Longest Finance Bill Ever - Never Mind The Quality Feel The Length

The longest finance bill ever, coming in at a stonking 762 pages (plus more than 400 pages of explanatory notes) was published on March 8th.

John Cullinane, tax policy director at the Chartered Institute of Taxation, is quoted by Andrew Goodall:

 “Today’s finance bill is the longest on record, beating the next longest by a country mile. This rate of change and quantity of additional legislation will make life more complex for taxpayers and tax advisers alike.” 

However the Office of Tax Simplification has said that we have nothing to fear, noting that while the length of tax legislation can give the impression of complexity, longer legislation can be easier to understand.

Got that everyone?

If you can't understand it, it's not the fault of the legalisation it's your fault!

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

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

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

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

What is Solar Tax Investigation Insurance?

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

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



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OTS Gives MTD a Sound Kicking

The Office of Tax Simplification is somewhat underwhelmed by HMRC's MTD plans:

"1.7 Overall, it is difficult to see the benefits to business owners. They are merely delivering the same (or possibly more) information digitally. 

The incentive appears to be the oft - repeated benefit of accuracy and clarity in their affairs but this isn’t proven. Although an earlier indication of tax liabilities will be helpful to some, it is unlikely to be seen as a major benefit. 

1.8 We have always argued that systems should be developed on a carrot rather than stick basis, i.e. that the pressure should be on HMRC to design a system that people want to use rather than (in effect) using sticks to force taxpayers to ma ke the best of it. Compulsion is fine if the software, tools and so on are in place, tested and working and people are showing they are engaging with the system and finding it is indeed easier. 

1.9 In many ways the biggest concern is: i s the MTD timescale really realistic? The project looks more like a 3 - 5 year plan rather than 18 months - 2 years."

Well then!

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

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

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

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

What is Solar Tax Investigation Insurance?

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

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



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

Osborne's Complex Tax Legacy

Osborne once (2007) called for the tax system to be simpler, in 2010 he set up the Office of Tax Simplification.

Fast forward to the 2016 Finance Act and we see nothing simpler, but in fact an additional 649 pages of complex tax legislation on top of the 11,000-plus pages already in existence

The ICAEW Tax Faculty estimates that during his tenure as Chancellor, Osborne was responsible for 3,896 additional pages of tax legislation.

Some legacy!

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

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

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

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

What is Solar Tax Investigation Insurance?

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

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



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

OTS Employment Status Survey

In July the government commissioned the OTS in July to examine the dividing line between employment and self-employment and “whether it is drawn in the right place and in the right way”.

The Office of Tax Simplification is now seeking views on where the complexities lie in determining someone’s employment status for tax purposes. As such it has published a questionnaire, the deadline for which is 31 December 2014.

The OTS aims to publish its report at the end of February 2015, in time for Budget 2015.

It would be nice to think that this exercise will help simplify our massively complex tax system. However, I won't be holding my breath.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

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

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

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

What is Solar Tax Investigation Insurance?

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

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



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

Tax Simplification? - My Arse!

As per Andrew Neil:

"Tolley's Tax Handbook, the bible of British tax, now 11,500 pages long. Doubled under Gordon Brown. And still growing under G Osborne."

Whatever happened to the Orifice for Tax Simplification?

As per Gauke in July 2010:

"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."

However, as I noted at the time:

"..politicians by their very nature abhor 'simplification' as it makes them 'redundant' in the eyes of the voters."

Some two and half years on and nothing has changed for the better!

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

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

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

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

What is Solar Tax Investigation Insurance?

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

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



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

Click the link to read about: Tax Investigation for Dummies

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

The Fear - Recommendations To Simplify The Tax System for SME's

The Office for Tax Simplification (OTS) yesterday published Recommendations to simplify UK’s tax system for small businesses

The OTS review covered three key areas:

- HMRC’s administration;
- disincorporation; and
- simplified taxation for the very smallest businesses (those with turnover under £30,000).

