Now that Rachel is dishing out VAT discounts on kids' meals, I assume a task force will be set up in HMRC to produce reams of documents analysing exactly what a kid's meal is?
Good luck with that then!
Oh, and although Rachel trumpeted this, she hasn't been so vocal about plans to whack 20% on various airport charges over the summertime!
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"
In the annals of bureaucratic bungles, few rival the sheer incompetence on display from HM Revenue & Customs (HMRC) this October 2025. The tax authority—tasked with collecting the lifeblood of UK public finances—has admitted to a glaring error in its VAT cash receipts data, forcing the Office for National Statistics (ONS) to slash public sector net borrowing estimates by a whopping £2 billion for April to August. This isn't some arcane glitch in a back-office spreadsheet; it's a fundamental failure in tracking one of the government's biggest revenue streams, leaving Chancellor Rachel Reeves with an unexpected £3 billion Budget boost while the rest of us foot the bill for HMRC's slapdash stewardship. As searches for "HMRC VAT error 2025" skyrocket, one burning question echoes: How the hell did they get this so catastrophically wrong?
At its core, VAT is HMRC's crown jewel—raking in tens of billions annually from everyday transactions. Yet, in a display of jaw-dropping oversight, the agency omitted entire "payment streams" from its data processing when supplying figures to the ONS. This understatement inflated borrowing projections from £83.8 billion to a revised £81.8 billion for the fiscal year to date, with ripple effects slashing the full-year estimate by another £1 billion. The error, which HMRC itself flagged as impacting "provisional 2025 to 2026 year-to-date receipts," wasn't caught until months into the year, despite VAT being a monthly reporting staple.
How does this even happen? HMRC's data pipelines, meant to be ironclad fortresses of fiscal accuracy, apparently skipped basic reconciliation checks on payment inflows—streams that could include deferred payments, adjustments, or even routine refunds. It's as if the folks at No. 1 Horse Guards Road forgot to tally a chunk of the nation's shopping bills. The ONS, reliant on these inputs, couldn't independently verify them, exposing a toxic dependency where one agency's sloppiness poisons the entire statistical ecosystem. For investors googling "UK borrowing VAT mistake," the fallout is immediate: spooked markets, volatile gilts, and a Budget narrative flipped on its head. Reeves now has extra fiscal headroom, but at what cost to credibility?
This VAT debacle isn't HMRC's solo act in a year of self-inflicted wounds; it's the headliner in a circus of scandals that scream systemic rot. Since January, the tax authority has been a punchline for incompetence, with errors and breaches piling up like unfiled returns.
Phishing Plague Hits 100,000 Accounts: In June, cybercriminals exploited weak safeguards to breach over 100,000 taxpayer accounts, siphoning £47 million in fraudulent repayments. HMRC's response? A mea culpa to MPs, but no heads rolled as scammers ran rampant.
Insider Data Heists: By August, dozens of HMRC staff were sacked for illegally snooping on taxpayer records, turning the agency's own vaults into a sieve of privacy violations.
R&D Fraud Fumble: Efforts to curb errors in Research & Development tax reliefs faltered, with fraud and error rates hovering at 5.9%—that's £481 million flushed down the drain in 2024-25 alone, and 2025 shows no turnaround.
Add cyber attacks that weren't "purely technical" failures but symptoms of deeper cultural lapses, and you've got an HMRC that's less guardian of the purse and more a black hole for trust. Tax cheats are "running circles" around them, per critics, with massive operational black holes unplugged despite billions in tech investments. In this context, omitting VAT payment streams isn't a "whoops"—it's par for the course in an agency that's allergic to accountability.
Predictably, no one's getting the boot over this £2 billion bombshell. HMRC's chief executive faced Treasury Committee grillings in June over customer service blackouts and that phishing fiasco, yet the revolving door of reviews spins on without a single high-level scalp. The ONS praised HMRC for "timely" disclosure, but that's cold comfort when the error stemmed from their own processing pitfalls. Where's the internal audit that should've flagged this months ago? The firings for data prying? Sure, low-level staff got the chop, but the architects of these systemic fails? Untouched, sipping tea while the economy reels.
