HMRC's Bloated Tax Code: A Monument to Inefficiency

 

The HMRC tax code is a behemoth of bureaucratic complexity, estimated to contain around 10 million words. To put that into perspective, it’s 13 times longer than the Bible and 17 times longer than The Lord of the Rings Trilogy. This labyrinthine code, which includes taxes dating back to the 17th century, is a testament to the inefficiency and outdated practices that plague HMRC.

A Monumental Waste of Resources

Managing this colossal tax code requires an army of 65,000 staff, costing taxpayers over £6 billion a year. This is an astronomical sum that could be better spent on public services, infrastructure, or reducing the tax burden on citizens. Instead, it is funneled into maintaining a system that is hopelessly convoluted and inefficient.

Confusion and Frustration for Taxpayers

For the average taxpayer, navigating the HMRC tax code is a nightmare. The sheer volume of regulations and the complexity of the language used make it nearly impossible for individuals and businesses to understand their tax obligations without professional help. This confusion leads to mistakes, missed deadlines, and, ultimately, penalties that further burden taxpayers.

The Need for Modernisation

It is high time that HMRC modernises, simplifies, and digitizes its tax code. A streamlined, user-friendly system would not only reduce costs but also deliver better value to the public. By eliminating outdated taxes and consolidating regulations, HMRC could create a more efficient and transparent tax system that is easier to navigate and understand.

Conclusion

The current state of the HMRC tax code is a monument to inefficiency and bureaucratic bloat. It is a system that confuses taxpayers, wastes resources, and fails to deliver value. Modernizing and simplifying the tax code is not just a necessity; it is an urgent imperative. The government must take decisive action to overhaul this outdated system and create a tax code that is fit for the 21st century.

 The UK desperately needs its own DOGE!

Tax does have to be taxing.

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HMRC Fails In Wales

Kudos to HMRC for not only screwing up the tax codes of the good people of Scotland, but also for doing the same in Wales.

WalesOnline reports that people across Wales have been paying the wrong rate of income tax because of an HMRC blunder.


Some people in Wales have had a Scottish tax code applied to their income tax which is a higher rate.

The Welsh Rates of Income Tax (WRIT) was introduced in April 2019. Welsh taxpayers are assigned a C prefix in their tax code denoting where they live.

HMRC has admitted applying an S prefix, so some people meaning they are paying Scottish rates.

It is not yet known how many people are affected.

The Chair of the National Assembly’s Finance Committee, Llyr Gruffydd AM said:

"HMRC’s admission is deeply disappointing as this Committee was repeatedly given assurances that mistakes like this would not happen.

We raised concerns about the flagging process for identifying Welsh taxpayers during our inquiries into fiscal devolution and the Welsh Government’s draft budget.

On each occasion we were told the matter was in hand and the lessons from the devolution of income tax powers to Scotland, where there were similar issues, had been soundly learned and would be put into effect.

We are seeking an immediate explanation of how this has happened and will be asking representatives from HMRC to appear before this Committee in the near future.”

An HMRC spokesman said:

"We have been made aware of an error in the application of new income tax codes for Welsh taxpayers by some employers which has meant some taxpayers payed the incorrect amount of tax in April.

It is the responsibility of the employer to apply the tax codes provided by HMRC and we are working closely with the employers affected and providing support as they investigate and correct the problem."

They were warned that this would happen!

Tax does have to be taxing.

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The Government Is Broke

From April 2019 HMRC will have the power to adjust people’s tax codes in real time to compensate for any underpayment of tax.

— The Morning Account (@MorningAccount) November 24, 2017

Bear in mind that this real time adjustment is only for underpayments, taxpayers who are overpaying because of an erroneous tax code will have to wait.

Why?

The government is bankrupt, and HMRC's stated objective is to maximise revenue!

Tax does have to be taxing.

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HMRC's Dash For Cash - Beware Dynamic Coding!