The key recommendations for each area are:

• Tax Administration - the OTS has found clear scope for changes to be made in the way the tax system is run that will make a genuine difference. There is much that is working well, and HMRC already have a range of initiatives in hand that the OTS endorses, but the OTS has developed a range of practical changes. These will help in areas of raising awareness of the help that is available, improving communication, improving the relationships between HMRC and the small business community and ways to gives businesses more certainty about their tax affairs. Recommendations include the use of two-way email communication, better VAT rulings and information and a dedicated helpline for small businesses.

• Simplified taxation for the smallest businesses – the OTS established that for the very smallest business – often “one man bands” – cash accounts are widely used, whilst claiming for businesses expenses are disproportionately burdensome given the limited amounts often involved. The OTS therefore recommends that receipts and payments accounting is accepted, instead of full ‘GAAP’ accounts. The OTS also recommends a wider range of flat rate expense allowances be available. These methods should be the default option for qualifying businesses, with an “opt-out” allowing those to select the system that is most beneficial to them. Furthermore, the OTS recommends a full study is undertaken of a turnover tax as a possible alternative for the smallest businesses.

• Disincorporation – the OTS identified that a number of the smallest companies would like to ‘disincorporate’ and move to an unincorprated status. The current tax system mitigates against this, so the OTS has proposed the introduction of a tax relief so that companies can disincorporate without incurring significant tax cost. This would parallel the existing incorporation relief. This would have the dual benefit of reducing admin burdens whist facilitating business reorganisations allowing businesses to trade in their correct form.

John Whiting, Tax Director for the Office of Tax Simplification said:

“We have spent a lot of time gathering the views of businesses and their advisers about the tax system from the sharp end. That has led us to recommend a range of practical changes to the way the system runs that will help businesses with their everyday tax affairs – and will help HMRC as well.

We have also looked for ways of changing the tax system and that has led us to recommend introducing a disincorporation relief and a wider range of flat rate allowances. 

There’s a strong case for a form of cash accounting and indeed we think that going further into a radically different way of calculating tax for the smallest businesses needs study. 

Overall, we think that the recommendations put forward today represent a common sense approach that would help to ease the burdens of thousands of the smallest businesses throughout the UK.”

The report report is broken down into three papers. The first paper brings the above strands together, and also covers the detailed recommendations on tax administration.

Key elements of the first report "Small business tax review: Final report, HMRC administration February 2012" are highlighted below:

It notes that there is a clear need for simplification:

"given the large number of businesses and the disproportionate cost of tax administration, simplification measures for very small businesses have the potential to deliver significant benefits to the economy."

Unsurprisingly the OTS found that SME's were fearful of HMRC and of making mistakes:

"fear is much harder to quantify than time or cost and tends to be less prominent in the policy debate."

Communications with HMRC (as loyal readers are well aware) is a matter that features within the report:

"there are clear examples in tax administration where the system makes it surprisingly difficult to make the correct “choice”. Examples raised in this paper include the processes for paying HMRC and the reliance on postal communication when email would be the preferred method of communication.

The preference is a facility to email named individuals within HMRC; we accept this may not be possible but businesses would, we think, be happy if there was a generic “smallbusiness@HMRC” email address to use."

Communications from HMRC are also regarded as being somewhat "unfathomable":

"Generic guidance from HMRC that is overwhelming and written in inaccessible language can be counterproductive as it pushes people toward less accurate and less reliable sources of advice."

Sadly, despite the fact that HMRC staff on the front line do try to do their best to answer questions put to them, the level of complexity of the tax system and the poor quality of training with HMRC result in confusing answers:

"Some 23% of businesses surveyed by TFC experienced difficulty obtaining a definitive answer from HMRC, with 30% having difficulty making sense of the answer and only 45% having confidence in the answer received. 

There is also evidence of different answers being received to the same question."

