Price of HMRC's delays in dealing with post

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As we know, our friends at HM Revenue and Customs don't look at their post for months after it is received. This has many detrimental effects on the relationships with taxpayers, and also those who have decided to come in from the cold and pay the tax they should have been paying for several years.

If I have a new client who wishes to own up to income received which should have been declared, he or she probably doesn't have a Universal Taxpayer Reference (UTR) and the only way of applying for one is by post. At the same time one wants to send a “marker” letter to HMRC to start the process of getting the individual into the system and establish it is at their own volition in case (a long shot) HMRC get their oar in first. That would theoretically increase the penalty potential which one wants to keep to a minimum.

The trouble is that the first response from HMRC will be considerably delayed. It takes months to get a UTR. It takes an age for HMRC to respond to a marker letter after they eventually read it and then allocate it to a case officer. You might say that offenders deserve what comes to them but once someone has decided to make a clean breast of things, I think it is only fair that they can get matters settled and get their tax (and interest and penalties) paid.

Of course HMRC also wait longer for their money because of their tardiness in dealing with these matters even after we get as far as being supplied with HMRC red spot stickers to mark our correspondence as more urgent than that from the hoi polloi. It just doesn't seem right, but HMRC apparently have 15 million open cases which means issues of any sort including over- and under-payment matters that haven't been resolved. They also have more unresolved than they know about with all those confessions sitting in their pile of post.

Royal wedding cant, hypocrisy, and the taxpayer

Wills and Kate are getting married and I wish them every happiness. I hope this Royal wedding will be a great show too, although they should have it just as they want it.

Of course there is the usual whining from commentators and journalists that the taxpayer should not have to pay for this, and the Royal Family should stump up a good deal of the cost.

Well, like it or lump it, but the Royal Family is a tremendous asset to the United Kingdom. Overseas media take a huge interest. The Royals are still worth a huge amount in terms of exports and attract millions of tourists from around the world, many of whom will come especially for the wedding. Manufacture of memorabilia is already in full swing, and William has made sure by use of her engagement ring that the Diana factor will feature heavily. Money is going to pour into our country from around the world. Yes, a lot of people are going to make serious money and yes, a lot of tax is going to be raised by the Exchequer and it will be a great deal more than the cost of running the wedding including all the policing and security. It is probably a much better money-raiser than the Olympics.

No money is going to be diverted from hospitals or welfare because the tax raised is going to be extra money. I am less a Royal fan than I was, but let us not get diverted by those who have an agenda other than their pretence of social conscience.

Let us enjoy the Royal wedding and the financial benefit the Exchequer, our clients and we will derive from it.

HMRC's stealth taxation through technology

The Revenue is introducing a new requirement to force agents to submit company accounts on-line in XBRL format from April 2011. Let me quote from their website:

“Company Tax Returns and XBRL

XBRL stands for Extensible Business Reporting Language, which is an international standard designed for business financial reporting.
At the moment accounts and other attachments to online CT600 returns can be sent in PDF format. From April 2011 (and for all CT600 returns due after 31 March 2011) we expect that all CT600 returns will have to be sent online, and will have to include attachments using the XBRL format.
You don't have to wait till 2011 to change to XBRL, and we recommend you consider doing so before it becomes mandatory. Later in 2009-10 HMRC intends to introduce a CT filing product which uses XBRL (this will be aimed at smaller, unrepresented companies), and to introduce a new main CT Online service. Other software developers have introduced or are working on products which use XBRL.”

I find this very news disappointing, especially with the short time-scale. I assume that behind this is an intention to make company accounts more accessible to staff within HM Revenue & Customs, and will help their cost-cutting. The justification is the report by Lord Carter on HMRC on-line services amongst other things. Lord Carter had to revise his proposals on individual taxpayers' Self Assessment deadlines following a furore back in 2006 that they were impractical. It would be useful if we could have just a little more time to make the change.

Self Assessment itself was introduced as a cost-cutting exercise, though it increased the cost burden of compliance for taxpayers.

The effect of the new requirement for XBRL format is to transfer further costs to taxpayers. The increase in software costs for tax agents will either have to be passed on to clients or the agents will have to bear them. No doubt the specialist tax software providers will have their developers working furiously to be ready for 2011 and they will need to charge the end user. Unfortunately the change will amount to a stealth tax even on those businesses which are not in profit. I believe in value billing, but increased overheads in software costs do not provide value for the agent or the end-user business. It is very difficult to provide the best value to clients whilst having to dance to the Treasury's discordant tune.

© Jon Stow 2009

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More in sorrow than in anger - Jobcentre bully

I heard something this week in the course of business that really upset me, and it has spared you, until I get around to it, a commentary on what activity might constitute trading and what might not.

I saw one of my clients this week to collect her books and those of her husband as they are both self-employed. Mrs. Y works with children. Times have been hard and generally people do not want to pay for luxuries and extras even for their children; hence Mr & Mrs Y as I shall call them have both been struggling and Mr Y had been unable to find any new assignments for a period. Fortunately his attributes have now landed him a decent engagement.

During the period of famine in the household my clients went to the Jobcentre Plus in the locality to apply for Jobseekers Allowance for Mr Y and for Housing Benefit since they have a mortgage to pay in addition to Council Tax etc. Mrs Y was required to produce her last accounts, prepared by my firm. The Jobcentre person looked down the profit and loss, or I should say, income and a lot of expenditure. She said “Of course I have to take these with a pinch of salt. Accountants produce figures to most suit the client. I cannot take into account some of these expenses” and she struck out the rent Mrs Y pays for her workspace used once a week in which to teach her pupils. This is the biggest expense, of course. Mrs Y told me she was shocked. Of course she was. When she related the story, I said “Why ever didn't you call me to ask me to speak to this person?” Mrs Y said that she felt the whole experience of dealing with the Jobcentre person was so humiliating that she did not want to prolong it by taking the matter up. She was clearly even now, months after this interview, quite shaken up.

Well, as I said, I am upset. Firstly, my client has been treated very badly by an intimidating and ignorant public servant. I know (because after a time in our business you get a nose for “dodginess” in people) that Mr & Mrs Y are completely honest, straight and decent people who do not deserve this treatment. Then again, I feel insulted on behalf of all tax advisers and accountants. The accounts were true and fair and every item was accounted for, backed by advices and receipts including obviously the rent arbitrarily “disallowed” by the aggressive woman in the Jobcentre, and of course all reconciled to my client's bank statements, paying in books and cheque stubs. I hardly need to spell it out except that I still cannot get over the attitude of the person.

In the end, despite my righteous anger at the aspersions cast at me, the worst aspect is that my clients have been deprived of benefit that is properly due to them as good taxpayers all these years. This sort of thing may be going on up and down the country for all I know. I wish my clients would make a complaint and I would back them all the way, but they would rather stay away from nasty officialdom, and I cannot say I blame them.

© Jon Stow 2009