The bane of all of our lives (HMRC and taxpayers alike) PAYE codes are set to cause yet more problems.

The FT reports that some taxpayers face the risk of “significant and aggressive deductions” from their pay packets as a result of a new approach to calculating pay-as-you-earn (PAYE) codes.

Taxpayers are being urged to check their tax codes after HMRC introduced a “dynamic coding” system in July.

The words "dynamic" and "HMRC" are generally not used in the same sentence. Anyhoo, by all accounts the automated system is able to adjust PAYE codes which determine exactly how much tax an individual must pay as soon as there is a change in their income. The new system is designed to help about 6m people who either end up paying too much or get an unexpected tax bill at the end of the year.

However, and when it comes to HMRC there is always a "however, experts say it is already showing signs of struggling to deal with data glitches, bonuses and employees on foreign assignments.

To make matters worse, in accordance with HMRC's new undisclosed mantra of "dash for cash", it is also aiming to collect tax debts far more rapidly than in the past, resulting in some taxpayers facing big and unexpected fluctuations in their take-home pay.

Kate Upcraft, a payroll consultant, said there were already signs of problems with the system. She said HMRC had recently reported an increase in postal PAYE queries, suggesting “significant and aggressive deductions that people are querying, but not through the digital channels”.

She went on:

“The biggest issue that will cause problems is HMRC’s misinterpretation of taxpayer data.

Those of us who know the standard of the data and some of the triggers it is using to amend codes are very concerned.” 

Problems have also arisen in cases where people have been paid bonuses or worked abroad for part of the tax year. Steve Wade of EY, the professional services firm, said:

“Any new system is likely to have teething problems and not surprisingly some globally mobile employees who have complicated affairs have been affected. 

In particular, the new process appears to ignore credit for foreign taxes paid, resulting in overestimating the tax due. In general, individuals returning from overseas assignments are liable to UK taxation from the date of their return. Unfortunately, some employees are finding that this new system attempts to charge UK tax from the start of the tax year.” 

Sharron West, technical officer of the Low Incomes Tax Reform Group, said she feared the adjustments could lead to a great deal of stress and anxiety.

“We are very concerned that there may be significant ramifications for those on low incomes who have their tax codes altered so their net pay reduces significantly unexpectedly, as they are often on tight budgets.” 

She said one of the biggest changes concerned underpayments which used to be collected over 12-36 months and now will be automatically “coded out” over the remainder of the tax year in which they come to light. These adjustments, which could be particularly large if made towards the end of the tax year, would be compounded for taxpayers who had underpayments from previous years that were already being collected via their tax code.

Be warned, under rules introduced in 2015, HMRC is able to collect up to £17,000 a year of tax debts directly from pay packets, subject to a limit preventing deductions of more than 50 per cent of an employee’s pay. The maximum deduction varies according to income, with a limit of £3,000 for those with incomes of up to £30,000.

HMRC claims that the changes meant that millions more taxpayers (HMRC said "customers" but I refuse to use the word!) were paying the right tax at the right time — meaning they would not face unexpected bills at the end of the year. It also said there had been a temporary issue affecting one specific customer group based abroad, adding that it was automatically updating their tax codes and refunding any additional tax paid. HMRC said individuals faced with an unexpected tax bill could ask for extra time to pay.

“If customers are faced with a tax bill they can request to spread their payment over time.” 

But the adjustments will still come as a surprise to many. FT Money is aware of one case where an executive’s total net income dropped sharply after a new tax code was applied, shortly after he was posted abroad by his full-time employer.

“When I got through to HMRC’s self-assessment department, I was told that an incorrect tax code had been automatically applied by a new ‘dynamic coding’ process which had wrongly decided that I owed more than £53,000 in tax.

I owe no tax. The man in the call centre noted that the system had been ‘a bit too dynamic’.” 

Ms West said:

“Although coding notices will be sent via online personal tax accounts or by post every time there is a change of tax code, most taxpayers do not check their tax codes — or even understand them properly to be able to check them — and so in many cases taxpayers will not be anticipating any change to their net pay or pension before it happens. 