Here is an extract of the summary:


"Communication with HMRC and improving the relationship with taxpayers

Difficulties communicating with HMRC can increase costs, create delays and cause confusion. The OTS recommends introducing two-way email communication, with response times within a set timeframe. A further popular improvement requested by businesses would be the introduction of a dedicated small business telephone helpline. HMRC should also continue with its ongoing programme of work on the tone and content of its communication with small businesses to ensure that such communication is meeting the needs of the business. Better tracking of correspondence and other communications would also be a welcome improvement.

Providing certainty

Businesses are entitled to expect clear answers on which they may rely in order to meet their tax obligations. Published information and HMRC staff training should ensure that this need is met. The OTS recommends that where a complex issue is raised, ownership be given to a particular HMRC officer until resolved. The prospect of a penalty for an innocent error leads to unnecessary fear among some small businesses so HMRC should make greater use of suspended penalties.

Making it easier for taxpayers to fulfil their existing obligations

This report makes a number of specific recommendations on improving processes to make tax obligations simpler and easier for those small businesses affected.

The overriding message here is that many small businesses look to HMRC for guidance in tax matters. It is perhaps valid to question whether businesses should look to external tax advisers for the necessary assistance instead. HMRC arguably does not have the resources to do as much as taxpayers and agents would like and its resources are likely to continue to be reduced. It is clear from our research, however, that many small businesses want to be more in control of their tax affairs and they look to HMRC to help them. These businesses want the freedom to decide when to involve external tax advisers.

We think this stance is entirely valid and we have accordingly reflected the needs of those small businesses in many of our recommendations. It will be deduced that the OTS thinks that, as the tax authority, HMRC has an obligation to help taxpayers comply with the tax system: self assessment only goes so far. We are encouraged that many in HMRC recognise these obligations and want to help businesses appropriately. It will clearly be challenging for HMRC to deliver the programme we have outlined but we think that what we have suggested is not all “one way”: there will be payback to HMRC through better compliance and more efficient use of their limited resources.

We have outlined a suggested timetable for delivering our recommendations, taking account of the deliverability by HMRC and the links with ongoing initiatives. We acknowledge that HMRC already has a number of initiatives under way that will address various aspects of our recommendations and the report highlights where these need greater focus or advertising. The recommendations in this report are summarised in Chapter 8, and are further divided between those that the OTS believes could be introduced in the short term for the immediate benefit of business, those which will need to await the introduction of the single Government domain later in 2012 and those which would be longer term initiatives.

One point to highlight is that those who come to this report expecting to find a single “blockbuster” change that will solve all small businesses’ problems with the tax system will be disappointed. The OTS has found much that is working well with the current tax system but, at the same time, there is scope for changes that will make a genuine difference. Many of the points made in Chapters 4, 5 and 6 are relatively minor, but taken together they will make a material difference. Also, the ten areas listed within Chapter 7 are a significant agenda for change.

It is the view of the OTS that tax administration for small business must be kept under review with any changes evaluated and, where appropriate, improved on. The OTS experience suggests that taxpayers are more willing to offer challenging and candid views when speaking to a third party. 

There is a clear ongoing role for groups such as the Administrative Burdens Advisory Board to continue to challenge HMRC on administrative issues, and there should also be a mechanism in place to feed back ideas to HMRC for systematic improvements. Finally, it is important to stress that the role of the OTS is to advise Government and it cannot make policy decisions itself. We have presented these recommendations to the Chancellor of the Exchequer and anticipate a formal response as part of Budget 2012."

Tax does have to be taxing.

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

To find out more, please use this link Taxwise



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"

Groundhog Day

It seems that, as with the regular cycle of the seasons, there is yet another government "headline catching initiative" to reduce the red tape negatively impacting British business.

The Telegraph reports that the Treasury has asked the Orifice of Tax Simplification (OTS) to identify how bureaucracy in the tax system holds small businesses back.

