HMRC and The Tax System Exposes Taxpayers To Fraud

As loyal readers, and non readers, are aware the number of scams whereby the perpetrators claim to be HMRC are on the rise.

BBC Radio 5 Live's Wake Up to Money reported that cases had risen to about 85,000 a month now, compared with 70,000 on a typical month last year. These are cases when fraudsters contact potential victims via phone, text or email, claiming to be from HMRC, and often suggesting people are owed a tax refund or need to pay more.

 

Chas Roy-Chowdhury, who is head of taxation at ACCA, said that taxpayers (that's all of us) were the weak point in the battle against fraud. They should not be criticised, he said, as con artists were exploiting the lack of interaction with the authorities.


He is quoted by the BBC:

"The weakest link is the taxpayer. It is difficult to be too critical of the taxpayer and HMRC because many of the scammers are using the opaqueness of tax and our interactions or lack of with HMRC to steal the taxpayers money.

Most people are scared of HMRC and regardless of how fully up to date their tax affairs are will always, because of the opaqueness of tax, give HMRC the benefit of the doubt and think they have underpaid."

He suggested people checked that any correspondence with HMRC tied in with an individual's tax assessment.

He also urged people to look up the official HMRC phone numbers before calling, rather than assuming any number they were told was correct.

"It is a new world we live in when it comes to tax scams, don't be a victim and do your own due diligence. Just a few simple checks to avoid being taken for a ride."

He's being very polite, part of the weakness of the system that exposes taxpayers to fraudsters is the complexity of the tax system (so complex that even HMRC doesn't understand it), and the lousy systems and practises that HMRC operates that makes it all but impossible not to be afraid of it or to communicate meaningfully with it.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

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

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

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

What is Solar Tax Investigation Insurance?

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

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



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

HMRC's Enquiry That "Drifted Along Aimlessly".

The FTT is unimpressed with the "progress" of an HMRC enquiry that the FTT stated "drifted along aimlessly" and, unsurprisingly, has ordered it closed.

Patel v HMRC [2018] UKFTT 0561 (TC)

Background

Mr Patel (the taxpayer) is a chartered accountant who incorporated his practice to become Ashley King Ltd (the company). The company was charged a fee under a licence agreement for the use of the practice name, business contacts and web domains, the goodwill of which the taxpayer claimed was a personal asset.

The licence fee received under the licence agreement was declared on the taxpayer's self-assessment tax return as income. HMRC opened an enquiry into the taxpayer's 2014/15 tax return in late 2016, in relation to the licence fee and goodwill. The taxpayer provided HMRC with a copy of the licence agreement which explained the nature of the relationship and the payment terms.

HMRC suspected that the licensing arrangement was intended to avoid employer NICs and the matter was referred to various specialist teams within HMRC for advice over the course of the next 12 months.  

At no point did HMRC seek to enquire into the tax return of the company, despite HMRC considering that there could be charges to PAYE and employer NICs as a result of the licence fee arrangement.

The taxpayer made an official complaint, claiming that HMRC were ignoring the information he had provided and his technical arguments. He also informed HMRC that he would seek a direction from the FTT requiring HMRC to close its enquiry. HMRC sought further information from the taxpayer and some 21 months after the enquiry had been opened, issued an information notice to the taxpayer pursuant to paragraph 1, Schedule 36, Finance Act 2008.

The taxpayer considered that he had provided all relevant documents and information to HMRC and applied to the FTT for a direction requiring HMRC to issue a closure notice pursuant to section 28A, Taxes Management Act 1970.

FTT decision

The application was allowed.

HMRC argued that it had not concluded its enquiry in relation to the licensing of the goodwill. Its initial view was that the goodwill could not be personal, in which case the taxpayer would have no goodwill to licence. It was possible that the licence fee payments received from the company should be recharacterised as salary and it therefore required further information from the taxpayer in order to form a definitive view.

HMRC agreed at the hearing that the specialist teams from whom advice had been sought had not been provided with the full facts of the matter and when questioned by the judge, the HMRC enquiring officer confirmed that there was no investigation in respect of the company and that if Class 1 NICs were payable, it was the company, not the taxpayer, which would be liable to pay them. Additionally, if the licence fee payments were salary, then the company would be liable under the PAYE system and as such no amendments would be required to the taxpayer's return.

The FTT referred to Estate 4 Ltd v HMRC [2011] UKFTT 269 (TC) and concluded that HMRC's admission that no amendments could be made to the taxpayer's return settled the matter in his favour. There was no tax at risk since Class 1 NICs cannot be recovered from an employee. Additionally, it was not sensible for the enquiry to be kept open when there was no possibility of an enquiry into the company.

The FTT directed HMRC to issue a closure notice in respect of its enquiry into the taxpayer's tax return.

There it is folks as per this sentence:

"HMRC agreed at the hearing that the specialist teams from whom advice had been sought had not been provided with the full facts of the matter."

HMRC deliberately tries to rig the "game" in its favour when engaging with taxpayers by hiding data and information.

Do not trust HMRC to treat you fairly or honestly!

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

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

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

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

What is Solar Tax Investigation Insurance?

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

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



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

One Day HMRC Will Come For You!

Just received my first brown envelope from HMRC advising me that they think I am impacted by #2019LoanCharge at least I have been expecting it many people who get the letter will not be. #STOPtheLoanCharge

— Unjust Tax (@TaxUnjust) November 26, 2018

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

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

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

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

What is Solar Tax Investigation Insurance?

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

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



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

Lord Forsyth Sticking It To HMRC

Lord Forsyth of @LordsEconCom is obviously not amused at @HMRCgovuk’s half-answers and obfuscation.

What are HMRC hiding...?#HMRCShambleshttps://t.co/ydk9ZeOqfv pic.twitter.com/607IB3uFB5

— HMRC Victim #LoanChargeCostsLives (@HMRCVictim) November 26, 2018

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

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

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

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

What is Solar Tax Investigation Insurance?

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

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



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

2018 People Survey

Hi folks

I still have been unable to find a link to the results.

Please can someone point me in the right direction?

Thanks

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

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

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

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

What is Solar Tax Investigation Insurance?

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

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



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

MTD Is Bollocks!

"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

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

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

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

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

What is Solar Tax Investigation Insurance?

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

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



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