People are being told to look at their personal tax accounts. But it does not show the history of the tax code, so unless a note is made of what was there before, it will be difficult for people to work out what has happened and they have to be comfortable with the digital channel which many aren’t, or don’t even know about.”

In other words this is another cock up waiting to impact the log suffering taxpayers, courtesy of HMRC's "dash for cash" and it inadequate digital strategy and implementation!

BEWARE DYNAMIC CODING!

Tax does have to be taxing.

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Pension Tax Errors Hit Thousands

The Telegraph is warning that tens of thousands of people may have paid incorrect tax on pension withdrawals made under new rules applying from April 2015.

At least 232,000 people drew down money from their pensions in the 2015 to 2016 tax year under rules which allow over-55s to drain cash from their pension pots in one go.

Many of these withdrawals will have been incorrectly taxed, as the PAYE system is not geared to multiple income sources and the chances are the tax codes used when drawing down from the pension pots were wrong.

Incorrect coding is of course nothing new, and the issue of coding pops up each year with the depressing inevitability of an unloved season.

However, on the bright side once MTD has been implemented all these problems will simply vanish!

Won't they????????????

Tax does have to be taxing.

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S Code Problems In Scotland

The role out of the new Scottish tax codes is not going so smoothly.

As per HMRC:

Annual coding run (P9 - tax regime)

HM Revenue and Customs (HMRC) are aware of an issue which is under urgent investigation whereby customers who are expecting to receive the new Scottish S code for employees, are not seeing this information when downloading into their third party software. As soon as HMRC have the fix and recovery solution confirmed HMRC will update you.

This means that employers are unable to comply with HMRC requirements under the annual coding run (P9 regime – which enables employers to revise employee codes in time for the start of the new tax year on 6 April).

Oops!

Tax does have to be taxing.

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Unnecessary Filing

The tax filing year end that has just passed was, apparently, the busiest ever with more people filing SA than records began etc etc.

However, it seems that some of those who were so keen to file may have in fact been wasting their time.

The Telegraph reports that those who owed less than £3,000 in tax may be needlessly filling in self-assessment forms.

The reason for the Telegraph's doubt about the necessity of some filling in an SA form?

None other than HMRC itself!

People who owed small amounts of tax from savings income or occasional extra work possibly need not have bothered, HMRC said. Instead of wasting hours compiling statements and invoices and completing forms, the money could have been deducted automatically from their pay packets from April.

Stuart Phillips, director of tax practice at The Private Office, the financial advisers, said:

“It is a great shame that in this country we are incredibly honest when it comes to paying our taxes, but HMRC doesn’t seem to be able to tell people the easiest way to do so.”

HMRC is able to recover up to £3,000 through the coding system.

However, the HMRC spokesman said that people who telephoned its helpline would be advised against filing a self-assessment return only if their untaxed income was less than £2,500.

That being said, as per HMRC:

“We don’t want anyone to fill in a tax return unless it’s absolutely necessary.”

However, taxpayers who owed less than £3,000 had until Dec 30 to request exemption.

Tax does have to be taxing.

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Coding Matters

It seems that the thorny issue of tax codes has raised its head again.

The Telegraph reports that up to three million people with more than one source of income face backdated tax bills of £2,000 per year, because of errors by HMRC.

Among those most likely to be affected are veterans who have taken a civilian job after leaving the Armed Forces, but who also draw a military pension. Pensioners with two pensions and those who have continued to work part-time after retirement are also more likely to be hit.

It seems part of the problem lies with a the fact that tax offices around Britain are failing to share information about taxpayers’ incomes on a central database.

HMRC insists that the problem is not “systematic”, and says the vast majority of tax codes are correct. However, professional tax advisors are seeing a rise in cases where incorrect tax codes have been issued.