Exchequer Secretary David Gauke, who is beginning to feature on this site a little too frequently, claims that wants the OTS to identify ways to improve the way that HMRC interacts with small businesses, including the processes involved in starting and growing new firms.

One of the major problems with the tax system, as it currently stands, is that it was set up with a "Victorian mindset" of people working for only one employer. In the real world many people are now self employed, or work for several employers.

Job "flexibility" and "getting on our bikes" has long been pushed by governments of all political persuasions. However, it is ironic that the tax system (under the control of these governments) remains rigidly inflexible wrt "portfolio" working.

As to whether anything tangible comes of this latest "initiative", remains to be seen. I would observe:

1 Governments, over the last few decades, have all claimed that they want to reduce the burden on business. Yet that burden has steadily increased over the years. These "initiatives" for reducing red tape make nice headlines, yet nothing ever seems to come of them.

2 HMRC's mess is the direct result of government interference, and the ever increasing complexity of tax legislation. The solution lies in the hands of the politicians.

3 Politicians thrive on complexity and tinkering with the law/regulations.

Why?

They need to show the voters that they perform a useful function, and that we cannot do without them.

In order for things to change/improve those who control the system (ie the politicians) must genuinely want things to change/improve.

The question is, do the politicians really want things to change and improve?

All views and comments, as always, welcome.

Tax does have to be taxing.

UK EXPATS: Reduce tax on UK Pensions
HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

Quote ID code "ABC" when contacting a QROPS specialist.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Simples!

Quel Demage!

The Treasury Select Committee has issued a report that concludes that much more work is needed before the tax system is said to be moving towards simplification.

It seems that, at "best", the measures taken by George Osborne have slowed "the rate of increase of complexity".

Accountancy Age quote the report:

"However, the primary duty for securing simplification should lie with the Government in its design and administration of the tax system."

Quite right!

Sadly the politicians, who are repsonsibile for this mess, have no real intention of simplifying the system. We are locked on a "defined path" of ever increasing complexity.

Tax does have to be taxing.

UK EXPATS: Reduce tax on UK Pensions
HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

Quote ID code "ABC" when contacting a QROPS specialist.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Simple!

I see that the Office of Tax Simplification is in favour of merging income tax and national insurance.

Renaming the con trick of NI (it most certainly is not a ring fenced insurance scheme, but is merely another tax) is all very well.

However, this recommendation will be used by politicians to raise taxes as the limits on NI will be removed, and an additonal tax of 10% will be lumped into the current rates.

Simple!

Tax does have to be taxing.

UK EXPATS: Reduce tax on UK Pensions
HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

Quote ID code "ABC" when contacting a QROPS specialist.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

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.

UK EXPATS: Reduce tax on UK Pensions
HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

Quote ID code "ABC" when contacting a QROPS specialist.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Back To The Future?

A study by PCG (Professional Contractors Group) shows that 71% of its contractor members believe that HMRC should be split into a Revenue section and a Customs section, in order to create a simpler tax system.

Those of you with long memories will recall that HMRC was once (pre Brown) in fact two separate organisations (the Inland Revenue and Customs and Excise). A significant number of comments posted on this site by those who work in HMRC criticise this merger, and blame some of the ills that HMRC is suffering on the forcing together of two separate bodies.

It is clear that the merger has been botched, and is still the cause of much internal friction between IR and Customs people. I personally am of the view that it may well be worthwhile splitting the two departments up even if, in the short term, that will require the taxpayer to foot the additional costs.

However, I do not think that splitting HMRC into two is a panacea for all that ails HMRC and our tax system.

The fundamental problem is that the tax system in the UK is too complex, neither the taxpayer or staff of HMRC fully understand it and the costs of administering/complying with it are excessive.

Additionally, as is evidenced by many comments on this site, HMRC management (for numerous reasons) are simply not up to the job of motivating/managing their staff.

Any splitting of HMRC needs to be accompanied by a fundamental simplification of our tax system and a radical reorganisation of the management structure/quality within HMRC.

