Mark Dearnley Quits HMRC

In June this year I wrote about Mark Dearnley's (HMRC's chief digital and information officer who joined in October 2013 from Vodafone) appearance before PAC:

"Dearnley told PAC this week that the new company had been set up specifically to provide "a better employment offer for the staff coming in from the private sector", including better base pay and pensions than could be expected as direct employees of HMRC.

However, he is quoted by Public Technology:

"It is limited by the pay cap.
But it does have a different salary scale and remuneration structure, so in that, we've been able to put together what we believe is a much more appropriate offer for people coming in from the private sector."

Adding:

"I'm sure this will be an ongoing topic of conversation with the Treasury over the next few years."

His last comment about having an ongoing discussion with the Treasury for years is somewhat ironic, as it transpires he is leaving HMRC in September for pastures new in the private sector.

This may cause a few headaches within HMRC, as PAC warned that management needs to be stable during the transition from Aspire. As per PAC:

“HMRC is now making progress in replacing the Aspire contract, but moving to a new model of IT provision remains a substantial undertaking which will require firm and consistent leadership.

As we have seen from elsewhere in government, one of the main factors that determines the success of complex programmes such as this is the quality and stability of their leadership.”

PAC must have had an inkling that he was about to abandon ship, as they asked HMRC at the time if was going to stay. HMRC rresponded that they were in negotiations with him!

As per Computer Weekly, Dearnley gave a valedictory statement about his almost 3 years in HMRC:

"We have replaced our outdated internal IT, launched digital tax accounts for individuals and businesses, and have successfully concluded negotiations to dismantle the Aspire IT contract, taking more direct control of the design and delivery of our digital technology services at huge cost savings for HMRC.

We have also built one of the strongest digital technology teams in the world, and I am confident that they will continue to deliver HMRC’s IT transformation at pace.”

Any guesses as to which company he will join?

Who knows, maybe he will get to sell into HMRC advice and/or software as it moves towards its glorious digital future?

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

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Poacher Turned Gamekeeper

My thanks to a loyal reader who pointed me to a press release that HMRC issued yesterday, concerning the appointment of a new HMRC Chief Information Office (CIO), Mark Dearnley.

Dearnley comes from the private sector from a company that loyal readers may well have heard of........Vodafone....cough!

Sadly I see he refers to HMRC as having a "customer base", oh dear!

Anyhoo, Dearnley has quite a task ahead of him as CIO's within HMRC don't seem to last the course. Phil Pavitt moved from the role in October 2012, then left HMRC in November and his acting replacement, Mark Hall, evidently didn't cut the mustard.

Does anyone know what has happened to Mark Hall, ie is he still in HMRC?

I ask because rumours abound that he was not best pleased at being snubbed.

HMRC won't say why Hall had been denied the promotion to CIO, as per Computer Weekly:

“The CIO recruitment process was subject to fair and open competition overseen by a civil service commissioner. Following a rigorous and transparent selection process, an external candidate was chosen. We do not comment on individuals who may have been on the interview panel. Mark’s replacement as CIO will be announced in due course,”

It also appears that the role of CIO is being downgraded across Whitehall.

Interesting times ahead methinks!

Anyhoo, here is the press release from HMRC:

"HM Revenue and Customs (HMRC) has announced the appointment of one of the country’s leading IT chiefs as the department’s new Chief Digital and Information Officer.

Mark Dearnley, who is currently the Chief Information Officer (CIO) of Vodafone UK, is joining HMRC in October. He will take control of a £500 million-a-year IT operation that serves 45 million individuals, 4.8 million businesses and 65,000 HMRC employees. He will be responsible for implementing HMRC’s £200 million digitisation programme and accelerating the planned delivery of online services for all taxpayers. He will also lead HMRC’s physical, personnel and information security.

Mr Dearnley has been CIO at Vodafone UK since 2010 with responsibility for IT supporting 19 million customers. He led a programme to overhaul Vodafone’s business-critical information systems and was named Oracle Global Business Unit CIO of the Year in 2012 for this achievement. Mr Dearnley also restructured Vodafone’s IT operating model and introduced Cloud-based technologies into the mobile operator. 

David Gauke, Exchequer Secretary to the Treasury, said:
“It is an indication of the scale and seriousness of the Government’s digital ambition that one of the UK’s most experienced CIOs is leaving the private sector to take on this major role. Mark Dearnley’s appointment to HMRC is evidence that Government has the cutting-edge challenges that can attract the very best leaders in IT to public service.”

HMRC Chief Executive, Lin Homer, added:
“Mark is an exceptionally experienced CIO, with strong leadership and change management skills as well as an accomplished technical background across a spectrum of IT disciplines. HMRC has already embarked on an ambitious programme of digitisation to provide taxpayers with modern online services and Mark is the right person to deliver that for the UK.”

Mark Dearnley said: 
“I have spent my entire career in the private sector, mostly in customer-facing businesses. But no private business in the UK can match the customer base, scale or complexity of HMRC, which makes this role irresistible. I am thrilled to have been appointed and can’t wait to get started.”