Clive Stevens, the executive chairman of accountancy practice Reeves, who sits on the council of the Institute of Chartered Accountants in England and Wales, is quoted:

“Often when people have two sources of income, two tax codes are issued by separate HMRC offices, each acting on the basis of information given to them by an employer, pension provider or the taxpayer directly. 

Clerical errors are made because the workforce, which has suffered sweeping redundancies, is demoralised and the required attention to detail and care is not there.

In my experience, up to three out of five PAYE codes that we see in our office are incorrect when first issued. In the worst cases, it has taken 10 attempts to get a correct code from HMRC.”

An HMRC spokesman said such problems should have ceased since the introduction of centralised record-keeping in 2009, adding:

“Over 98 per cent of tax codes are correct and the vast majority of people who pay their tax through the PAYE system on either earned income or pensions pay the right tax.”

Alastair Rush, of financial advice firm Echelon Wealthcare, said the situation is worsening.

“HMRC seems to be imbued with the concept that it’s infallible.

It prefers to pretend the system works just fine when we all know it doesn’t.

It produces errors with almost casual disinterest which cause a huge mess for clients, families and their employers. I wish it would hold itself to the same measure of accountability that it attaches to its customers.”

When errors are identified, HMRC is demanding back payments even where, under concessions (ESCA19) aimed to protect taxpayers, it has no right to the money because it was at fault. However, HMRC is unmoved and insists that "due to improved processes", it would only now apply in “very unusual circumstances”.

Views and comment from the frontline are, as always, very welcome!

Tax does have to be taxing.

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HMRC's Sinister Ploy

HMRC has come up with rather an "interesting" wheeze wrt improving its cashflow.

HMRC wants to delay telling employees about changes in their tax codes for up to a month, which could see people paying more tax than they owe.

The delay means that people would only find out when it is too late to correct the mistake, and the money has already been deducted from their monthly salary.

Lesley Fidler, a tax director at Baker Tilly, is quoted by the Telegraph:

"When you are counting the pounds in your pay packet you don't worry that it will work itself in the long term, you are thinking 'have I got enough this month?' 

This delay does seem to be manipulated, it's a sinister sense of manipulation. People will effectively be lending to the taxman out of their salaries."

Under the proposal employees will have to wait up to 30 days to be notified of a tax code change. The regulation is currently being consulted on, but is likely to be laid before Parliament later this Summer.

A spokesman for HMRC said:

"Where this happens, the employer will still be informed immediately of any change and if a customer requests a tax code we will issue one. 

HMRC anticipates savings for the taxpayer of several millions pounds in printing and postage costs, as a result of these changes. 

HMRC is currently consulting on the proposed changes and welcomes comments on the detail. We plan to lay finalised regulations in the autumn." 

Good for HMRC's cashflow, but not for the taxpayers' though!

Tax does have to be taxing.

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Coding Errors and HMRC's Resistance To ESC A19

The Telegraph has highlighted the ongoing attempts by HMRC to resist claims by taxpayers for application of the ESC A19 concession. The concession allows tax arrears to be written off if three conditions are met:

1 HMRC failed to make “proper and timely” use of information provided to it.

2 The taxpayer “could reasonably have believed their tax affairs were in order”.

3 No notification was sent to the taxpayer within 12 months of the end of the tax year in question.

Unsurprisingly, given the regular coding errors, many taxpayers (pensioners are particularly prone to erroneous coding notices if they have more than one pension source) find themselves in a position of owing or being owed tax.

As per a letter to the Telegraph:

"I read with great interest your account of the case of RD, South of England. My case covers unpaid tax to the tune of £10,457 for the tax years 2002-03 to 2007-08 as advised to me in an HMRC letter dated July 3, 2008. Even though this was received with shock and concern this sum was paid in full to HMRC because I was informed by them in reality that I had no option but to pay up. 

However, in October 2011 I became aware, through reading your column, of the A19 concession and wrote to HMRC seeking it to apply it to my case retrospectively. Eventually I was told that it would not apply. However, my case seems so similar to that described in your column recently it once more raised my concern about the way HMRC has dealt with mine. It had all the necessary information."