All of that will cost money.

Sadly, I do not believe that our government has the resources or guts to take the necessary action to improve HMRC (other than some "window dressing" that will grab the headlines for a day or two).

Comments and views, as always, welcome.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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"

Bernard Ingham's View

Unedited, as per The Yorkshire Post:

"WHEN in doubt, set up a committee. That is the politician's answer to everything. It is often an elegant response to a knotty problem because, like Royal Commissions, committees can take minutes and spend years. Just what parties in power, if not the public interest, order.

And so, while his colleagues are culling quangos, Chancellor George Osborne has set up a new one. It's the Office of Tax Simplification, otherwise known as OOTS.

Unfortunately, we are in no position to grumble about OOTS. Osborne said he would establish it two years ago because, as was his wont, Gordon Brown had taken a complex system and complicated it. The new Chancellor has appointed a former Tory Minister, Michael Jack, and John Whiting, a former PriceWaterhouse tax partner, to sort out the mess.

So far so good. But what sort of dog's breakfast has Brown left behind? OOTS' usefulness turns on the answer.

It goes without saying that the tax system is complicated. There are a lot of vested interests behind its complications. As an eminent Scottish lawyer once told me over dinner, budgets were his bread and butter. I gathered that the more impenetrable they made the system, the fatter he became. Gordon Brown was God's gift to tax lawyers.

Since the 1999 Finance Bill, tax legislation has grown at an alarming rate. So have the penal regulations introduced since self-assessment tax returns were issued in 1997.

On top of this came the merger of the Inland Revenue with Customs and Excise in 2004. Rubbing shoulders with tough Excisemen brought up on nabbing smugglers has, it seems, done nothing for the taxman's dubious PR skills.

The result, according to accountants I know, is a deterioration in the relationship between taxman and taxpayer. HMRC are the masters now. I cannot personally testify to this since, in my lazy way, I employ an accountant to devil for me. He is not a complaining sort.

But I am clearly no more representative than is Naomi Campbell of models in taking post-prandial delivery of "blood diamonds" – or "dirty-looking stones" – on her bedroom doorstep. Last year, HMRC records it received 73,455 complaints and has even set aside £30.7m for legal costs in appeals that taxpayers are expected to win.

In the first half of last year, 20,778 taxpayers asked for an independent review – mostly for late filing of returns – and more than half either had the penalty withdrawn or cut.

These figures do not testify to respectful relations between the public and tax collector. Nor does the awesome total of 18 million unresolved cases covering both over- and under-payment Messrs Jack and Whiting clearly have their work cut out.

It may well be argued that, if – and hope springs eternal – they can simplify the system so that I can understand it, the problem will solve itself. But will it? All I hear suggests that it is not just a matter of complexity; it is also one of attitude. In other words, it is not just a matter of bad law; it is a matter of the public servant's approach to the citizen – as I fear it is in so many branches of our bureaucracy.

I speak as one who recognises that avoidance of tax is a national industry and that no Revenue officer should be born yesterday – or expect to be loved.

But the readiness to impose ever increasing penalties, some of which can have serious implications for contractors' continued operation in business, the difficulty of finding and reaching the appropriate office, the time taken to make simple repayments and the excuses offered demand more of OOTS than mere simplification.

It probably does not help that there are competing chartered institutes of accountants in this green and overtaxed land. They surely bear some responsibility for our tax system being up to its knees in the Brown stuff. Perhaps the public would have been better served if they had spent more time on insisting on good law and less on ever more complex methods of tax avoidance in pursuit of their own profit.

It is probably a good thing that OOTS is trying to simplify our hopelessly complex system of providing the wherewithal for the nation's operations. But I trust it also feels it must look at the spirit in which the Revenue conducts its essential business.

Unless it does, Osborne will not realise his ambition of showing the world that Britain really is open for business. It must clear the air as well as the Statute Book."