Notes for editors:

1. Mr Dearnley was recruited through a fair and open competition under the Government’s business appointment procedures for senior civil servants. The recruitment process was overseen by the Civil Service Commissioner, who led a panel that included two Permanent Secretaries and a Non-Executive Director. The UK Government Chief Operating Officer was consulted throughout the process. The appointment was approved by the Prime Minister.
2. The annual salary for this Director General role is £180,000, which is at the Senior Civil Service (SCS) 3 pay band.
3. Mr Dearnley is CIO of Vodafone UK, where his primary focus is using IT to improve the customer experience. He has worked internationally in the telecoms industry over the last decade.
4. Prior to Vodafone, Mr Dearnley spent six years at Cable and Wireless, as CIO and in other senior IT roles. He also spent three years at Boots the Chemists, first as Chief Operating Officer for the start-up of Boots.com and latterly as Programme Director.
5. He has a degree in electrical and electronic engineering from Brunel University and is a Fellow of the Institute of Engineering and Technology and British Computer Society."

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?

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



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Gauke's Smoking Gun

My thanks to a loyal reader who pointed me to another update on the Osita Mba debacle.

The Guardian reports that based on emails that it has seen, David Gauke seemingly approved a plan to brief a journalist with information to help discredit testimony from HMRC whistleblower Osita Mba.

The leaked emails were sent on 15 December 2011 by a senior figure in HMRC's media department to Gauke's private secretary, Oliver Haydon. The emails claimed that the imminent public accounts committee report would be highly critical of Hartnett, HMRC and the Goldman Sachs deal.

In one email, the HMRC executive wrote to Gauke's secretary saying there was a need for Mba's evidence to be challenged:

"The belief that Mr Mba has genuine and deep knowledge of the Voda [Vodafone] and GS [Goldman Sachs] settlements is growing when in fact the picture he presents is partial, incomplete and flawed.

Much of the PAC [public accounts committee] report on large business settlements is likely to be based on his submissions and we feel this must be challenged if HMRC's reputation is not to suffer very serious damage.

We propose to do this by having Dave Hartnett brief [a named Financial Times journalist] – on the record – with a view to a Saturday/Monday story. We would welcome your views."

Haydon responded:

"Thx — I've relayed to XST [Gauke] whose initial reaction was positive. I'll confirm when I speak to him in the next hour or so."

Sadly there is nothing new in politicians using (directly or indirectly) the media to undermine the reputation of individuals and to manipulate the opinions of those involved in reviews/investigations. It is though particularly troubling when parts of the civil service encourage the politicians to adopt such a strategy.


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

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Tax Planning In Retirement

Now that Dave Hartnett has retired he can use his experience of HMRC and this country's complex tax affairs to help others.

My thanks to several loyal readers who pointed me to the fact that Dave spoke last Thursday in New College Oxford, at the gala dinner of the Key Haven Publications tax planning conference.

Unfortunately Dave's speech was interrupted when a group calling themselves WeAreTheIntruders, posing as employees of Goldman Sachs and Vodafone, presented him with a bouquet of flowers and the "Lifetime Achievement Award to Corporate Tax Planning", otherwise known as the "Golden Handshake".

A video of the scene has been made by the group. One diner is heard to say:

"You will depart immediately, before we set the dogs on you." 

Another a diner is heard calling the protesters "trespassing scum". 

All a tad puerile, as Hartnett retired from HMRC in July and is perfectly at liberty to attend and speak at whatever functions he wishes.

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 Taxwise.

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

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What is TAXWISE?

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To find out more, please use this link Taxwise



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

Click the link to read about: Tax Investigation for Dummies

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HMRC Threaten Tax Avoiders

HMRC continue to push their anti avoidance mantra, with a threat to "customers" and "taxpayers" (even HMRC now seem to be confused as to what we are!) who use avoidance schemes.

The Telegraph quotes an HMRC spokesman:

"It is important that our customers know that if they choose to engage in tax avoidance we will be relentless in pursuing them. 

We will challenge tax avoidance and will take legal action against [tax avoidance] schemes whenever possible. Instead of the tax savings they hoped to achieve, people who use tax avoidance schemes run the risk of wasting money on fees for a scheme that does not work, and will have to spend time dealing with an in-depth investigation by us into their tax affairs. 

Taxpayers may find themselves being cross-examined before a tax tribunal and having their tax avoidance exposed to public scrutiny when the tribunal's decision is published." 

Of course trying to understand what parliament's true intentions are is somewhat muddied by the incredibly complex tax system that we all have to endure.

Much of the time, trouble and expense incurred over "avoidance" by taxpayers and HMRC could be greatly reduced if the tax system were simplified.

That of course requires politicians to actually do something constructive, sadly that is something that is unlikely to occur in the foreseeable future!

Tax does have to be taxing.



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What is TAXWISE?

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

To find out more, please use this link Taxwise



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

Click the link to read about: Tax Investigation for Dummies

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Homer Defies PAC

I see that Lin Homer is attempting to defy requests from the Public Accounts Committee (PAC) to hand over documents detailing tax deals agreed with five large corporations (including Goldman Sachs and Vodafone).