Only after the Telegraph intervened did HMRC back down, apply the concession and pay back the tax.

HMRC said:

“We apologise for the way that we have handled matters for Mr P. This is not the level of service we aim to provide. We are sorry for any worry and distress that he has experienced. We are sending a payment for £150 to him to apologise for our poor handling.” 

Elaine Clark, director of the accountants Cheap Accounting, is quoted by the Telegraph:

“Taxpayers who suffer errors are being forced to be more tenacious.

In our experience HMRC has toughened its stance. It’s almost as if officials don’t read the case file, they just send out a letter demanding payment even if the taxpayer would have legitimately qualified for ESC A19.”

In some cases, she said, taxpayers were left totally unaware of their rights. Others were frightened to take on the authorities.

Theoretically, RTI will eliminate these coding errors.

Time will tell!

Tax does have to be taxing.

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Communications Foul Up

The Telegraph reports that there has been a communications foul by by HMRC wrt the tax treatment of child benefit charges for this tax year.

HMRC tax coding notices HMRC implies that the full year's worth of benefit (for this tax year) should be collected through the wages in the remaining two months of this tax year.

Employers and taxpayers are both receiving the coding changes which could lead to the full year's money being taken through just two payslips. The information given by HMRC's customer helpline also confirmed the impression of the money being taken in two months.

However, the reality is meant to be different from what has been communicated. Yesterday HMRC apologised for the poor wording of its coding notices, it now insists the intention was not to claw back all the money in such a short time.

An HMRC spokesman said:

"We will not be collecting the full child benefit charge for 2013-14 tax year before 31 January 2015 at the earliest. We apologise if the coding notice suggests otherwise and anyone who finds they are having the child benefit charge taken in a way they did not want should contact us as soon as possible."

This of course means that people should check very carefully their PAYE coding notices and their monthly income net of tax for February and March.

Those receiving PAYE Coding Notices are urged to call the tax office on 0300 200 3300.

Tax does have to be taxing.

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Tax Coding Errors

Incorrect tax codes mean that over one in three taxpayers who receive employment benefits in kind could be in danger of paying the wrong amount of tax, according to UHY Hacker Young.

The firm's analysis of tax codes sent to clients revealed that around 37% would have resulted in people paying the incorrect amount of tax.

Whilst it is up to the individual taxpayer to check his/her tax code and statement, human nature and the fact that most people are clueless about how the tax system works means that many people take their tax codes and statements at face value. This in turn results in over/underpayments of tax.

Roy Maugham, Partner at UHY Hacker Young's London office, said:

“Mistakes most frequently occur when someone has several sources of income, for example income from an investment as well as a salary and benefits from their employer, or where they have received a large one-off sum such as a dividend payment.

HMRC really needs to make more of an effort to eliminate these errors as generally people trust its calculations and assume that they are paying the correct amount of tax.

If taxpayers do spot a mistake, it is now an even bigger headache to sort out because HMRC has made it harder to challenge unfair tax bills.”

One UHY Hacker Young office saw errors for 20 different taxpayers in just one week relating to benefits provided by employers, such as company cars and private health cover (usually set out on a P11D form).

In most of these cases the code sent by HMRC completely omitted to account for the tax due on the benefits.

The lesson being, check your tax code and tax bill!

Tax does have to be taxing.

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

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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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RTI Fudge

It seems that there has been a wee glitch with RTI, CityAM reports that up to 40,000 people have had their income tax payment "fudged" by Real Time Information (RTI).

Apparently a number of individual employees, mainly from SME's, have been allocated an incorrect tax code resulting in them overpaying their tax.

A spokesman from HMRC is quoted:

“We are aware of a problem affecting a very small number of employers and a small proportion of their employees.

We are urgently working with the employers to solve this.” 

I welcome thoughts and comments as to the possible causes of this error.