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 Orifice For Tax Simplification

Yesterday I wrote the following:

"This presents a golden opportunity for the government to radically simplify the tax system, thus making it easier for taxpayers and HMRC to 'administer' taxes and reduce the associated costs.

However, politicians by their very nature abhor 'simplification' as it makes them 'redundant' in the eyes of the voters."

Well, blinkey blonky blimey, as if by magic the government have announced today that they will set up an Orifice (or is it "Office"?) For Tax Simplification.

The chairman of the new body will be former Conservative MP and Treasury minister Michael Jack. Its director will be John Whiting, formerly of PricewaterhouseCoopers, who is tax director at the Chartered Institute of Taxation. Neither will be paid.

Treasury minister David Gauke is quoted by the BBC:

"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."

Currently the UK has an 11,000 page tax code, aptly described by the Chancellor as a "spaghetti bowl"

The BBC reports that the Chancellor says:

"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".

The new body will initially conduct two reviews - streamlining 400 tax reliefs, allowances and exemptions and simplifying the tax system for small businesses, including a simpler alternative to the controversial IR35 code.

It will advise ministers where the tax system is too complex but it will not look at tax credits, which Mr Osborne said he considered part of the benefits system."

Not tax credits?

Aren't they one of the complicating factors?

If they are part of the "benefits" system, why do they fall under HMRC's remit?

So, loyal readers, are we to look forward to a massive simplification of our tax system?

Could it be that I was wrong, when I said that politicians "abhor simplification"?

Could it be that politicians really do want to make things simpler?

Let's see shall we?

I won't be eating crow just 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"

Death By A Thousand Cuts

The Independent reports that HMRC has warned the government that planned cuts to the public sector, if applied to HMRC, will result in a lower tax take.

Treasury minister David Gauke was warned by HMRC in a private meeting earlier this month that the cuts, particularly redundancies, would be counterproductive.

This presents a golden opportunity for the government to radically simplify the tax system, thus making it easier for taxpayers and HMRC to "administer" taxes and reduce the associated costs.

However, politicians by their very nature abhor "simplification" as it makes them "redundant" in the eyes of the voters.

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"

Deeply Flawed

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

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"

Fantasia

Yesterday's fantasy budget, based on an unachievable 2011 growth forecast of 3.5%, was remarkable in many respects.

Aside from the fact that national debt has now shot up to £1 Trillion (see below), it proposed among other measures:

- Fines for tax advisers who are incompetent.

- A requirement for Finance Directors (FDs), of large companies, to personally certify that adequate controls are in place to prepare accurate tax computations. They will be personally fined £5K if they fail to do so.

- HMRC to publish a quarterly list of names and details of individuals and companies who have been penalised for deliberate defaults.

Why are these proposals so wrong?

1 Re financial advisers, the onus is on the client of the adviser to claim redress for incompetence not HMRC/HMG. This is an unnecessary, and unwelcome, extension of HMRC's powers to levy fines and regulate commercial relationships between third parties.

2 Re FD's certifications, this goes against the principles of company law whereby the board has collective responsibility; and is yet another excuse to raise revenue by levying fines.

3 Re the "name and shame" suggestion, as "morally satisfying" as that may appear, it may well breach human rights legislation and goes against the central tenets of HMRC; ie never to reveal an individual's/firms' tax affairs. It will also be open to abuse by HMRC, who will use it as a stick to threaten people who they "suspect" (but don't have proof) of misstating their tax declaration.

So much for KPMG's call for "simplification"!



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"

Draft Charter

HMRC have produced a draft charter, and are holding a consultation process open until 21 May 2009.

The aim to make "the tax and benefits system feel simple to use" is most laudable, and one that everyone (Gordon Brown and the Treasury excluded) would all agree with. However, the fact remains that the tax and benefits system is not at all simple.

I cannot see HMRC being able to make much of an impact wrt simplification, until their political masters "buy into" the concept of simplicity.

