Complexity Costs

The long running issue with regard to tax credits being overpaid by HMRC to low income families, and the financial problems caused by demands for repayment are well documented and well known.

However, another group of people are now also being hit by HMRC errors. This time it is pensioners who are on the receiving ends of demands from HMRC for payments of underpaid tax, resulting from errors by HMRC.

This Is Money reports that almost half a million people with small pensions have had slipped under HMRC's radar, as a result of this they are now facing demands for hundreds of pounds of unpaid tax.

Former nurse Olive Mader, 65, faces a bill of almost £7,000 after drawing her state pension for the past five years. She continued working full-time until she was 65, but was not taxed on her state pension. She says she cannot afford to pay.

HMRC is supposed to send out P161 forms to people approaching state pension age. However, Paddy Millard from TaxHelp for Older People says these forms can be lost in the post or left on the mantelpiece because older people don't understand their importance.

The errors stem from a breakdown in communications between the Department for Work and Pensions and HMRC.

Failure to comply with the bureaucracy means that HMRC fails to apply the right tax code, and pensioners don't pay the full amount of tax.

In an perfect world, of course we should all check that the tax that we pay is correct. However, this is not a perfect world:

-People do not understand the complexity of the tax system

-Not every elderly retired person is as good with bureaucracy as those who are still working

Whilst the underpayments do need to be addressed, there is a funadamental problem with how HMRC "connects/communicates" with real people and with other government departments.

This is yet another example of how the complexity of the tax system is causing distress, errors and extra work/costs in trying to sort out the mess.

A spokesman for HMRC is quoted:

"We issue a form called a P161 to every pensioner for whom we receive notification from DWP that payment of state pension is about to start.

We are working with the DWP to explore ways of making the service to people approaching retirement more joined up."

Let us hope that they really do find and implement a "joined up" approach pdq.

It is a pity that Brown doesn't do "simple".

Tax does have to be taxing.

The New Statesman, Britain's leading political magazine is delighted to announce that HMRC Is Shite has been nominated for a New Media Award in the category of Campaign For Change. The campaign for change award will go to the individual or organisation that has most effectively influenced opinions and behaviour through the use of new media technology. The winner of this award will champion a cause and provide information and tools to instigate change.

The full press release can be downloaded here.

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"

Hanging On The Telephone

The consumer magazine Which? has named and shamed over 30 organisations that are using 0870 or 0845 customer-service numbers to profit from their callers.

Which? is calling for all companies to switch their helplines and technical support lines from expensive numbers to cheaper 03, 0800 or geographic numbers.

Which? said a 10-minute call from a BT landline to a normal geographic line costs about 40p at most while the same call to 0845 number could cost up to 60p (50% higher).

I looked at the list, and saw that HMRC does not feature on it.

Great!

Unfortunately this appears to be an omission on the part of Which?, as all the documentation that I have from HMRC gives 0845 numbers for phone queries (as indeed does the HMRC website).

Maybe the call costs are tax deductible?

Tax does have to be taxing.

The New Statesman, Britain's leading political magazine is delighted to announce that HMRC Is Shite has been nominated for a New Media Award in the category of Campaign For Change. The campaign for change award will go to the individual or organisation that has most effectively influenced opinions and behaviour through the use of new media technology. The winner of this award will champion a cause and provide information and tools to instigate change.

The full press release can be downloaded here.

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"

Using The Data Protection Act

In early April Nick Morgan wrote about the ordeal that he suffered whilst being investigated by HMRC. HMRC when it launches an investigation turns centuries of British jurisprudence on its head, by shifting the onus onto the taxpayer to prove his/her innocence.

In late April Nick wrote a follow up piece for AccountingWeb, explaining how he used the Data Protection Act to gain access to the files that HMRC kept on him during the investigation to fight his corner.

It seems that when a request is made for information held by HMRC, the tax file is physically sent to Newcastle where it is read and vetted by the Data Protection team. Once they have decided what can and cannot be released, copies are made and sent out to the taxpayer and the original documents are then returned to the investigating officer.

Nick got what he wanted, including information that showed the HMRC investigating officer admitting that the case was not a big one, and a senior officer saying that he wanted it closed down ASAP.

Nick advises that people make the most of the Data Protection Act whilst they can. His prognosis for the future is that HMRC will seek to change the rules and block future requests.