Tax does have to be taxing.

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

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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"

Is RTI The Panacea That HMRC Claim It Will Be?

My thanks to a loyal reader, who has posted the following comment concerning HMRC's inability to deal with matters "real time".

The reader makes the valid point that the system is incapable of transmitting realt time data between DWP and HMRC.

This clearly has implications for RTI and Universal Credits.

My question to those of you have intimate knowledge of the RTI flagship is, will RTI satisfactorily deal with, resolve and be able to cope with the issues raised by this loyal reader?

"An individual (me) has 2 forms of "income" which consists of a pension following 40yrs employment and a DWP minimum ESA payment of the taxable kind.

A succession of tax codings ends up with notification of 2013/14 to include an "underpayment restriction" amount of -£X, cue rapid query via endless wait on phone!

Pray tell me HMRC says I, what does this amount relate to and how did you arrive at the figure?
HMRC - We don't know what your income is going to be and we have to estimate it.

But says I (and herein lies the RTI scenario bit)

my pension is paid from you as my ex employer through the realms of MyCSP (my civil service pension) and your closest partner agency DWP pay me the reduced ESA, what gives?

HMRC states we don't know what DWP pay you (ESA taxed by HMRC via instructions to MyCSP as DWP can't collect the tax due for whatever reason) until the end of the tax year! Cue incredulity on my part at this stage as besides the fact that HMRC are estimating that which it is possible to calculate, by my calculations I am due to receive an inflation busting increase in my ESA of 14.65%.

So what does all this mean for the taxpayers of the UK?

I don't know what an incorrect tax code costs to put right but multiply it by the number of time my tax code has been "adjusted" in 6 months (7) and you begin to get the picture.

Then there is the "underpayment restriction" which unchallenged would result in a tax-free loan by the taxpayer - me, to HMRC, prior to the subsequent adjustment the following year.

Now, call me a cynic, but do you suppose that the vast majority of these adjustments are one-way and unethical?

So, what does it all mean?

Think carefully with RTI looming.

There is the archaic system of ESA taxed via pension provider - a system of taxation via third party involvement, with all the opportunities for mistakes along the line...

The system is incapable of transmitting real time information from DWP to HMRC.

Even with all the correct information to hand (i.e. its own and DWP data, HMRC is incapable of calculating "the right amount of tax at the right time".

HMRC obtains a positive balance in this area at the expense of the taxpayer, not creative accounting but certainly unethical especially during a reccesion.

What does that mean for the Universal Credit and RTI systems?

Over to you Ken."

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"

Hypothetical Case Study

My thanks to a loyal reader for posting this hypothetical case study in the comment section of yesterday's article:

"Hypothetical situation:-

A manager known to be a bully with a record of appalling staff mistreatment and proven cases against him/her, who had caused a potential risk by social network "naivety" and who had several recent records of complaints and grievances against him/her with a trail of staff suffering from stress absences and transfer out or resignation is in the evidential chain, also other managers are accused of criminal and/or civil law breaking..."

How should this be professionally handled by HMRC management, were this situation reality and not hypothetical?

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"

ESC A19 To Go The Way of The Dodo

I see that This Is Money reports that HMRC wants to send ESC A19 "the way of the dodo" (as per the quote from an HMRC spokesman).

Dodos aside, the spokesman went on to say:

"ESC A19 itself can no longer apply in all but a handful of cases as we reconcile all cases at the end of the tax year."

HMRC's desire to abandon ESC A19 should come as no surprise, as the threat to ESC A19 has been noted several times on this site eg last July.

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"

HMRC To Take Control of Pay Cheques? - Another Clusterfuck!

Now here's a plan (originally mooted in 2010 that appears to have resurfaced) that is guaranteed to fail, if it is enacted.

HMRC are, quite rightly, concerned that the PAYE system is not fit for purpose and want to reform it.