"HM Revenue & Customs makes sure that money is available to fund the UK's public services. We also help families and individuals with targeted financial support. We aim to make the tax and benefits system feel simple to use.

You can expect HMRC to:

Treat you as honest, believing you are willing to pay what you owe, claiming only what you are entitled to, unless we have good reason to doubt you.

Respect you, listening to your needs and taking into account your circumstances.

Provide you with accurate information, making it easy for those who try to get things right.

Recognise your right to be represented by someone else.

Pursue relentlessly those that break or bend the rules.

Protect the information that we hold about you.

HMRC expects you to:

Work with us to ensure your payments or claims are accurate and made at the right time.

Respect our staff, treating them in the same way as you want them to treat you.

Contact us when you need help, advice or support, letting us know if you have particular needs.

Tell us about changes in your circumstances so that we can get things right as early as possible.

Accessing information about HMRC:

Service standards, such as our times for responding when you contact us.

Data protection policy and keeping your information safe and secure.

Complaints process."

Send in your comments :

-by e-mail to: charter.consultation@hmrc.gsi.gov.uk

-by post to: HMRC Charter Team, Room 3E/02, 100 Parliament Street, London SW1A 2BQ

-by fax to: 020 7147 0391.

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"

Dead Wood

The Tories recently revealed their plans for removing the dead wood, and there is a lot of it, from the UK tax system during a lecture at the ICAEW headquarters in Moorgate.

Lord Howe together with George Osborne addressed an audience of the profession's leading tax figures, and explained how a Tory government would make the UK's tax framework simpler.

Lord Howe's report "Making Taxes Simpler", proposes that an Office of Tax Simplification would be set up to examine the existing tax code and make proposals.

A cross party committee would scrutinise government initiatives and proposals, and any changes to tax law would be flagged up to the public no later than the pre Budget report

However, he warned:

"It's going to be a very long haul."

George Osborne noted that "this complex and unwieldy piece of legislation provides a perfect lesson in how not to make tax policy."

It is at least a start that the opposition recognise that the tax system has become far too complex for both the taxpayers to understand, and for HMRC to administer (even if they were up to strength).

However, we are stuck with two more years of Brown. The future, for the medium term, is very bleak indeed for both the taxpayers and those who work in HMRC (who are also taxpayers as well).

As I have noted before, the most effective method of simplifying the tax system is to:

- cut out erroneous taxes such as CGT and IHT
- increase personal allowances to around £10K
- levy one rate of tax at 20%
- make up the shortfall in revenues via VAT

Bada Bing
Bada Bong!

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 full press release can be downloaded here.

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"

Scottish Cuts

HMRC Derby (re yesterday's article) is not alone in facing government and senior HMRC management plans for restructuring.

There are also plans for many other offices to be axed, eg 11 Revenue and Customs offices employing 171 staff across north and north-east Scotland.

Mary Hay, who is the HMRC director responsible for the programme, is quoted in The Press and Journal:

"By consolidating work in fewer locations we will be able to work more efficiently and so improve customer service as well as providing better value for money."

The consultation paper said that "where feasible" staff will be offered relocation, but overall 600 out of 1,800 jobs across Scotland will be lost.

Mark Serwotka, general secretary of PCS, the main union involved, has a view that does not chime with HMRC senior management claiming that it was "a crude drive to slash jobs and cut costs which will leave HMRC unable to deliver quality public services.

Access to tax advice in communities across the UK will be damaged by these proposals hitting businesses and the public, in rural towns and villages, as well as taking quality jobs out of local communities."

The hit list of offices includes Elgin, Longamn House, Invereness, Grangemouth Customs House, Wick, Buckie, Falkirk, Stirling, Dunoon, Perth and Oban.

An HMRC spokeswoman said:

"Many of our customers now prefer to deal with us by telephone or the internet at a time of their choosing."

That may not be entirely true given the meltdown of the online filing system this year at a critical moment, and the less than high quality phone service provided by HMRC.

The proposals have not gone down well with the politicians in Scotland.

