Snowed Under

In keeping with the season, the FT reports that HMRC is snowed under with claims for tax repayments from companies.

Seemingly, businesses are waiting twice as long for corporation tax rebates from HMRC than they were a year ago.

Waiting times of a month (in comparison with 14 days last year) are now common.

The problem arises because the recession has increased the number of claims for rebates, which HMRC simply doesn't have the resources to handle in a timely manner.

Self assessment rebates for individuals are processed automatically. However, business rebates are processed manually.

Doubtless there will be those who argue (as they have done before) that if returns were input by businesses earlier in the year, the backlog would be lessened.

That is not unreasonable, up to a point. However, it should be remembered that the businesses are trying to drum up business and continue in operations; their time and energy are focused on that. HMRC's role is to make tax administration/payment etc simple, efficient and as least time consuming as possible.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

HMRC's Coding Enigma

It seems that HMRC's shiny new NIC & PAYE system (NPS), heralded as a major step forward by HMRC, isn't working terribly well.

What government managed IT project ever works "terribly well"? (Delete the word "well" from the previous phrase and you have the reality).

For reasons that only a computer would know, the HMRC database has "misplaced/lost" the information it is meant to contain about people leaving jobs.

The result?

The system is combining taxpayers' current employment records with old data, thus creating additional wealth and income which doesn't exist. This causes the system to calculate incorrect personal allowances and thus issue incorrect tax codes (which are of course used by employers to deduct tax).

How many people is this screw up affecting?

HMRC is issuing approximately 25 million tax coding notices this year, that is double the amount issued in the previous year. Therefore, it is not unreasonable to assume that several million taxpayers may be adversely affected by this.

Taxpayers need to be more than vigilant this year, when they receive their coding notices, and ensure that where there is an error that they notify HMRC immediately.

Quite how long it will take HMRC to rectify these errors remains to be seen.

Enigma - Sadeness

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Information

My thanks to a loyal reader who nudged me to take a look at the evidence given to the Public Accounts Committee on 7th December 2009 by HMRC.

Question 38 appears to indicate that HMRC have committed something of a "faux pas", by issuing assessments to the wrong accountants; ie they have sent details of some people's income etc to accountants not authorised to receive it.

Isn't disclosure of such information to non authorised people "illegal" under the rules of HMRC? It certainly appears to be breach of the Data Protection Act.

"Q38 Mr Bacon: Ms Walker, you mentioned the issue of confidentiality. Is it correct - I have got your CV here but I am not sure I am reading the right bit - that you are currently, since October 2008, the Director of PAYE, Self Assessment and National Insurance?

Ms Walker: That is right.

Q39 Mr Bacon: Good. On the National Insurance and PAYE service, the NPS section of the HMRC website, there is a reference under current issues to some notices and statements having been sent to the wrong agents. I will just read the first sentence. It says: "Even though HMRC's self assessment and PAYE systems are showing the correct details some notices and statements have been issued incorrectly to the wrong agent", by which one presumably means in most cases a tax accountant or something like that. How many cases?

Ms Walker: I do not have those figures with me I am afraid.

Q40 Mr Bacon: You do not. Over what period has this been going on?

Ms Walker: It happened over a period in the summer. It has now been fixed as I understand it.

Q41 Mr Bacon: It says on the website - you have anticipated one of my later questions - that "HMRC is due to put a fix in place in December 2009". That has now happened, has it?

Ms Walker: I believe it has.

Q42 Mr Bacon: When you say "over the summer", when did it start?

Ms Walker: The new PAYE system went live at the end of June.

Q43 Mr Bacon: Right, and this breach, data being sent to the wrong people, occurred starting at what point?

Ms Walker: I do not know the details of that; I know it was something that happened in the summer.

Q44 Mr Bacon: Could you write to the Committee with a note explaining that?

Ms Walker: I will do, yes.

Q45 Mr Bacon: Have you had any discussions with the Information Commissioner about this or anyone in HMRC because it would be appear to be an obvious breach of one of the principles of data protection, which is that information must be securely kept.

Ms Walker: We have taken advice on that; I would need to write to you and tell you the total answer.

Mr Bacon: You have not talked to the Information Commissioner or you do not know if anyone has talked to the Information Commissioner. You have put on your website - which is what I find extraordinary, especially after the issues with the HMRC and the National Audit Office where, famously, 25 million names went missing - that you have been sending notices and statements out to the wrong people. You have admitted the breach on your website but you do not know whether you have had any discussions with the Information Commissioner.

Q46 Chairman: What is the answer? Do not just all shake your head, either say yes or no.

Ms Strathie: We have taken this in a different context. What you have read, I am assuming, Mr Bacon, is the known problems that we keep updating so that agents and so on know what we are working on and what we are fixing. We owe the Committee a note and we will explain the Information Commissioner point in that.