One plan being considered is whereby employers, instead of deducting income tax then paying gross salaries to employees, would pay the gross monthly payment to an HMRC-run tax “calculator”, which would then pass the net salary to the worker; ie employers would hand over the responsibility for paying the correct net pay to HMRC.

Aha!
 

The plan would mean the end of traditional monthly payslips, because employers would no longer be able to tell workers how much tax they had paid each month.

Reform of PAYE is most certainly required, because inaccurate data will again affect millions of people this year who will be forced to pay back underpaid tax, and millions of others who will get rebates.

Anyhoo, wrt the proposed "plan" instead of a payslip detailing pay and deductions, employees would only find out how much income tax they had paid by asking HMRC.

Oh dear!

Brian Stenhouse of Armstrong Watson was quoted in 2010 by the Telegraph saying that people should have “deep concerns” about the central deductions plan.

“Are people going to be happy to give HMRC their bank details and trust HMRC to make the right deductions and pass on their salary every month? 

Given they’re not going to have a complete monthly payslip any more, people are going to be in dark about what’s been deducted. And if there is an error, they’d be reliant on HMRC to correct it.”

Along with RTI, this will be another clusterfuck waiting to happen! 

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"

A Question of Coding

Oh dear it seems that, despite the fact that Pacesetter is meant to solve all of HMRC's problems, HMRC is still having problems with PAYE codes.

In fact, according to UHY Hacker Young, the problems are so widespread that one in four taxpayers may be presented with the wrong tax bill with pensioners and higher-rate taxpayers most at risk (seemingly two thirds of pensioners on the wrong tax code overpaid their tax).

However, it's not all bad news:

1 RTI, which is guaranteed to be up and running on time, will solve all of this, and

2 HMRC don't recognise the figures used by UHY

A spokesman for HMRC is quoted in the Telegraph:

“We don’t recognise any of the numbers cited. 

 Accuracy of PAYE coding notices on the basis of information we hold is 98 per cent. 

Most people are paying the right tax. 

If any agent has information about their clients’ changed circumstances they should let us know.” 

Please feel free to comment if you have been incorrectly coded. In the event the list is long enough I will send it to UHY and HMRC.

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"

Coding Problems

My thanks to a loyal reader who dropped me a note yesterday, about the problems he had trying to speak to someone on the other end of HMRC's Employers Helpline regarding problems with duplicate coding:

"Hi, I am a tax professional. 

Today I had to spend almost an hour on the telephone because four employees in a six employee firm all received duplicate coding notices for 2012/13. All for the same employer.

When I eventually got through to the Employers' helpline the officer admitted that there was a known system error creating duplicate records. In our case the duplicate records had one 'sensible' code number and one D0 which means that tax would be deducted from the whole of the employee's salary at 40% with no personal allowance.

The solution was to ring the 'normal' tax number rather than the specialised agent number (where you get through much quicker) and pass security for each employee to have the duplicate record removed.

In the fourth case the codes were BR - all tax taken at 20% and the other code K955 which means the loss of the personal allowance of 8015 and further tax being collected on 9550 of income which we know this employee doesn't have.

The Revenue are obviously not doing anything about this and the people on the phone fudge the issue. 

It might be something you could highlight which might grab someone's attention where it matters! 

Thank you. 

I only found your blog last week and I am loving it. 

Keep up the good work."

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"

Beyond Pathetic

Freelance UK reports that the Forum of Private Business (FPB) is a "tad underwhelmed" by HMRC's many faults.

The FPB is of the view that the tax system is inefficient because it is "bogged down in bureaucracy" partly a result of HMRC's "complex, unwieldy" procedures for online taxpayers.

The FPB said that the tax system was no longer "fit for purpose".

Re HMRC's failure to pick up 43% of the calls it received (2008-09), the FPB said that it was "beyond pathetic."

This is not a state of affairs that can continue. Something is going to "break"; whether it is the staff (who are taxpayers), the taxpayers (who are not staff), the politicians or indeed Excomm.

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"