Exaro News reports that Homer has personally rebuffed the request, and insists that taxpayer confidentiality prevents her from showing the documents to the cross-party committee.

Taxpayer confidentiality is, to my view, a principle that should be defended. However, PAC are of the view that it should be dispensed with for these five companies.

PAC held a private session with HMRC chiefs, including Homer, and Sir Andrew Park, the tax judge who had advised the NAO, at the end of last month.

Margaret Hodge told Homer:

“Our view is that you do have the discretion – I know that this is contested – and it is also in the public interest, to enable us to have at least the background documents that you gave to the NAO, so that we can understand better the systemic issues that have been of concern to the committee, by looking at the details of the particular cases.

The committee has discussed this, and, of course, we would be happy to look at the documents in confidence, if that is your wish. But we feel that we need access to those papers to do our job properly. 

Are you willing to use your discretion to enable us to hold you to, what I consider to be, proper public account?”

Homer replied:

“Our duty to taxpayer confidentiality prohibits me from sharing, unless either I do so in pursuit of my function as a commissioner, or there is specific statutory gateway.”

The question arises is Homer taking this stand on the genuine basis of the principle of protecting taxpayer confidentiality, or is she using this as an excuse to avoid handing over documents that might embarrass HMRC?

It is not clear cut to my view, and I would welcome views and comments.

Tax does have to be taxing.





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To find out more, please use this link Taxwise



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

Click the link to read about: Tax Investigation for Dummies

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Homer Gets Roughed Up At PAC

Poor old Lin Homer (CEO of HMRC) got a very rough ride at yesterday's Public Accounts Committee. Homer was forced onto the back foot by aggressive questioning from the committee, and had to repeatedly deny that HMRC enter into negotiations with large companies over how much tax they pay (although they do negotiate wrt other tax issues eg IHT "You should consider negotiating a settlement where the issues are not clear cut and the taxpayers cannot be persuaded that your point of view is the correct one.").

Well, sorry to say it, but unless things have changed since when I was a young internal auditor in the early 90's that simply isn't true (or at least she may be mistaken).

The standard practice between HMRC (the Inland Revenue as it was then) and companies was for IR to present a tax figure (detailing how they derived it) and for the company to present theirs. Where there were major discrepancies the two parties would keep "surprises" (eg write offs, hidden losses, hidden profits etc etc) in reserve to use during the discussions as to how much the tax bill would finally be. A final figure (midway) would usually be decided whereby both IR and the company felt that they had gone as far as they could without incurring costs of litigation etc.

That to me is a "negotiation", and there is nothing wrong with that if both parties act with honesty, integrity and commonsense.

Anyhoo, apparently, these "negotiations" do not occur now (according to Homer).

Hmmm!

Leaving that aside, Margaret Hodge (chairman of PAC) accused HMRC of letting large corporations off paying large sums of money and (as per the Huffington Post) said that there were "many question marks" hanging over the settlements reached in cases such as those involving Vodafone and Goldman Sachs.

Referring to the Vodafone case, Hodge said:

"It seems to me that you haven't pursued them properly and you have actually let them off a lot of tax."

Re the giant vampire squid, Goldman Sachs, she said that it had been "let off tens of millions".

Homer said that she accepted criticisms relating to governance arrangements and was aiming to increase the number of commissioners with tax law qualifications from one to three or more, as well as to recruit as many as 1,000 tax-qualified graduates.

Jim Harra, director-general of business tax at HMRC claimed that HMRC were investigating the tax affairs of “just over 4,000” companies

Homer said:

"We settle for the amount we think the Revenue is due. We do not settle for a lesser amount than we believe we could reasonably expect if we litigated."

To which Hodge retorted that Homer's position was "incredible".

"It is the committee's view that there are so many question marks over whether the settlements are in the public interest and properly defend the taxpayer's interests and are fair and equal under the law."

Homer refused to handover documents detailing the precise tax arrangements of large companies which have come into the spotlight, insisting that she was not allowed to do so unless the papers entered the public domain as part of a court case.

Whilst Hodge threatened to refer HMRC lawyer Anthony Inglese to the Attorney General over claims he made under oath in an earlier parliamentary hearing that lawyers were involved "throughout" the Vodafone case.

"I think you should take this away and investigate further whether or not somebody who accounts to you did mislead Parliament and we will take away what we will do, with possible reference to the Attorney General, as to whether or not a particular individual accountable to you did mislead Parliament."

All in all a pretty lousy day for HMRC.

In my humble opinion, if "negotiations" are still conducted in the same manner as I described from the early 90's then Homer should have stated that forcibly and without shame.

A commonsense cost effective approach to gathering tax is surely what everyone wants, and should be aiming for, is it not?

As ever, comments and opinions from all are very welcome. I would be particularly interested to hear if the "negotiations" that I described are still carried out in the same way.

Here is the hearing for you to watch:






Tax does have to be taxing.