This impunity isn't just infuriating—it's a green light for more mayhem. With anticipated compliance crackdowns looming by January 2025 on digital platforms, how can anyone trust HMRC to wield new data powers without botching them too?
Let's be brutally clear: HMRC's outputs aren't flawed—they're fiscal poison. This VAT error didn't just revise numbers; it misled the Bank of England on inflation pressures, jacked up borrowing costs for households, and handed tax dodgers a smokescreen amid the chaos. Worse than worthless because it actively harms: £6 billion annual black holes from fraud could be plugged with better analytics, yet HMRC lags while DWP saves millions on Universal Credit scrutiny.
For businesses hunting "HMRC data reliability 2025," the verdict is damning: distorted receipts skew VAT forecasts, hobble cash flow planning, and amplify economic whiplash. Globally, IMF projections wobble on these shaky pillars, dragging UK growth estimates into the gutter.
HMRC's 2025 implosion demands a reckoning, not more handshakes with the ONS. Pump in AI-driven fraud-spotting? Fine, but link funding to zero-tolerance accuracy KPIs. Enforce real-time audits on core streams like VAT? Mandatory. And accountability? Start with sackings at the top—because if they can't tally taxes, what can they do?
Until then, scepticism is your shield. The VAT vortex is today's outrage; tomorrow's could bankrupt us all. For unvarnished UK tax truths, ditch the official fog—because HMRC's house of horrors has no exit.
If you've time to kill whilst waiting for the Autumn Statement, I present the furskin flowchart - HMRC's handy guide to whether clothing with fur has 20% VAT or 0% VAT.
— Dan Neidle (@DanNeidle) November 22, 2023
Have fun. pic.twitter.com/AHjcuc6dgY
HMRC is closing its VAT registration helpline on Monday, May 22, 2023. The helpline was a subsidiary of the main VAT helpline and was dedicated specifically to helping taxpayers who had a concern around their VAT registration application. Advisers from this helpline will be redeployed to spend their entire time processing VAT registration applications instead of answering calls through the helpline.
HMRC says the decision to close the helpline was made after a review of taxpayer service offerings. The agency says it is committed to being responsive to taxpayer needs and to ensuring that its business model represents the best possible value for money for the taxpayer.
HMRC says taxpayers who have a concern around their VAT registration application can still get help by contacting the main VAT helpline on 0300 200 3701.
This is of course a load of old wank.
Agents were originally told in an email from HMRC that the service will close on 22 May 2024. As such people have been given just 5 days notice!
This is yet another example of HMRC talking bollocks wrt caring about handling taxpayer queries!
Tax does have to be taxing.
In Pavan Trading Ltd, HMRC tried it on and then doubled down at the review stage.
When a business exports goods, the sale can be zero rated, but the zero rate is on the basis that the business holds evidence of export.
The taxpayer had good records and was able to produce both official and commercial evidence.
There were some anomalies in the taxpayer’s paperwork, for example, not all payments from USA customers could be identified, deliveries were not made to customers’ main addresses and the values stated on the parcels were lower than the true value.
Crucially, the HMRC officer stated the main reason for assessment was the taxpayer had not supplied HMRC with the export evidence within three months. The officer told the tribunal that had the taxpayer given the main/supplementary evidence to HMRC within three months of each export, HMRC would have accepted the export evidence for zero rating purposes.
HMRC was saying the assessment was because the taxpayer had acceptable evidence of export but that the law required the taxpayer to physically give that paperwork to HMRC within three months of each and every export.
All very nice, except for the fact the law does NOT say that!
Tribunal concluded that HMRC made two errors in law. Firstly, the three-month period for obtaining evidence does not mean the taxpayer has to provide that evidence to HMRC within three months, it simply means the taxpayer must hold the evidence in their records within three months of the transaction.