Is Nick being too cynical about HMRC?

Surely they are merely a tax collection function, set up to serve to the people, which would not seek to change the rules?

Tax does have to be taxing.

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"

Too Clever By Half

Sometimes people and organisations can be just a little bit "too clever".

HMRC and the Treasury have suffered an attack of "cleverness" which backfired on them, and recently forced them to back track on one of their cherished policies.

HMRC has now backed down from taxing foreign sport stars' global income, as a result of the very real threat of losing out in the selection to host top sports events such as Uefa Champions League Final in 2011.

Brigid Simmonds, chairman of the Central Council of Physical Recreation (CCPR), told the Telegraph before the climbdown:

"There is no doubt that we are losing out on major events because of the heavy-handed way in which tax on sport is treated in this country.

In other countries, the authorities go out of their way to attract major sporting events - international and European competitions which bring in a great deal of money, local investment and prestige, as well as home advantage.

But the taxman here seems to be going out of his way to put people off."

Jane Kennedy, treasury minister, relented and told the Football Association a fortnight ago that, if Britain won the right to host Uefa, visiting players would not be taxed here.

This follows hot on the heels of a similar exception granted to the Olympics.

Which is all very well, but as Mike Warburton told The Telegraph:

"What we need is a clear statement of policy rather than the treasury being forced into one embarrassing climbdown after another."

He added:

"HMRC thinks it is being very clever, but this approach has the unintended consequence that Britain loses international sporting events and the economic activity they generate."

As said, HMRC at times tries to be too clever by half.

Tax does have to be taxing.

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"

Computer Says No - Yet Again!

There has been another IT foul up at HMRC.

This one has left up to 100,000 low-income families waiting for £250 child trust fund payments that they are entitled to. These payments top up the £250 voucher available to all parents.

Kitty Ussher, the economic secretary to the Treasury, told a select committee on Thursday that a "programming error" had delayed the payments.

She is quoted in the FT:

"It is a technical thing due to the way the various computers at HMRC  . . .  talk to each other around people who are eligible for benefit payments."

She added that a separate problem "that we have not quite got to the bottom of" had also affected payments.

It would seem that, amongst other things, the merger of Customs and the Revenue has caused issues wrt the IT systems of the pre merged organisations not being able to communicate effectively with one another.

These communications problems are further compounded by the fact that Brown has habitually, for the last decade, made the tax system ever more complex. We should not of course forget the fact that politicians are incapable of effectively implementing/managing IT systems.

Unsurprisingly the delayed payments are, in many cases, linked that failed "flag ship" of Brown's: Tax Credits.

Why not abandon the sinking ship of tax credits, and increase the personal allowances by a significant amount instead?

A solution that is cheap, simple, effective, and easy to understand/implement.

Unfortunately Brown does not do "simple".

Tax does have to be taxing.

The New Statesman, Britain's leading political magazine is delighted to announce that HMRC Is Shite has been nominated for a New Media Award in the category of Campaign For Change. The campaign for change award will go to the individual or organisation that has most effectively influenced opinions and behaviour through the use of new media technology. The winner of this award will champion a cause and provide information and tools to instigate change.

The full press release can be downloaded here.

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"

Lost - The £9.9BN

The Liberal Democrats have accused HMRC of losing almost £10BN of public money owing to flaws (fraud, error and overpayments) in the tax credit system.

The tax credit computer system was recently condemned by the Public Accounts Committee for suffering "the highest rate of error and fraud in central government", and is losing £1BN a year as a result of erroneous tax credit payments each year.

Shadow work and pensions secretary Danny Alexander said:

"The government's boasts about the tax credit system have been exposed as spin."

The treasury has refuted the numbers, saying they ignore the fact the that HMRC will recover the majority of overpayments and that it includes "unrelated" figures.

Maybe so, but wouldn't it save time, money and effort if these overpayments were never made in the first place?

Tax does have to be taxing.

The New Statesman, Britain's leading political magazine is delighted to announce that HMRC Is Shite has been nominated for a New Media Award in the category of Campaign For Change. The campaign for change award will go to the individual or organisation that has most effectively influenced opinions and behaviour through the use of new media technology. The winner of this award will champion a cause and provide information and tools to instigate change.

The full press release can be downloaded here.

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"