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To find out more, please use this link Taxwise



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

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NAO Publishes Settling Large Tax Disputes

In May I wrote that I had been advised by the National Audit Office (NAO) that their delayed report into "HMRC's Sweetheart Deals" ("Settling Large Tax Disputes") would come out in the beginning of June.

Well, here we are on 14 June (midway into the month) and the NAO have published their report.

The report into five major tax settlements by HMRC, including deals with Goldman Sachs and Vodafone, concludes that the final payments were “reasonable and the overall outcome for the exchequer was good”.

However, the report criticises HMRC for:

-failing to follow strict official processes,
-for refusing to consult its own lawyers before agreeing to drop litigation, and
-for weak internal communications that bred a climate of suspicion within the department.

The latter point is most certainly true, as it chimes with the regular comments/feedback from HMRC staff on this site and their emails to me; it is good that the NAO have picked this issue up and drawn attention to it. However, as to whether there will be an improvement within HMRC remains to be seen.

HMRC are quoted by the Telegraph:

“We welcome today’s report. 

We have always maintained that the settlements represented good value for the UK.”

The phrase "welcome today's report" rather makes me smile and brings back memories of when I ran an internal audit department, for whenever anyone used that phrase to me they invariably meant that they were really pissed off that their shortcomings had been brought to the attention of others.

Notwithstanding the NAO report and vindication of Dave Hartnett, UK Uncut have been granted their day in court to challenge HMRC's decision on Goldmans. This decision will be subjected to a judicial review, where HMRC said it “will strongly contest” UK Uncut’s application to quash the settlement.

Whatever the outcome of that review Margaret Hodge, chairman of the Public Accounts Committee, has also flagged the issue of processes being bypassed and internal communications failures:

"This report confirms my committee’s concerns about the uncontrolled way that HMRC has been doing secret deals with large companies. If the final settlements in these cases were reasonable, as Judge Park has concluded, questions still remain over why officials bypassed the proper processes.

With billions of pounds of tax at stake it is extremely worrying that the department failed to involve its own specialists in the final negotiations and follow its own rules by settling for less than it could have won in litigation."

Here is the summary of the report

"On the basis of Sir Andrew Park’s reports, I conclude that the settlements reached by HMRC in these five cases were all reasonable. Moreover, in settling them, the Department successfully resolved multiple, long-outstanding tax issues.

However, our concerns over the processes by which the settlements were reached have been confirmed. It was not appropriate to set up governance arrangements specific to certain cases or to fail to apply processes correctly. Poor communication with staff also undermined confidence in the settlements."
Amyas Morse, head of the National Audit Office, 14 June 2012

The National Audit Office has concluded, on the basis of an examination by former High Court tax judge Sir Andrew Park of five large tax settlements, that all five settlements were reasonable and the overall outcome for the Exchequer was good. However, the spending watchdog has expressed concerns about the processes by which the settlements were reached and over poor internal communication of the reasons for settlement.

The NAO review of the settlements followed serious concern by the Public Accounts Committee about how HM Revenue & Customs had handled them or overlooked governance arrangements. The NAO also examined the basis of concerns expressed by whistleblowers.

According to today’s report, all five settlements were reasonable for the Department to have reached under the circumstances and at least one may have been better than reasonable. These large settlements are complex and there is no clear answer to what represents the ‘right’ tax liability. In each case, there was a range of justifiable positions the Department might have taken. The NAO’s examination included consideration of whether the settlement in each case was as good as or better than the outcome that might be expected from litigation, taking into account the risks, cost, uncertainties and timescale of the latter option.

Specialist staff were sometimes excluded from the final settlement negotiations and the Department did not always ensure that these staff involved understood the reasons for settlement. Poor internal communication of the reasons resulted in a loss of confidence in the settlements, both internally and externally.

It is not clear that all settlements were fully compatible with the Department’s Litigation and Settlement Strategy. For instance, there are some disputes where the only possible outcomes are either that the taxpayer owes nothing or that it owes the full amount. In these circumstances, the Department’s Litigation and Settlement Strategy does not permit ‘splitting the difference’. In one settlement, the Department settled for less than if it had won in litigation.  This was reasonable, given the costs and uncertainties of litigation, but was not clearly compatible with the Strategy.

In most cases, there was no need to seek legal advice before agreeing settlement terms. In one case, the Department did not consult its lawyers when it should have done because there was ongoing litigation.

The findings of today’s report confirm the NAO’s concerns regarding the governance arrangements operating in these cases. The Department has acknowledged that its governance processes need strengthening and is introducing new arrangements, including the appointment of an assurance Commissioner, who will approve all large settlements.

As ever, comments and opinions from loyal readers are very welcome.

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

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NAO Moveable Deadlines II

A week ago I wrote the following about the National Audit Office (NAO) report into "HMRC's Sweetheart Deals":

"My thanks therefore to a loyal reader who has pointed out the reason for the absence of the NAO report, it appears that the deadline has been quietly shifted back (without any announcement) to at least Summer this year.

"The C&AG aims to report the results of this work to the Public Accounts Committee in summer 2012."

By the way "aims to report" is not a very firm "deadline!

Is this "slippage" because the investigation is taking so long, or is it because they don't want the report issued before Hartnett officially leaves in summer?