The second error was that HMRC was of the view that all the evidence of export must be contained within the CP72, ignoring established case law and HMRC’s own guidance that a basket of evidence from a variety of sources is acceptable evidence.
The tribunal concluded “This error was started by Officer Bains,
perpetuated by the nonsense written by the review officer, and then
compounded by HMRC’s statement of case and skeleton argument. If there
was ever a counsel of perfection for the provision of export
documentation, then this appellant has achieved it and we have
absolutely no hesitation in allowing this appeal.”
What is clear from this case is that HMRC cannot be trusted to get things right, or even apply the law correctly!
Tax does have to be taxing.
HMRC has seized three Non-Fungible Tokens (NFT) as part of a probe into a suspected a VAT fraud involving 250 alleged fake companies.
Three people had been arrested on suspicion of attempting to defraud it of £1.4m.
NFTs are digital assets that can be bought and sold, but which have no tangible form of their own.
The digital tokens are certificates of ownership for virtual or physical assets. NFTs have a unique digital signature so they can be bought and sold using traditional currency or crypto currency, such as Bitcoin.
HMRC said the suspects in its fraud case were alleged to have used "sophisticated methods" to try to hide their identities including false and stolen identities, false addresses, pre-paid unregistered mobile phones, Virtual Private Networks (VPNs), false invoices and pretending to engage in legitimate business activities.
Nick Sharp, deputy director economic crime, said the first seizure of an NFT "serves as a warning to anyone who thinks they can use crypto assets to hide money from HMRC".
"We constantly adapt to new technology to ensure we keep pace with how criminals and evaders look to conceal their assets."
HMRC said it had secured a court order to detain the seized crypto assets worth about £5,000 and three digital artwork NFTs, which have not been valued, while its investigation continues.
HMRC have warned that businesses that deferred VAT payments last year have one month left to join online to pay in monthly instalments under the VAT Deferral New Payment Scheme.
The online portal for the new payment scheme closes on 21 June 2021.
Over half a million businesses deferred £34 billion in VAT payments due between March and June 2020 under the VAT Payment Deferral Scheme. Businesses had until 31 March 2021 to pay this deferred VAT or, if they could not afford to do so, they could go online from 23 February to set up a new payment scheme and pay by monthly instalments to spread the cost.
Jim Harra, HMRC’s Chief Executive, said:
“Businesses that deferred paying their VAT last spring have until 21 June to join the VAT Deferral New Payment Scheme online. They should act now to avoid missing out on this opportunity to spread payment of their deferred VAT across monthly, interest-free, instalments.
The new payment scheme is part of the Government package of support worth over £350 billion to help protect millions of jobs and businesses during the pandemic and as we emerge on the path to recovery."
Eligible businesses that are unable to use the HMRC online service by 21 June 2021 can ring the HMRC Coronavirus Helpline on 0800 024 1222 to join the scheme until 30 June 2021.
Businesses may be charged a 5 per cent penalty and / or interest if they don’t join up to the scheme online by 21 June, or pay in full by 30 June, or contact HMRC to make an arrangement to pay by 30 June 2021. Businesses should also contact HMRC by 30 June 2021 if they need to agree extra help to pay.
Importing almost anything from the EU has descended into abject chaos, with HMRC apparently clueless on new VAT rules, and all kinds of other previously non existent charges. Easier and less costly now to import from the US, where there is no FTA. What the hell is going on?
— jeremy warner (@JeremyWarnerUK) March 10, 2021
Subway sandwiches are subject to VAT in Ireland because they have so much sugar in the bread it counts as confectionery! https://t.co/am3On4RHdt
— Paul Lewis (@paullewismoney) October 2, 2020
"Why don’t HMRC online forms work?Comments and helpful advice welcomed.
I’m 99.99% certain that any information you submit into any HMRC webform isn’t stored or sent anywhere; you’re literally just pouring all your details into a black hole.
