Tax disenfranchisement

It was reported this last week that 1.5 million UK pensioners are paying too much tax which is because too much is being deducted from their occupational and private pensions and from any employment earnings they have. Once upon a time of course, most pensioners with taxable income of any sort had to complete tax returns. Since the introduction of Self Assessment in 1996-97 and increased automation and exchange of information as well as significant job cuts in what has become HM Revenue & Customs, far fewer people have to complete tax returns. In itself this is sensible, because why should people have to worry about form filling if it is not necessary, and can be dispensed with? However, if we have a more “automatic” system, it should work and be seen to work. This means that if age allowances are due then they should be allocated, and it should be easier for the public to talk to the Tax Office about their issues.

I believe information should be supplied to every household in the land explaining the system of personal allowances and how direct taxation works at its most basic level, but in reality, the only time most of us get any proper information about the workings of our liabilities to tax is if we actually have to complete tax returns ourselves. For the rest who just have periodical Notices of Coding, HMRC is simply explaining why they are doing what they are doing, and leaving out information which they perceive as irrelevant but which may not be.

Of course, the public may talk to someone at an HMRC call centre if they think they have problems or are being taxed incorrectly, but they need to know they have a problem first. Some no doubt complain about high taxes without knowing that they are being overcharged. This of course takes me back to the point a made a few months ago about “progress” disenfranchising the non-technical population.

© Jon Stow 2009

BBC: 1.5m pensioners 'overpaying tax'

HMRC and customer service

I wrote recently about Government and in particular HMRC disenfranchising the non-technical population. It is a sad situation, and it means that some perfectly intelligent people and in particular those of an older age group, or perhaps those who work with their hands have to employ people like me to do tasks with which they could have coped if dealing in paper.

Because there is almost no one in HMRC with whom the ordinary population can speak who actually knows anything about tax, taxpayers just have to grub along or pay someone else. It gets worse as demonstrated by a visit I made to an older couple this week. Their problem was that another elderly relative had died and they had been left to administer the estate. They had been sent a Form R27 which, for the uninitiated, is a Return of income for the previous 6th April up to the date of death of the deceased, and which is completed by the Executors or Administrators of an Estate. The couple had filled in the form but missed out completing two sections. An Assistant Officer at HMRC had sent it back with the two sections marked with red crosses and asked the worthy couple to complete the details required. Of course they dud not have a clue which is why they had telephoned me.

Now in the good old days these Executors could have taken their papers and the form to the Tax Office and had help completing the form on the spot. Nowadays, even if they could find the person who penned the red crosses, he probably would not have had a clue either, which is why after a couple of months he returned the form with such an unhelpful letter.

I reckoned the repayment due to the estate was less than £100, but the couple had not collected all the information needed to fill in the R27. I dictated letters to the organisations concerned, which the wife took down in shorthand, and said that when they had received replies they would be able to complete the form and send it off. If they were still unsure they should call me.

I came away feeling unable to bill for my 45 minutes plus the short drive. I had done the tedious Money Laundering check because that is obligatory but by the time I had done an engagement letter, written the letters myself and dealt with HMRC I would have done far more work and costs would have far exceeded the refund due to the very small estate. Effectively I had to treat it as charity work.

HMRC calls taxpayers customers, but customer service has become an alien concept. When I was a young tax junior you could track down anyone in the Revenue and get things sorted out over the telephone, which is no longer possible with the call centres.

Why should I have to do for nothing something HMRC cannot be bothered to do because it has changed itself into an even less friendly organisation than BT or my bank? Yes, those who cannot afford to pay for representation can go to TaxAid, but why should they have to, and though I am happy to help out, I think we tax advisers and agents are taken for granted and not afforded proper respect by HMRC. However, if they treat their customers like that, what do I expect?

© Jon Stow 2009