Oh and by the way, they are only looking at five deals, not 10 originally discussed in 2011; so it's probably not the workload that has caused this "slippage".

I will ask NAO why they have delayed this, and will post their answer if I get one ."

I emailed the NAO, and received this response from the Head of Media:

"There was no deadline for this report. The information on our website on approximate timing, for guidance only, was posted at the beginning of our study when we could not know exactly how long it would take. Such guidance is commonly changed as studies progress. The date on which a report is to be published is decided by the Comptroller and Auditor General and for this report has yet to be announced."

I responded thusly:

"Thanks ****

Steve Barclay (a member of PAC) was under the impression that is was Spring as well (as per his website http://stevebarclay.net/?p=2260)

For clarity, now that your site says "Summer" this is not the deadline either?

http://www.nao.org.uk/publications/work_in_progress/larger_tax_settlements.aspx

As an ex auditor myself (KPMG, Philips, De Beers) I am rather surprised that you have yet to decide a deadline.

Thanks

Kind regards

Ken Frost"

He then called me, and advised that the report will probably be issued at the beginning of June and that PAC are aware of this.

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

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HMRC Tax Degree

HMRC has been feeling the heat recently wrt negative publicity over their handling of a number of issues (eg tax deals with Vodafone, Goldman Sachs and losing the Harry Redknapp trial.

Therefore HMRC has decided to sharpen up its act and, in a joint venture with Manchester Metropolitan University, send some of its staff to university (or rather training centres across the UK) to study for a degree.

The part time course for a degree in tax is expected to yield £2M to £3M in extra tax revenues per graduate over four years.

How on earth do they come up with that figure?

Anyhoo, the staff studying for the degree (expected to total around 400-500) will not have to pay for it (unlike other university students).

Students will also be able to study tax courses up to the equivalent of A-level or a Higher National Certificate, accredited by the Association of Accounting Technicians.

Dave Hartnett, HMRC Permanent Secretary for Tax, said:

“We know we have great people doing great work that deserves to be recognised. We want to be seen as a leader in tax, both in the UK and internationally, and the launch of the Tax Academy is a really important step towards that goal.”

Does anyone know how the figures of £2M-£3M have been derived/calculated, or what grades of staff will be allowed to study for the degree?

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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"

War is Declared!

Now here's an interesting thing, last year's public drubbing of "Jack" Hartnett and HMRC's General Council Anthony Inglese (who was forced to take an oath) by the Public Accounts Committee (PAC) over HMRC's handling of the Vampire Squid and Vodafone has not gone down well with the civil service.

As I noted in December last year:

"When it comes to self loathing, no one and nothing does it better than politicians and the State; especially when they viciously turn on one of their own departments.

Therefore it should come as no surprise whatever to read the "public damnation" of HMRC by the Public Accounts Committee ."

Anyhoo, senior mandarins are less than gemused and have, according to Exaro, "declared war" on MPs over the constitutional implications of civil servants being treated in this manner.

Such is the anger felt by the mandarins that GOD himself (the recently retired Gus O'Donnell) wrote to Margaret Hodge (Chairman of PAC), at the end of last year before he was elevated to the Lords, to tell her that civil servants should not be accountable to Parliament and are only accountable to ministers.

In the letter to Hodge GOD accused PAC of using the hearings as a “theatrical exercise in public humiliation”, adding “praise certainly can be a more effective tool for change than blame.”

Hodge is making a speech this Thursday in which she is expected to reveal the contents of a dossier of anonymous, highly critical comments from civil servants and government lawyers who object to PAC's conduct.

At the very centre of the storm is the treatment of HMRC's Hartnett and Inglese.

Hodge is quoted:

"I would agree that Whitehall seems to have declared war on Parliament.”

Aside from Thursday's speech by Hodge, which will stir things up, PAC is adding further fuel to the fire with its ongoing examination of contracts that allow senior civil servants to avoid tax.

This "war" between mandarins and Parliament will of course do nothing to help HMRC improve its service or internal moral; as its failings/improvements will be used as a political football by both sides.

Tax does have to be taxing.

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To find out more, please use this link Taxwise



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

Click the link to read about: Tax Investigation for Dummies

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

HMRC and Tax Avoidance

HMRC has rewritten its guidance to the disclosure of tax avoidance schemes (DOTAS) regime.
 
Although the number of schemes reported has reduced over the years, the government (ironically) is concerned that some avoidance schemes seem to be slipping the net (avoidance is of course perfectly legal).

Taxjournal reports that Graham Aaronson’s report on the merits of a general anti-avoidance rule (GAAR) concluded that "purposive interpretation [of tax legislation], specific anti-avoidance rules and DOTAS are not capable of dealing with some of the most egregious tax avoidance schemes".

Why does HMRC want to know tax arrangements, who has used such arrangements and how they work?

HMRC answer the question thus:

"On its own the disclosure of a tax arrangement has no effect on the tax position of any person who uses it. 

However, a disclosed tax arrangement may be rendered ineffective by Parliament, possibly with retrospective effect."

