - 11%
Down 15%

Neutral
05/2005 - 38%
11/2005 - 38%
2006 - 35%
2007 - 28%
2008 - 27%
2009 - 25%
Down 13%

Negative
05/2005 - 36%
11/2005 - 40%
2006 - 46%
2007 - 52%
2008 - 58%
2009 - 64%
Up 28%

I think these figures speak for themselves. In 2005, only a quarter of staff felt that HMRC was well managed. In just 4 years, that figure has dropped to a tenth. Nearly 90% of staff are unable to have confidence in HMRC's management.

Since the 2009 survey and its appalling results, what has the reaction of senior management been? Er, not much that I can see.

Despite these atrocious - nay, scandalous - figures, I actually have a small measure of sympathy for senior managers. They are faced with a department that simply doesn't have the budget to revolutionise itself and, thanks to Brown, Darling et al, that budget is being slashed year on year.

We are actually in the position whereby if a taxpayer e-mails us documentation in Word 2007 format, we can't read it. Why? Our version of Word is too old. Can we upgrade to 2007? No, there isn't enough money in our budget.

This is the HMRC that Gordon Brown has created.

This will be his legacy."

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

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

The American Way

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

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

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

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

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

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

Why can't that be done?

Tax does have to be taxing.

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

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

Power Corrupts

In a few weeks time the Finance Bill will grant HMRC new powers to be able to access individual's salaries and deduct up to £2K per annum, in order to recover underpaid tax.

Until now HMRC had to obtain taxpayers' consent, or a court order, before it could do this.

As Roy Maugham, a tax partner at UHY Hacker Young, points out other creditors can't deduct money from people's salaries in this manner, why should HMRC be granted such powers?

"After mortgage payments, food and energy bills, a lot of taxpayers have little left over every month. What's going to stop HMRC making deductions from taxpayers' salaries that leave them unable to pay utility bills or service other creditors? Other creditors can't just deduct money from people's salaries on a whim.

When you think of the administrative errors that led to millions in tax credits being paid incorrectly, you have to wonder whether there ought to be stronger safeguards before HMRC is granted unfettered access to taxpayers' paycheques."

Power corrupts.

Tax does have to be taxing.

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

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

Scam Alert

I may be 100% wrong, but I have a "gut feeling" that this email that I have just received (see below) is in fact a scam;)

HM Revenue & Customs
Crownhill Court
Tailyour Road
Plymouth
PL6 5BZ

http://www.hmrc.co.uk/

Dear Applicant,

We are pleased to notify you of the result of the HM Revenue & Customs program held on the 15TH June 2009.You have therefore been approved for a sum payment of 168,240.00 GBP only, payable in Lloyds TSB cashiers check credited to security credited file numbers GWK/558B/5355/UAD in the United Kingdom.

Due to the security, we ask that you keep all information confidential until your claim will be processed and your money remitted to you.

THIS IS PART OF OUR SECURITY PROTOCOLS TO AVOID UNWARRANTED ABUSE OF THIS PROGRAM BY SOME UNKNOWN PARTICIPANTS.

Complete and print the form attached and send to info@lloydstsbprize.com and allow us 3-9 business days in order to process it.

Lloyds TSB BANKUnited KingdomAccount ManagerMs. Kelly Campbellinfo@lloydstsbprize.com0945 100 9005 Your tax file number (TFN): 8 2 1 0 8 4 4 7 9

This will enable the office to verify your claim.

Regards,

HM Revenue & Customs
Crownhill Court
Tailyour Road
Plymouth
PL6 5BZ

http://www.hmrc.co.uk/

Tax does have to be taxing.

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"

Everything is Tickedy Boo

In response to criticisms that its service levels are declining, HMRC stated that its quality monitoring "demonstrated that performance had not been adversely affected, and that in some areas, performance had improved substantially".

HMRC went on to say that its drive for greater efficiency was being achieved by "modernising and re-engineering work processes, cutting out waste and enhancing leadership performance".

Clearly the ICAEW poll of tax advisers, which concluded that 6 out of 10 tax advisers said they had spent more time and money dealing with HMRC service problems over the past year, must be wrong then.

