The Dynamic Duo's Trip To India

In December I asked the following two questions:

"Why did Dave Hartnett, Permanent Secretary for Tax, fly business class to Mumbai at the beginning of December with Melissa Tatton (HMRC's Deputy Director of Business International) to participate in a third rate talking shop for Indian accountants and tax officials?

The four nights they spent in rooms on the executive floor of the five-star ITC Maratha Hotel in Mumbai would doubtless have been bearable, but was their trip really necessary?"

The Mail has come up with a few answers:

It seem that the trip cost us (the taxpayers) £8,400, and that for this outlay Hartnett and Tatton delivered a 35 minute speech.

Have they never heard of video conferencing?

I am quite amused that HMRC, inadvertently, belittle Tatton by noting she is not senior enough to publish her expenses (why did she go with Hartnett then if she is not senior enough?):

"The expenses of senior civil servants such as Mr Hartnett are published routinely every three months. Melissa Tatton is not senior enough for us to have to publish those, so we cannot comment on individuals' expenses."

It seems that when this was subject to media scrutiny in December, HMRC told the media that the cost of the dynamic duo's trip was under £6,000.

Not very good with numbers are they?

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"

Self Absolution

Taxation recently published this letter from a disgruntled taxpayer and tax professional, re HMRC's handling of taxpayers' affairs.

As the letter notes:

"HMRC are allowed to absolve themselves from any responsibility when they make mistakes..."

I thought only a priest could do that?

Here is the letter in full:

"From: Lesley Rance

To: Pete Wishart, MP for Perth and North Perthshire

Mr Wishart,

I would like to add my voice to those of my fellow tax professionals regarding the delays being experienced by agents in dealing with their client’s tax affairs.

Mike Truman, the editor of our professional publication, Taxation, put three questions to Exchequer Secretary David Gauke MP at last November’s ICAEW Tax Faculty Hardman lecture.

To date, no answers have been forthcoming, and Mr Truman has sent an open letter, published in Taxation and a copy of which I enclose for your reference, seeking a response.

Agents are being asked to write to their MPs to lobby Mr Gauke, hence my letter to you now.

The delays currently being experienced in dealing with HM Revenue & Customs are widespread and increasing and a far from satisfactory service is being provided to taxpayers and their agents.

I have many years' tax experience and, although there have always been instances of delays and errors, matters have gotten much worse in recent times.

The open letter gives a flavour of the problems being experienced by agents, myself included.

However, I don’t just have one example of each of these, I have several:

•HMRC not responding at all to letters and having to send reminders.

•Being advised they have no trace of my letter too many times to count now, and having to send duplicates.

•Being told when sending duplicate tax forms that these will not be given any priority but will go back to the end of the queue and dealt with in strict post order.

•HMRC choosing to respond to only one point raised in letters, thereby necessitating further correspondence to resolve other issues.

•HMRC writing back to ask for a National Insurance number as they could not trace the taxpayer we were writing about, despite our letter having repeated the reference given by them on their previous letter. What’s the purpose of their reference if they cannot trace a particular taxpayer from it?

•Receiving a letter from an office other than the one to whom I have written or other than the taxpayer’s own office. The worst so far is an involvement with four different offices: not so much a case of the right hand not knowing what the left hand is doing but rather, the right and left feet are involved as well, and they don’t have a clue what’s going on either. It used to be the case than an agent would receive a notice advising that the taxpayers records are being dealt with at another office, but that seems to have gone by the wayside.

•Having to continually chase for reminders because 28 days have gone by without any response. Contact by telephone is, for the most part, a waste of time, usually because the person on the other end doesn’t have the papers in front of them or doesn’t have the technical expertise to answer the query. And yes, I’m including in that the dedicated agent helpline, which is supposedly manned by more experienced staff.

•Being told by HMRC that they do not have the mandate 64-8 recorded on their system, when it must be quite obvious from all the correspondence that has already passed between us that we act for the taxpayer. Yes, I know they have to comply with the law, but when it's simply down to them not having updated their systems, it’s the most frustrating experience.

•Being told on the phone that the matter would be passed to someone else to deal with who would be in touch in a few days, and not being contacted.

•Being told that a repayment will be issued sent out within ten days, chasing when it isn’t, and again being told it would be issued within ten days.

The system places the onus for getting things correct wholly at the taxpayer's feet, and HMRC are allowed to absolve themselves from any responsibility when they make mistakes.

Most people have very little awareness of how tax works so. For example, issuing a PAYE coding notice and asking the taxpayer to contact them if they do not think it is correct, is just asking for trouble.

No other profession is able to shift the burden in quite that way. A doctor wouldn’t give you a prescription and leave it up to you to decide whether it was the correct medication or not.