Retrospective legislation is a step on the road to dictatorship, and the government would be advised to steer clear from that particular course of action.

Moreover it is more than a little surprising that HMRC and the government are still pushing the anti avoidance message, given that both HMRC and the government support tax avoidance eg:

- Ed Lester

- Deepak Singh

- Vodafone/Goldman Sachs 

- Vodafone (again!)

Hypocrisy from the government and HMRC?

Surely not?

Tax does have to be taxing.

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What is TAXWISE?

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

To find out more, please use this link Taxwise



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

Click the link to read about: Tax Investigation for Dummies

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

Did HMRC Break The Law?

The Guardian reports that the Public Accounts Committee (PAC) is looking into claims, from an HMRC whistleblower, that Dave "Jack" Hartnett's deal with Vodafone to waive £7BN of tax may have been outwith the powers (ultra vires) of HMRC (ie illegal).

The whistleblower also claimed that the agreement that HMRC claimed let the giant vampire squid (Goldman Sachs) off £10M was in fact worth £20M.

£10M here, £10M there; details mere details!

Margaret Hodge, chair of the committee, told the Guardian that she had received the new allegations from someone with an apparent detailed knowledge of the deals and confirmed that a senior counsel may now assess them.

"The main allegation is that senior officials at Revenue and Customs have acted ultra vires [beyond their powers] and we are duty bound to take that seriously."

I wonder if the whistleblower is part of "Dissent"?

Jack has thus far avoided detailed scrutiny by citing legal privilege. That defence, if the allegations are valid, has just been blown out of the water.

However, HMRC is standing by its guns and is quoted:

"We are entirely confident that our approach to large business tax settlements is the right one. This approach has brought in more than £13bn from large businesses since 2006.

We have not seen the material which the Guardian tells us may be referred for counsel's opinion so it would be wrong to comment further....

Dave Hartnett's evidence to the PAC [public accounts committee] is entirely consistent and accurate.

Mr Hartnett made clear that an error occurred and the comptroller and auditor general is on record as saying this error was between £5m and £8m."

This will run and run!

Tax does have to be taxing.

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

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What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Jack in The Box

I see that things are hotting up for Dave "Jack" Hartnett, wrt the Goldman Sachs and Vodafone tax deals.

A senior judge is to be brought in to investigate the deals, and is apparently going to be given powers to examine the accounts of the Vampire Squid and Vodafone.

The National Audit Office (NAO), keen not be left behind the curve on this, is also considering looking at the  tax affairs of other large companies in order to ensure that HMRC haven't signed off any other Vampire Squid deals.

This move is interesting, because it indicates that the government no longer trusts HMRC (which is itself a government body).

 

The NAO are now "scoping" the terms of the work, and determining who they need to actually do it.

 

Anyone care to volunteer?

 

The Truth

Members of the Commons Public Accounts Committee took the unusual step of making Anthony Inglese CB, General Counsel and Solicitor HMRC, swear an oath at yesterday's PAC hearing into HMRC Accounts and Tax Disputes.

For why?

 

It seems that the committee did no feel that they were getting answers from Inglese.

For why?

He repeatedly declined to answer questions, citing taxpayer confidentiality.

I am amused to read this about him in The Lawyer:

"The veteran lawyer does admit to getting a thrill from reading about his work in the national press. 

'It’s exactly why I wanted to join ­government'.."

LOL!!

I guess he will be delighted to read this then!

Sir Gus O’Donnell (GOD) KCB, Cabinet Secretary, and Dave "Jack" Hartnett, Permanent Secretary for Tax, HM Revenue and Customs also appeared.

Inglese and Jack admitted admitted that mistakes had been made in the deals with Vodafone and Goldman Sachs (the giant vampire squid).

The committee chairman, Margaret Hodge, asked why HMRC appeared to have a special relationship with such big businesses that allowed them to do deals in a way that would not be possible for smaller businesses or individual taxpayers.
 
Jack managed to undermine what he said at a previous hearing (when he claimed that he had been advised by an HMRC official that there was a "legal impediment" to charging interest) by stating that an official from HMRC (not him) had lost his bonus as a result of the deals.

"The error was taken into account on someone's annual appraisal."

Why didn't Jack also lose his bonus, given that he signed off on the deal?

Farcical!

Watch the farce here The Farce.



Tax does have to be taxing.

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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"

Downfall II - HMRC Fights Back

My thanks to a loyal reader who posted HMRC's Stephen Hardwick's (Director of Communications and Corporate Affairs) intranet defence of Dave "Jack" Hartnett on this site the other day (apologies that it got stuck in the spam filter!).

I note he talks about "relentlessly" pursuing tax evaders.

Fair enough, except that (as I understand it) the vampire squid was trying to avoid (not evade) taxes. So that, to my humble view, is a red herring.

Additionally, quite why Hardwick chose to use the Occupy London Camp as a rationale for his message also eludes me; given that most of the tents are vacant, it is hardly an "occupation" or a credible "political movement".

Surely he would have been on firmer ground (if he really believes what he is saying), robustly demolishing the PAC assault on Jack (which after all is the real threat to Jack's career and the future of HMRC)?