Tax does have to be taxing.

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"

Tax Avoidance - MPs Only

The message that ZaNuLabour and various senior members of HMRC have been broadcasting is that tax avoidance (whilst not being illegal) is not OK in their eyes, and that they will move heaven and earth to stamp it out.

Why then did Shaun Woodward (cabinet member) choose to avoid paying capital gains of up to £1.5M?

Is this not a tad hypocritical?

The real message is that tax avoidance is OK if you are a member of the government, but not OK for anyone else.

Here's what Shaun did:

Source The Times.

SHAUN WOODWARD, the richest member of the cabinet, avoided a capital gains tax bill of up to £1.5m on one of his London homes, which he sold to Sting, the singer.

Woodward, the Northern Ireland secretary, who has a portfolio of properties stretching from London to the Caribbean, sold the townhouse in May 2003 for £5.7m.

He told the taxman this was his main home — and thus avoided a hefty tax on the sale.Capital gains tax (CGT) is imposed on second homes.

However, in 2001 he said that his family were based in Oxfordshire, where his children were schooled. All available records of his Commons claims also indicate that he was based in Oxfordshire.

Others have “flipped” their claims from one home to another, to maximise their allowances by ensuring their second home is the one needing the most maintenance or the highest mortgage payments. Woodward, who has a grace and favour residence at Hillsborough Castle in Northern Ireland has claimed more than £138,000 in MPs’ housing expenses since 2001. He last night issued a categorical denial that he had flipped his home or set out to avoid tax.

He also said that, far from saving himself money by avoiding capital gains tax, he lost money in the longer term when he sold off another, more valuable, property three years later.

He said he had to pay more capital gains tax when he sold off Sarsden House, a grade II-listed mansion set in 458 acres of Oxfordshire countryside. It went for approximately £25m in May 2006.

However, although questions were submitted to him by The Sunday Times last Wednesday afternoon, he failed to clarify whether he declared different “main” residences to the taxman and the Commons authorities in May 2003.

In a statement issued at 4.19pm on Saturday he strongly denied that his arrangements were an attempt to avoid capital gains tax and said there was no “inappropriate personal gain”.

He conceded in a statement that the Westminster townhouse was exempt from CGT. However, he said the sale of Sarsden was subject to CGT.

He provided a letter from the accountants Horwath Clark Whitehill which said: “Your tax liability would have been dramatically lower had you made different arrangements because the greater liability arises from the sale of Sarsden.”

However, he failed to disclose which specific property he was claiming Commons allowances on during this period, saying that he was having trouble finding the records.

Woodward, who once worked as a researcher on Esther Rantzen’s BBC television show That’s Life!, is regarded by many MPs with a mixture of suspicion and envy. He is married to the supermarket heiress Camilla Sainsbury and defected from the Tories to Labour in 1999.

Two years later, in June 2001, he was parachuted into the safe seat of St Helens South where he bought a small detached house without a mortgage for about £55,000.

After the election, he and Camilla went on a property spree in London, buying a £2.7m penthouse in a building with panoramic views of the Thames, and a one-bedroom flat in the same development.

The couple, who married in 1987 and have four children, also purchased two apartments on London’s South Bank at the end of 2001 for £2.25m. Woodward now claims expenses against one of these properties.

One of their best investments was the Westminster townhouse, reportedly bought in 1997. Lord Mandelson once stayed as a guest.

“At the time there was only one other house in 50 or 60 offices in a terraced row,” said Woodward in a 2006 interview. “They were remarkably well priced, yet it was a risk. By the time I sold it nearly half of the street had become residential. I made a lot of money from it.”

His profit on the sale was about £3.7m and a second residence would have been liable for CGT of up to 40%.

John Rosenheim, a lawyer acting for Woodward, said: “Woodward has no direct or personal dealings with the tax authorities or the fees office and always acted on professional advice.”

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"

Money Saved

The Southport Visiter claims that the closure of HMRC's Southport tax office will generate savings.

However, it will take 20 years for these savings to materialise.

I guess that the lengthy time horizon is part of the "Vision" thing that HMRC are following.

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"

Oh The Irony!

