HMRC Is Shite

Thursday, 4 October 2012

Query From A Loyal Reader

A loyal reader sent me the following query today, regarding a disagreement that he is having with HMRC over the validity or otherwise of an EC VAT number.

Any thoughts comments on what he should do would be most welcome.

Thanks.

"HMRC told me I was using the wrong EC VAT no.

They complained about an EC VAT no of a German client whose VAT ID they couldn't identify.

So I checked at least 4 times: No mistake on my site.

I contacted my client and told him that maybe presented the wrong no.

NO!

He has only this one and he furnished proof by producing the VAT no. assignment letter from the German tax authority.

Despite having brought this to HMRC's attention, they still state that I am using wrong EC VAT no. and threaten me with a penalty for not correcting the ECSL!

How should I correct something that isn't wrong at all??????

So I find myself at present a little bit lost in this kind of "logic" as I don't know were I went wrong!

Any advice is much appreciated!"

Tax does have to be taxing.

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Help!

HMRC have invited SME's to sign up to an email list that, in theory, will provide them with emails that offer them help and support.

HMRC require those who sign up to provide their:

- name
- email address
- phone number

Additionally, those who wish to sign up will have to answer the following questions:

"To help us ensure our services are meeting your needs, would you please consider the following two statements. We are asking you to provide this information for research purposes only and your answers will not be linked to your HMRC record in any way. There is no right or wrong answer, we would just like to know what you think.

Thinking about you and your business, how much do you disagree or agree with the following two statements, on a scale of 1 to 9 where 1 is 'Completely disagree' and 9 is 'Completely agree'.

Statement 1 - I understand what my business has to do to meet its obligations to HMRC.

Enter a number from 1 to 9:*

Statement 2 - My business often needs help understanding official forms

Enter a number from 1 to 9:*

Please tick ONE checkbox for each of the following two questions.
From time to time HMRC conducts research to help us understand how we can improve the support we provide to businesses. Would you be willing to take part in research conducted by HMRC?

Yes, I would be willing to take part in research

No, I wouldn’t be willing to take part in research

Would you be willing for HMRC to pass your email address to an approved research agency for the purpose of them conducting research on behalf of HMRC?

Yes, my email can be passed to a research agency

No, my email can’t be passed to a research agency"

Here is the text of the press release from HMRC:

"Small and medium-sized firms are being invited by HM Revenue and Customs (HMRC) to sign up to receive regular emails giving help and support.

The new service, aimed at small and medium enterprises (SMEs), is chiefly for people who are new to business, either setting up or expanding.

Colin Ford, HMRC’s Head of SME Education Design, said:

“Starting and running a business is challenging and HMRC recognises that its customers sometimes need help to understand their tax affairs.

“Signing up is a simple process. We do not ask for any personal information beyond a name, e-mail address and phone number.

“At a time when businesses need all the help they can get, HMRC is keen to do everything possible to ensure SMEs have the information they need to make their tax affairs as smooth as possible.”

Once a customer signs up, the business will receive about six emails signposting a range of help. The advice available includes videos, interactive tools, factsheets and online presentations or webinars.

The help is tailored to the level that the customer indicates they need and their likely cycle of tax obligations. The email service will not be able to provide answers to specific questions from the signed up companies.

To sign up for the email service, SMEs can go to http://bit.ly/NQuvEw"

Tax does have to be taxing.

Wednesday, 3 October 2012

HMRC Senior Managers Jumping Ship

Despite the ongoing PR spin coming forth from the HMRC bunker that all is well, and that things are improving, reality appears not to be quite so rosy.

UHY Hacker Young report that the number of resignations by senior managers at HMRC has ‘jumped sharply’ during the year to 31 March 2012, increasing by 45% when compared to the previous year.

Despite the fact that HMRC desperately needs to retain experienced professionals (especially during a time of massive upheaval and change), 42 senior managers resigned during this period.

Roy Maugham, tax partner, is quoted by Tax Journal:

"The loss of senior management from HMRC could impact many others in the organisation too.

It’s important for HMRC to hang on to its most experienced staff and their in-depth technical skills. With big cuts to staffing numbers and a sharp increase in resignations, there are a lot of skills walking out of the door at HMRC."

HMRC appear not to be worried, their spokesperson said:

"Overall, resignations at HMRC have fallen over the last four years and, in a department of around 68,000 staff, it is inevitable that some will decide to leave or retire.

HMRC is committed to providing stability and good service to our customers. We have already increased the accuracy of tax codes to 98%, announced the recruitment of an extra 1,000 people to answer the phones, and increased tax yield year-on-year."

There is of course a solution, albeit an expensive one. In the private sector when people retire or are made redundant, many invariably come back as consultants (at a higher rate of pay and cost).

How can this be, if the redundancies were made to reduce headcount?

Simples....consultants don't appear on the headcount!

Tax does have to be taxing.

Tuesday, 2 October 2012

RTI Resources

Resources to help you understand Real Time Information (RTI), the automated HMRC process to collect payroll and tax details as wages and salary payments are made.