Therefore, to my humble view, this was a wasted opportunity by the Director of Corporate Communications.

Anyhoo here it is (as posted), feel free to comment:

"London tax demonstration: Message from Stephen Hardwick

24 October 2011

You may know that activists are expected to march from the Occupy London camp at St Pauls’ Cathedral to 100 Parliament Street this afternoon, where they will call for Permanent Secretary for Tax Dave Hartnett’s resignation.

The march has been co-ordinated by tax pressure group UK Uncut and follows a week of media coverage over the Department’s large business settlements.

UK Uncut has persistently misrepresented how HMRC handles large business settlements and has targeted our 2010 settlement with Vodafone in particular.

Their claims that HMRC does “sweetheart deals” are wholly false. HMRC has relentlessly pursued all taxpayers who seek to evade tax, big or small. In fact, the money we bring in through our compliance work has more than doubled since the Department was created in 2005. Last year, that figure stood at £13.9 billion.

UK Uncut and others have attacked HMRC – and Dave Hartnett personally – over the non-disclosure of confidential tax records. As they know, the law prevents us from doing this.

We have repeatedly said that our legal advice makes clear that any official who breaks taxpayer confidentiality, whether before a Parliamentary committee or in any other context, could be prosecuted. We have a duty both to protect taxpayers’ confidentiality and our employees.

UK Uncut’s march on HMRC and its call for Dave Hartnett to resign are misguided. While there is a role for public campaigning against tax avoidance and evasion, and we welcome the profile it brings to the issue, those who target individuals and companies do have a responsibility to get their facts right. Otherwise they undermine both their own cause and HMRC’s work.

Dave Hartnett will be declining UK Uncut’s request that he resigns, and he has the full support and sympathy of all his ExCom colleagues. He is taking all of the burdens of HMRC’s negative publicity on this issue on his shoulders and, in our view, does not deserve to be targeted in this way.

Stephen Hardwick

Director of Communications and Corporate Affairs"



Tax does have to be taxing.

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HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

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

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What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Downfall

Such is the perceived mess that HMRC is in, and the animosity felt by many towards Dave "Jack" Hartnett, that GOD, or to give him his mortal name Gus O'Donnell (the cabinet secretary) is to investigate demands from senior MPs for a fundamental reform of HMRC.

The Guardian reports that Margaret Hodge, the chairman of the public accounts committee, met with GOD and told him that he had to consider how to bring greater accountability to HMRC's dealings with big business.

Some MPs are now claiming that Hartnett was "out of control", and that there were no effective checks and balances on him in Whitehall or Westminster.

Well, 20/20 hindsight is all very well and dog whistle politicians do rather love to attack wounded animals. However, I would venture to suggest a few points:

1 Hartnett's behaviour, and HMRC's issues, have been widely publicised for a number of years. Were these same MPs all asleep during this period?

2 HMRC is (theoretically) under the control of Parliament. Therefore the failings of HMRC and its senior officers are (when the "final buck is placed upon the table") attributable to our "respected" elected representatives.

3 These elected representatives, who are howling for blood, are the very same people who have devised our "buggers' muddle" of a tax system, merged IR with Customs, ordered the restructuring and cuts within HMRC, appointed people such as Strathie and Hartnett and generally enjoy various tax privileges and avoidance schemes that the rest of us are not privy to.

Hartnett refuses to answer journalists' questions about his arrangements with Vodafone and Goldman, saying that taxpayers' affairs must be confidential.

Hodge on the other hand has said that she wanted O'Donnell to accept that corporations were not entitled to the same privacy rights as individuals.

The public accounts committee also wants HMRC to be accountable to the National Audit Office, and for the NAO to have the right to brief MPs in confidence about controversial decisions. HMRC refuses to give the auditors detailed accounts of big tax disputes, once again citing the need for confidentiality.

As you can see, this is developing into a power struggle between Parliament and HMRC. This is rather ironic, given that HMRC is meant only to be a bureaucratic arm of government responsible for the efficient and cost effective gathering of taxes.

Something, somewhere in the past seems to have given HMRC ambitions above its "position" in the grand scheme of things.

Whatever the outcome of the battle between HMRC and Parliament, Jack's position has become untenable.

All lofty ambitions end one day, shattered and decaying into dust.

Tax does have to be taxing.

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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"

Jack's Back - By Popular Demand!

By popular demand the ever entertaining Dave "Jack" Hartnett made his encore yesterday before the Commons Public Accounts Committee (PAC).

Margaret Hodge (Chairman) made Jack feel very welcome, by stating that the committee would not "let matters rest from last week".

Hodge went on to say that the Cabinet Secretary (GOD - he who soon leaves orifice) had requested a meeting, and that the committee would decide after that meeting what ‘further action’ it was going to take wrt HMRC.

PAC could force open the settlement agreements that forgave the giant vampire squid (Goldman Sachs) £10M of tax and Vodafone £4.75BN. There are also two other companies with similar tax agreements with HMRC that remain secret.