First Minister Alex Salmond said that the cuts amounted to "centralisation totally out of control".

Argyll and Bute Liberal Democrat MP Alan Reid said:

"It is an outrage that the three tax offices in my constituency are all to close and local people will have to travel a hundred miles or so to Glasgow or Inverness for face-to-face advice."

Caithness, Sutherland and Easter Ross Lib Dem MP John Thurso said he was "steaming with rage at the deceitful and underhand way in which HMRC have acted".

It seems that HMRC senior management and the government have something of a credibility problem wrt their restructuring plans. They claim that they will improve efficiency and reduce costs. However, neither the staff nor the "customers" (taxpayers to you and I) believe them.

Why do people not believe HMRC senior management?

• Could it be that the senior HMRC management is simply not up to the job of managing the hotch potch that HMRC has become, since it was created from Customs and the Revenue?



• Could it be that the piles of unopened post, going back months, sitting in HMRC offices across the country indicates that there are no efficiency savings and that HMRC is in meltdown?



• Could it be that the datagate fiasco is merely the tip of the iceberg of an organisation on the brink of collapse?



• Could it be that HMRC senior management are simply not good at their jobs?



• Could it be that the plummeting morale within HMRC indicates that senior management do not know or understand how to manage change of this nature?

I most definitely think so!

The government claims that it wants to improve the efficiency, and reduce the costs of HMRC. To my view this is not the way to go about it.

The most effective means of improving efficiency and reducing costs would be for a massive simplification of the tax system.

Unfortunately, as long as Brown is PM this will never happen; Brown does not do "simple".

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 full press release can be downloaded here.

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"

Guardian Says Sorry

The Guardian has apologised to Tesco over its reporting of Tesco's tax affairs.

As noted on this site in April, the Guardian wrote an article about Tesco's alleged tax avoidance plans.

Seemingly the Guardian was talking bollocks, and has now stated that it no longer believes that Tesco's Cayman island structures allowed it to avoid up to £1BN in corporation tax.

"The original Guardian articles did not correctly explain the effect of Tesco's tax schemes. It was wrong to state that they were designed to avoid corporation tax. It would have been correct to refer to avoiding SDLT [Stamp Duty Land Tax].

As a result, the figure of 'up to £1bn' - calculated as the amount which could have been saved on the disposal of £5bn of property - is wrong. The loss to the exchequer is likely to be nearer the region of £90m-£100m."

All very well, but even if there had been a tax avoidance plan that could have saved £1BN, the Guardian has been duped by Hartnett and Brown into their web of deception that tax avoidance is somehow wrong.

So what if Tesco had in fact put together a tax avoidance plan for saving £1BN?

Tax avoidance is perfectly legal, we all do it each year by eg claiming our personal allowances.

Hartnett and Brown are keen to tar tax avoidance with the same brush as tax evasion (which is illegal) because they desperately need to increase the tax take, as the government's finances are blown.

Once they have cracked down on high profile schemes, they will turn their attention to the more "mundane" ones such as isa's and possibly even personal allowances.

The Guardian was duped into playing the government's and HMRC's game, yet they still don't see this. Their apology snidely refers to "clever accountants", thus leading the reader to conclude that tax avoidance is somewhat "dodgy".

However, being the Guardian, it chooses to cite their "righteous moralism" over "correctly reporting the facts" as being justification for the error.

"We remain ready to defend our journalism - in court, if necessary. We believe these matters should be subject to debate and scrutiny, and we invite further informed analysis from any readers with experience in accountancy or tax law."

They want input, I suggest that you give them some; here is their email tax@guardian.co.uk

Tax avoidance is legal!

The most effective way for the government to reduce the time, effort and money spent by HMRC on chasing tax avoiders is to simplify the tax system; thus making it unnecessary for companies and individuals to set up complex and costly tax avoidance structures.

Unfortunately, Brown and Darling don't do "simplification".

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"