I’ve tried repeatedly to 'De-register for VAT’ as well as 'Make a Complaint’ (about VAT de-registering service) but the info doesn’t seem to go anywhere as no action is taken, and there’s no option to phone, email or live chat with them.
Annoying and frustrating in equal measure because they’re bound to find a way to blame me for not informing them.
I also seem to be stuck in an interminable loop between my HMRC Business Account Gateway login and my Personal Account Gateway login—each saying I need to use the other to file my personal tax return online.
*Banging head against the wall*
Has anyone else had either of these issues?"
"The Government’s claim that MTD for VAT will increase the amount of tax collected remains unconvincing." says House of Lords Report https://t.co/8ZQpZu46E9 pic.twitter.com/PEQKCk7una
— Elaine Clark (@cheapaccounting) November 22, 2018
"I am both concerned and disappointed...you have made little progress.Hillier also accused HMRC of being underprepared for changes to how businesses would pay VAT on EU imported goods after Brexit - with bills expected to be paid quicker.
You gave us no assurance that HMRC has a plan to ensure that businesses are aware of what they will need to do.
We are particularly concerned about the 100,000 small traders that HMRC can not engage directly with, as you do not know who they are.
I would be grateful if you could write to the Committee as soon as possible with an update on the level of business understanding and preparedness for changes to customs rules and procedures in the event of no deal."
"The potential move to postponed accounting is something that was foreseeable and it is reasonable to expect you to have been better prepared for it."An HMRC spokesperson said:
“HMRC has well-developed plans to ensure that there will be a functioning customs, VAT and excise system in the unlikely event of a no deal. We have engaged with business representative bodies who will be a key partners in reaching businesses to ensure that they understand any implications for them.
We have always said the timeline for implementing the Customs Declaration Service is tight, but that we would operate the current system (CHIEF) in tandem throughout the transition. We have made good progress to ensure that the UK has a customs system capable of handling any potential volume of customs declarations after March 2019.”
BREAKING: Massive UK-wide tax evasion scheme uncovered involving billions - but HMRC / Customs officials are utterly clueless. Here's the proof:https://t.co/huAO2BqeQ7@SkyNewsBreak @BBCNews @LizKershawDJ @lbcbreaking @itvnews @Channel4News @Channel5N @standardnews @dotasscandal— HMRC 🇬🇧 🇪🇺 #FBPE 🌍 (@HMRCon) August 1, 2018
HMRC's failure to tackle customs and VAT fraud from China, despitre it being pointed out to them by affected taxpayers, has undermined the EU's faith in HMRC to cope post brexit https://t.co/qe2Lxt2RLt— Gordon Berry (@wealthagent) July 30, 2018
"I accept that the failure here can properly be described as negligent, but it was negligence to a lamentable degree.The same disclosure failings meant that a linked trial of petrol station owners, due to begin a few weeks later, was also abandoned.
It is indicative of a more systemic failure going beyond the omissions of just one officer."
The competence, even credibility, of the investigative team has clearly been tainted."
“At this stage I can say that we have proposed a number of projects which should stop, or not start and a number which should be stretched out over a longer timescale.Good luck with all that then!
We took our initial proposals to Treasury ministers in early February and we will update the [public accounts] committee as soon as final decisions have been taken.”
"HMRC collected around £124bn in VAT last year – over a fifth of the UK's total tax take – and failed to collect around £12.6bn in VAT.Good luck getting straight answers from HMRC!
The reasons for why VAT is so vulnerable are somewhat opaque, so the committee will examine how this might be addressed.
Brexit may provide both opportunities and challenges to the UK's approach to VAT. The government may choose to stick to a broadly similar structure to what currently exists, change it, or abolish it completely.
We will examine the chief concerns for HMRC and businesses going forward, and what impact Brexit will have on HMRC's efforts to reduce the VAT element of the tax gap."