Hartnett told PAC that HMRC was ready to talk in confidence, and would ‘support the NAO’ in its work.

How very "nice" of him and HMRC!

Does that not sound as though HMRC and Hartnett are getting a tad above themselves?

Have I not warned many times on this site about HMRC taking on powers and politicising itself, in an attempt to place itself above its brief of being a bureaucracy whose mission should be solely to collect taxes in an efficient and cost effective manner?

Anyhoo, Jack confirmed that he would write to the committee regarding legal advice received on taxpayer confidentiality. He claimed that he was in discussions with lawyers, and would clarify the precise rules governing taxpayer confidentiality "by Wednesday" (doesn't he know the rules after all those years in the job?).

Stephen Barclay MPO accused Jack of misusing confidentiality rules to "cover up his own mistakes".

Jack admitted that he had not sought legal advice before settling the case with Goldman, based on the view that HMRC could not pursue it because of the technicality.

Mr Barclay retorted that it "sounded like" he had "cut a deal and didn't tell anyone".

Jack blustered that there was "far more" to the case than had been discussed, but it could only be revealed in a confidential session.

Aha!

The whole case seemed "very odd", said Mr Barclay.

Quite!

Enjoy watching Jack's encore performance via this link Jack's Back.

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"

HMRC Not In A Great Place - The Pride and The Passion

My thanks to a loyal reader who sent me a hand typed copy of the latest HMRC intranet posting. This one covers the recent evidence given by HMRC senior staff to the Treasury Select Committee.

Here it is as sent to me, if there are minor errors/omissions please let me know and I will correct them:

"HMRC's senior team have given evidence covering the whole range of HMRC's work to a committee of MP's

Contact centre performance, morale and engagement, PAYE and tax settlements with big business all featured in the Treasury Select Committee meeting yesterday afternoon.

Chief executive Lesley Straithie, non-executive chairman Mike Clasper, permanent secretary for tax Dave Hartnett and chief finance officer Simon Bowles all took part in the three-hour hearing.

They agreed with the committee that HMRC has to do a better on both customer service, especially call waiting times, and staff engagement.

Lesley told the committee: "I want to make a plug for our staff here - the great thing we have to build on in HMRC is their pride and passion in their work and their determination to provide good service for their customers".

She said the Department needed to "paint a picture of hope" - especially around skills and career development, something which had come out strongly in discussions with the trade unions.

She added: "I really do believe that people need to understand just how committed and passionate our people are in their work - even if they think HMRC hasn't always helped them do it".

When it came to customer service, the team told the committee that it was unlikely to improve radically until PAYE had been stabilised.

The problems experienced with PAYE and the knock-on effects on HMRC's call centres and customer service were, they stressed, the result of working across eight years in the current year, following the introduction of the National Insurance and PAYE Service (NPS)
___________________________________________________________________________________________________

[...the great thing we have to build on in HMRC is [our staff's] pride and passion in the work... Lelsey Strathie]

The backlog of open cases will be cleared by the end of 2012 and the Department will be in a "much stronger position" by 2013 and "stronger again" in 2014.

Meanwhile, accuracy for the current annual coding cycle is at 97 percent - up from 80 per cent last year. However, they cautioned there would inevitably be "ups and downs" despite the steady improvement.

The work being done to manage demand in contact centres is a key part of this - especially encouraging people to use online services instead of making unnecessary calls.

Lesley added: "The satisfaction level when you speak to our staff is very high. People speak very highly of contact centre agents when they get to speak to them."

While the aim is to provide a high-quality telephone service for those who want it, the future will involve more outreach work, home visits to the elderly and more on the internet.

The team also told the committee about the changes taking place within the Department, including the work to improve leadership and revealed they will cut the number of layers from 13 to either seven or eight.

Discussion also focused on the £917m of reinvestment to focus on avoidance, evasion and criminal attack, which will bring in an extra £7bn by 2015. When this target is met, they argued, there would be a case for going back to the Treasury with business cases to ask for further investment.

Despite the challenges the Department has faced, they stressed the compliance yield had risen significantly - by more than £5bn in four years.

Settlements with big business were also discussed, especially the Vodafone case and Dave Hartnett gave a forensic analysis showing why the much-quoted £6bn liability was an "absurd figure which no serious or reputable tax specialist would support".

More information

A full transcript of the meeting, which covered many other topics, will be published on the HMRC intranet as soon as it is available."

The HMRC Intranet article appears to have missed some "nuances", as per media reports elsewhere, Mike Clasper told the Treasury select committee that he was not happy about the level of service that HMRC had been providing.

Clasper is quoted by Accountancy Age:

"I think there will be a period of steady improvement.

We're not going to be in a great place until 2013 and we'll be stronger again in 2014."

He admitted that employees were disenchanted with the work itself and that the civil service "does not like change or manage change well" and HMRC "has not given people that need to make change the tools they need".

Dame Leslie Strathie apologised to customers (taxpayers) for poor service.

Well then, over to HMRC staff now for their thoughts and comments.

Tax does have to be taxing.

UK EXPATS: Reduce tax on UK Pensions
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What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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