Q47 Mr Bacon: You are quite right, there are issues that have been resolved and there are current issues. This one is under "Current issues" which suggests that it has not yet been resolved.

Ms Strathie: Yes, and we are just into December, so we will confirm that.

Q48 Mr Bacon: What is the difference between sending a notice to someone who has no right to know it, that informs them, say, that Mrs Smith of Middlesbrough or Mr Jones of Cornwall is on the verge of retirement and T-Mobile sending out information or using the information that they have no right to, to phone people up and say, "Your mobile phone contract is about to expire"? This information can easily be misused by people to do marketing that they have no right to do. You can easily imagine phone calls where people would say, "Hello Mrs Smith, now that you are about to retire ..." and start selling them products. This is potentially an extremely serious breach.

Ms Walker: This is not about information about people who are about to retire as I understand it.

Q49 Mr Bacon: It does not say what it is about but some of them may be in that category, we do not know. If someone is aged 64 then presumably they are about to retire, if they are 53 they are probably less likely to.

Ms Walker: Yes, but that will not be obvious from the information that was sent out.

Q50 Mr Bacon: It might if their date of birth was there.

Ms Walker: I believe these were notices of coding which were sent to the agent when they did not have the correct authority to receive them.

Q51 Mr Bacon: It says they were sent to the wrong agent, had been issued incorrectly to the wrong agent so Mr Smith's tax accountant in Cornwall gets sent something that should have been sent to Mrs Smith's tax accountant in Middlesbrough. That is what it reads like to me. Are you saying that is not the case, that I have misunderstood it?

Ms Walker: I would need to be properly briefed on that. I am sorry, I have not got the details with me.

Q52 Mr Bacon: Perhaps you could send the Committee a detailed note.

Ms Walker: Yes, indeed.

Q53 Chairman: I did not hear that last answer; what did you say?

Ms Walker: I am sorry, I said I do not have the information with me."

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

Our Man In Washington

Despite the comments on this site, and the results of staff surveys, not everyone in HMRC loathes their job.

It is refreshing to see that Dave Hartnett is like a veritable "pig in shit" when it comes to his role of "opening up" countries to HMRC inspections, and acting as the UK's envoy in Washington next week at a gathering of tax commissioners.

He is quoted in Accountancy Age:

"Nations are now working together to deal with this issue.

What [HMRC] would really like to do is open up Switzerland.

The UK and many other governments are determined to crush tax evasion through offshore accounts and I think that's what will happen. Otherwise he may find himself posted to places that are less salubrious than Washington.

There are some countries who are resistant.

One or two tax havens would like to be back on an OECD blacklist so they can hoover up money from other people who still want to hide it."

Hartnett doesn't like countries who believe in banking and tax secrecy, adding:

"They believe that a country like the UK should have a major amnesty – not just a disclosure regime – where we forgive [unpaid] taxes and use that to make disclosures, which I don't think the UK is going to do."

Such ambition!

He bestrides the world of tax, like a veritable colossus!

Let us trust that he has not promised his bankrupt masters in Downing Street more than he (and HMRC) can actually/realistically deliver in his/their lifetimes.

Hubris is such an unforgiving mistress!

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

HMRC Tells Farmers To Grit Off!

The recent snowy weather produced something of a contra temps between HMRC and some members of the farming community.

HMRC told the National Farmers Union not to use the lower-tax fuel when gritting.

Under current rules farmers can only grit roads if using tractors powered by white diesel (which is fully-taxed).

Red diesel can only be used in tractors on farmers' own farm tracks, or on public roads to clear routes of snow to allow feed deliveries or milk collections.

However, when a farmer intends to use grit on a clear road as a preventative measure he must use white diesel (ie drain his tank of red first and replace it with white).

Fair enough under normal circumstances.

However, during the coldest snap in thirty years or so do you not think that some common sense could have been applied and the rule temporarily put into abeyance?

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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

IT Matters

As the online filing deadline of 31 January looms ever larger on the horizon, some taxpayers and their agents who file online are experiencing the traditional January technical hiccup in online services provided by HMRC.

Silicon.com reports that HMRC has received about 300 complaints from people who have been unable to view their tax information after logging into their HMRC account.

They report being unable to view their previous years' self-assessments and tax returns. This means that certain details, required for completion of this year's returns, need to be requested from HMRC in hard copy form.

All very well if the deadline was not quite so close. However, HMRC have stated that there will be delays in sending out hard copies because the tax offices (not unreasonably) are busy at this time of year.

HMRC are quoted:

"If anyone is unable to file on time because HMRC was unable to provide them with the information they need we would consider a claim that they had a reasonable excuse for not filing on time."

HMRC went on to state that it is working with Capgemini (its IT supplier) to fix the problems, which have been going on for a month.

Are there any other ongoing problems with the system? Feel free to share.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

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

To find out more, please use this link Taxwise

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

Click the link to read about: Tax Investigation for Dummies

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