HMRC's job is to collect tax and to recover it where income has not been properly declared. These days, because of the Gordon Brown's “cuts” many HMRC staff are frankly not of the standard they used to be or are actually prevented from thinking for themselves. The current standard may be simply due to lack of training rather than ability. As a consequence they seem to be doing everything by rote.
A typical example is a discovery of some undeclared bank interest. HMRC writes to my firm and to the client. We check what has happened and there is indeed some undeclared interest but the bank actually provided incorrect information to the client and to me at the time the Tax Return was prepared. We write with the correct information and explain that it was all entirely the bank's fault.
HMRC person then writes to us and asks us to explain the omission, which we already have. It is as though no one has read our letter properly. We write back referring to the previous letter and repeating the perfectly reasonable explanation.
HMRC then writes requesting payment of a penalty for carelessness in addition to the tax which is obviously due. Now, there may be technicalities which would allow HMRC to call an innocent mistake, due to a bank's failure to deliver the correct information, careless. However, in any reasonable sense no one has been careless except the bank, which gave its customer the wrong information and HMRC the correct figures.
Once upon a time a Revenue Inspector could apply his or her judgment to any issue and act with a little discretion based on common sense. Now it is a question of sending letters one, two and three quite literally by the book and no matter the circumstances.
I hope letter four will not be in the book because we have written a strong response to HMRC's last effort. Of course they have on their side that it is not always cost effective for the client to resist too much, but then again I may just be in a pro bono mood.