How ironic that the self same MPs, who have been bleating on and on about the "immorality" of tax avoidance, have themselves been using taxpayers' money (as a tax deductible item) to fund advice to ensure that they avoid tax themselves.

As we all know, though some of us don't like, tax avoidance is perfectly legal; no matter what Hartnett, Brown, Darling et al might try to have us believe.

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"

Blears - The Tax Overpayment

It seems that Blears has made a tax overpayment, if Dave Hartnett's tax assessment of her zero liability for CGT is accurate.

Telegraph

"I've got round to asking after Hazel Blears and her cheque, which I mentioned a while back. My query was prompted by an item in the Independent's Pandora diary which claimed she was minded to hand the money over to a charity rather than see it credited to her future tax liabilities. What I've discovered rather increases the pressure on Geoff Hoon and James Purnell, who also face some property/CGT questions.

According to her office, on the day Ms Blears popped up in front of the cameras waving her cheque, she spoke to Dave Hartnett, the permanent secretary for tax at HM Revenue and Customs. Mr Hartnett is, in effect, the country's top tax man. He worked out for her what her capital gains tax liability would have been had she been liable for one. However - this is the crucial bit - he assured her that she was not liable and therefore did not have to pay the cash. Ms Blears, in line with the point she has made that her constituents aren't impressed even if it was legal (no kidding), decided to pay the cash anyway, and was given a special dispensation to do so. The cheque was walked around to HMRC headquarters that evening and handed over to a senior official, who had stayed behind to receive it.

The cheque has been cashed, I'm told by Ms Blears' advisers, and is now sitting in an account at HMRC. What happens to it now is unclear. If it goes into the general Government account and therefore becomes available to pay for hospitals, nuclear weapons, or police uniforms, Ms Blears will be happy. But if HMRC rules that it can only be credited to her by offsetting it against her future liabilities - in effect repaying her the money - she will make an equivalent contribution to a charity.

Which is why all eyes are on Messrs Hoon and Purnell to see how they respond. Ms Blears has set them a precedent."

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"

Silly Billies!

Having warned us all of the dangers of responding to unsolicited emails, claiming to be from HMRC (in reality coming from scammers), HMRC are now getting in on the act and are sending unsolicited texts and voicemail messages.

Never respond to an unsolicited text, voicemail or email (whether it seems to be from HMRC or not).

HMRC just don't seem to be able to get their heads around data security/scamming risks.

Source Director of Finance:

"PKF Accountants & business advisers is warning individuals not to respond to HM Revenue & Custom’s (HMRC) latest attempts to contact taxpayers by text or automated voice messages to save money.

Just two weeks after issuing warnings about the latest identity theft scams perpetrated by fraudsters claiming to be HMRC, the Revenue announced on Monday that it is to try contacting taxpayers by automated voicemail messages and text message.

Matt Coward, Director of Personal Tax at PKF, says: “We are urging individuals and businesses not to respond to any of these sort of messages as it is just not safe”.

On its website, HMRC has warned taxpayers to only respond to a text or automated message that quotes specific telephone numbers – 0191 225 5348 for tax or 0845 300 3900 for tax credits issues.

Coward commented, “How is anyone receiving a text or call purporting to be from HMRC to know whether or not it really is from the tax authorities?

Perhaps the only giveaway that it is a genuine number, is that the tax helpline always seems to be engaged – a fraudster would at least want to answer your call!

But, ultimately, does HMRC really expect every recipient to spend time digging around on the Revenue website to check out that the response number is genuine?”

Coward continued, “I know that HMRC is duty bound to try to save money and to look at all communication technologies, but this is clearly a waste of time. I suspect that most people will simply put down the phone as soon as they realise that the call is automated. With text messages, few will expect to receive one from HMRC so, one hopes, they would treat it with the utmost suspicion.

“If HMRC wants to try out these technologies they should do it via an “opt in” system and the messages should carry some form of personalised accreditation so that taxpayers who have registered, know they are genuine. But in my opinion, HMRC should simply use the funds spent on such exercises to clear its huge backlog of ordinary post from those taxpayers who have taken the trouble to contact them by letter."

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"

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.

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