In theory it will eliminate annual reconciliations and end-of-year forms such as P14s and P35s.

All schemes/employers with less than 5,000 employees will start to submit RTI in April 2013; those with 5,000 employees or more will start to submit RTI on dates agreed with HMRC between June and Sept 2013.

As per HMRC:

"The move to reporting information in real time is the biggest change to the operation of PAYE in over 60 years.

Under real time reporting, employers and pension providers – or agents, payroll bureaux and other intermediaries acting on their behalf – will send us information about tax, National Insurance Contributions (NICs), student loans and other deductions each time they pay their employees. This will enable HMRC to keep more accurate records and, over time, more people will pay the correct tax.

So what are the essential facts you need to know?
• Migration to reporting PAYE information in real time is mandatory
• Most employers and pension providers will move to reporting PAYE information in real time from April 2013
• We will write to you
– in October to tell you what you need to do to get ready
– in February to confirm the date from which you should start reporting PAYE information in real time
• Most employers already send PAYE information electronically and information reported in real time will also be sent online. Your payroll software will collect the necessary information and send it to HMRC online
• You need to consider your options for payroll. A wide range of commercial software designed for real time reporting will be available from April 2013 to suit employers’ and pension providers’ individual requirements, including some free products. HMRC’s Basic PAYE Tools will also be available for employers who have nine or fewer employees. You can get more information about this at www.hmrc.gov.uk/paye/intro/payroll-system.htm
• You will need to include information in your RTI submissions about all employees
• We will no longer require the end-of-year Employer Annual Return forms P35 and P14, and you won’t need to send forms P45 and P46 to us; instead you will include this information with the information reported in real time
• Employers making payments to their employees by Bacs, using their own service user number, will need to include a cross-reference in the RTI data submission and their Bacs payment instruction, see Getting ready to operate PAYE in real time.

What will not change?
• The way tax and National Insurance contributions are calculated will not change
• You will still need to give employees certificates of tax and NICs paid – form P60
• You will still need to send expenses and benefits returns (P11D and P9D) annually
• The dates by which you must pay HMRC stay the same."

Here are some useful links:

Articles on this site about RTI
HMRC RTI homepage
HMRC FAQs
HMRC Data Quality homepage
HMRC RTI webinar - how payroll alignment works
Real Time Information - What it Means for Employers
Operating PAYE in Real Time

Tax does have to be taxing.

The Joy of Affluence

Much has been made by some, eg Danny "Beaker" Alexander, about the expansion of HMRC's "Affluent Unit" (the team set up in October 2011 that targets tax evasion by "wealthy" people - those worth more than £1M).

Beaker said the other week that an extra 100 inspectors and specialists will be recruited to scrutinise the tax affairs of the 500,000 wealthiest people in the country.

That's all very nice and dandy, maybe.

However, please could someone explain to me why HMRC also has another unit that also focuses on "wealthy" people?

HMRC's "High Net Worth Unit" focuses on people with assets of more than £20M.

Why does HMRC need two units?

Does this mean that the Affluent Unit doesn't look at tax evasion by those worth more than £20M?

Why are they not merged into one; thus saving time, money, resources and confusion?

Comments and views welcome, as always.

Tax does have to be taxing.

Monday, 1 October 2012

HMRC Paper Tax Return October Deadline

Just to remind everyone that the end of October is the deadline for those who file their tax returns in hard copy (ie paper).

HMRC has issued a reminder that if your paper tax return arrives even one day late (and even if there is no tax to pay, or the tax due is paid on time) a fine of £100 will still be levied (easy money, what was I saying the other day about penalty farming?):

"HM Revenue & Customs (HMRC) is reminding anyone sending their 2011/12 tax return on paper that they need to do so by the 31 October deadline, if they want to avoid a penalty.

Paper tax returns received on or after 1 November will result in a £100 penalty – even if there is no tax to pay or the tax due is paid on time.

If you’re not able to submit a paper return by the end of the month, you can avoid a late-filing penalty by sending your return online by 31 January.

As well as having an extra three months to file, if you file online your tax is calculated automatically and your tax return is processed faster, so any money you’re owed is repaid more quickly. Registering for HMRC Online Services is simple – just go to www.hmrc.gov.uk/online

For general help and advice on completing your tax return, visit www.hmrc.gov.uk/sa or call the Self Assessment helpline on 0845 9000 444.

Notes for editors
1. Around 10.6m Self Assessment returns/notices to complete a tax return have been sent out by HMRC for the 2011/12 tax year.

2. The penalties for late Self Assessment returns are:

an initial £100 fixed penalty, which applies even if there is no tax to pay, or if the tax due is paid on time;

after 3 months, additional daily penalties of £10 per day, up to a maximum of £900;

after 6 months, a further penalty of 5% of the tax due or £300, whichever is greater; and

after 12 months, another 5% or £300 charge, whichever is greater.

3. There are also additional penalties for paying late of 5% of the tax unpaid at: 30 days; 6 months; and 12 months."

Tax does have to be taxing.