In addition to delays in dealing with matters, I have seen a significant increase in the mistakes being made by HMRC, leading to both under- and over-stated tax. I have to then analyse why their calculation is wrong and write back to them explaining what they should do to correct it.

The errors are, very frequently, extremely basic. I have one at the moment in which, instead of showing the tax deducted from bank interest in the 'tax paid' column, the calculation included the net interest figure.

Why that wasn’t immediately spotted I have no idea, but it resulted in the client being over-refunded the sum of £270. That was HMRC’s third attempt at the calculation.

All the information they required to properly assess the position had been given to them, but they failed to do it three times and yet the onus is on the taxpayer to check that it is correct.

How far does a taxpayer have to go to comply with their obligations? If we’ve tried three times to get them to get it right, do we have to continue until they do?

In this case, its not economical for the client given the delays and costs involved and, in fact, the client has told me to do nothing more.

I would think, however, that if HMRC ever discover the error and seek reimbursement, the client has very strong grounds for arguing against having to repay it.

I daresay you may already have been contacted by other local agents on this subject.

I sincerely hope that you will appreciate the importance of what we all have to say, and that you will, therefore, write to Mr Gauke seeking a response to the questions raised by Mr Truman.

Yours sincerely,

Lesley Rance, Miller Hendry, Perth"

Sound familiar?

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"

Debt Collection Issues

My thanks to a loyal reader who recently wrote to me about the problems she has encountered when dealing with HMRC's debt collection department.

"I've seen your blog and wonder if anyone else has had the problem of allegedly unreceived VAT 7 forms?

My husband's earnings dropped well below the VAT threshold for several years and last March or April he completed the VAT 7 and sent it off. He heard nothing and of course, you've guessed the rest, since then, he's had escalating demands of speculative VAT they've decided he owes.

There have been numerous calls from us, from our accountant and each time we get a different story but they always say they can't trace having received the VAT7.

We complained to the Debt management unit at Shipley and he also sent a letter to them confirming his turnover at way below the limit and they date from which he wished to de-register.

He also got his accountant to send in yet another VAT7, with a covering letter in December.

In February, the complaint was responded to but on the basis that the recorded delivery VAT7 could not be traced and although the fake debt pursuance had been put on hold, the threatening letters would still come out if the VAT 7 was not received.

During one of the phone calls, someone at the Debt Recovery unit told me it didn't make any difference if you sent things recorded delivery, they could still maintain all they'd received was something, and not necessarily the document in question.

Where we are now is that since we had the complaint response on Thursday saying the matter was in abeyance, we got a letter on Friday from the debt unit in Benton saying they're going to instruct solicitors to collect this bogus debt.

I've sent a response by recorded delivery, both to the complaints manager and to whoever the anonymous person was in Benton saying that if we hear anything from a debt recovery agency, we'll institute a counter claim and will treat it as harassment.

Basically, even if this shower of shit can't find the various VAT7 forms, they do have my husband's letter in which he gives them all the relevant information. This formed part of his complaint but those people didn't pass it on to the de-registration unit on the basis, I was told that it's not their job. I took the precaution of sending it by recorded delivery and am doing so with all future correspondence.

I mean, this is it in a nutshell and the bottom line is that my husband has only tried to de-register and has had a barrel full of abuse and harassment. He's 69, has heart failure and diabetes. They know all this. I've sent a letter to my MP today but doubtless it will go on the pile and nothing will come of it. I've got the correspondence and am waiting for the accountant to let me have the audit trail of the what/when that he's done over the past year.

When are we going to get some sort of organisation together that fights back?

Individuals are powerless and it's about time we got some publicity for successful prosecutions against HMRC. My husband's case isn't about an error of coding - this is about incompetence and the fact that he owes them nothing but they still hound him relentlessly. It's positively Kafka-esque.

Tax does have to be taxing.

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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"

A Hammer To Crack A Nut

HMRC have started writing to 900 tax evaders, telling them that they are "on probation".

HMRC will make unannounced visits to the premises of those notified, carry out checks on their suppliers and customers and deny them access to simplified tax-filing procedures and processes for a period of up to five years.

Fair enough, until you see that the financial threshold for this has been set at a mere £5K (hardly a huge amount if the business is relatively large); and that HMRC are judge and jury when determining as to whether the "error" was deliberate (evasion), or simply an honest mistake.

Even Richard Murphy is not overly impressed, the Guardian states that he thought the plan was a good idea but poorly executed:

"I am quite concerned that the level of error is fairly low at £5,000. People can make honest mistakes."

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"

The Hail Mary Response

Last week I wrote that the "Grande Dame" (Lesley Strathie) had apparently talked up the recently published Civil Service People Survey 2010 (in which HMRC came 103rd out of 103).

My thanks to a loyal reader who has taken the time and trouble to make a transcript of the "Grande Dame's" pep talk. I understand that this has been typed from the script as it appears in the HMRC intranet, therefore there may be a few small errors and omissions. However, I am sure that you will all get the underlying message!

"Message from Leslie Straithie Improving Our People Survey Results

There's no question we have to improve our People Survey results.

Overall engagement was the lowest of the 103 organisations surveyed and all on the senior team take responsibility.

Tempting to think nothing can be done short term. People point to pay freezes and staff cuts insist we can't turn things around while this is happening.

Yet our highest performing teams show it can be done, Benefits & Credits we have front line operational teams whose scores have jumped over 20%.

These are fantastic results we can learn from them.

In the summer I set out what we were doing to start turning things round. Every HMRC leader now has to publish the 3 leadership behaviours they want to improve personally.

Frontline people have taken part in focus groups to examine what you expect from us as an employer (and what we can expect from you in return), we are currently looking at the HR policies and procedures we need to change.

Where our people survey have improved - and we've seen good results in parts of Information Management Services there are 4 common themes:

Pacesetter - People don't want to hear about changes they want to be part of the solution. Fundamentally it is about solving problems the 3 C's process is about making sure issues can be raised escalated and dealt with not simply ignored.

In 2009/2010 B&C adopted 75 staff ideas under Pacesetter Change Control Process this year they have taken up over 230. What's more leadership visibility scores in Pacesetter areas are an average 10 higher.

Communication - essential- especially where it involves line management. High performing teams use face to face briefings whenever possible and don't rely on intranet, newsletters or emails (Editor's note: Does that ,mean that HMRC - which does rely on emails and intranet - is not high performing?)

We have seen this in IMS with their fortnightly briefings and seen how these teams score higher where managers explain how their work fits into HMRC's overall strategy.

Good Line Managers - The manager is crucial especially when it comes to day to day issues that really affect morale and performance.

Not all of these issues will be within their gift but we have seen excellent results where they have listened (Editor's note: this implies that some line managers do not listen), fed back concerns and taken action.

CaM and B&C Ops have developed something called The Link Model to help managers do this. Last year just 20% of B&C believed action would be taken as a result of the survey, this year it was 42%.

Excellent managers tackle things that damage morale like poor performance, and take early and decisive action on sickness absence.

High scoring teams reward good work either through the Simply Thanks scheme, similar local initiative or celebrate it at special events.

Strong Leadership - Visible credible leadership is characteristic of high performing teams and a key part of our leadership behaviours. The most successful managers even have staff engagement built into their PDE's.

We expect them to talk openly and honestly about what's taking place in HMRC (key part of Change Programme) This is something we will measure them against.

Finally you said you wanted to see action so every month Pulse magazine will include a new Listening, Acting, Improving section setting out the changes large and small we make that month.

I firmly believe we can build a Department we can all be proud of. Its a big challenge and I want to thank the high performing teams who prove it can be done."

Well, from my perspective as an outsider, there is a lot of management consultant jargon in this "Hail Mary" plea for faith in the future. However, I would like to ask those who actually work in HMRC:

1 Do you believe that she is sincere in the above, in that she really believes that things can/will improve?

2 Are the tactics she refers to above really being rolled out across all of HMRC?

3 If these tactics are actually being rolled out, are they actually working and helping improve performance and morale?

4 What really needs to be done?

5 As a member of staff of HMRC, what was your genuine feeling about the Strathie response to the survey?

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"

The One Way Street

My thanks to a loyal reader who sent me the following examples (I have redacted certain details) about communication delays when dealing with HMRC:

"I wrote to the correct tax office in May 2010 to request a tax refund, enclosing P45/P60 details to support my simple calculation £** overpayment. Cheque received yesterday, 8 months later. No interest and had to be chased twice in writing.

I am chasing a VAT overpayment of over £**K for a client. Has to be reduced to £**K as only 4 years can be allowed (HMRC can go back 6 I believe). This is a corner shop. £**K is 2 years entire net profit. Why?

Letter with correct VAT sent 5 Dec 2010. HMRC is currently (as of this morning) reading the post from last week of November. Why?

I am working with Tribunal service for a client charged with penalties of £*K for three missing CIS returns. He earns £*K a year. HMRC supposed to have 42 days to respond to me and Tribunal. Have so far been allowed 150 days. My clients haven't slept for 4 months. Why?

Client been given 7 days by Debt Enforcement office to avoid seizing of assets. Investigation so far shows HMRC has 'lost' all payments made in 2008 and 2009; that it has no record of the telephone time to pay agreement and has also lost the P35s sent twice by recorded delivery. My 64-8 from August 2010 also not processed or lost. (along with 3 or 4 other 64-8s)

I only have 50 clients and these are four different ones I am dealing with this month alone...."

It does seem to be rather a "one way" street when communicating with HMRC, in that the taxpayer gets jumped on if he/she misses a deadline but not vice versa.

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"