HMRC are broken

A pensioner who completes his own Tax Returns has been sent the Short Tax Return for the last few years. A Short Return is a paper form which has to be submitted annually by 31st October. He gets all his stuff together and sends in his Return at the beginning of August. Fairly promptly the Return is sent back to him. He is informed that as his foreign dividends exceeded £300 and are nearly £400 annually (because he had more than one account with a bank taken over by our Spanish friends, Santander) he has to fill in the full version Return. Do they enclose a full form for him to complete? No.

The pensioner telephones HMRC and after half an hour or so, gets to speak to someone, to ask for a form. None arrives.

The pensioner calls me (he is a relative) and tells me the tale. He tells me he is worried; he followed up his call with a letter on 1st September but had heard nothing. The October deadline is approaching. I told him that HMRC were unlikely to read his letter of 1st September until around Christmas. He said “I suppose I will have to try to file on-line”. Indeed that will be the case by the time I get to see him to help, otherwise he will have a £100 fine.

I don't like this blog to be a continual whinge about HMRC. However, most of the non-technical stuff I have to deal with is about this sort of nonsense where HMRC are simply not delivering any sort of service to those they have the temerity to call customers. The problem is partly about money, but many of the basic failures appear to be to do with management, organization and common sense. After all, if you tell a taxpayer he should fill in a different form, surely you should send him that form?

Good grief!

Fun with HMRC's Online Services Helpdesk

I went through the authorisation process to act for a new client, which involves entering the client's Universal Tax Reference and post code on-line, following which the client is sent an Authentication Code which he or she gives to the agent. We agents enter this code and HMRC will talk to us about the client.

I duly completed this process for a new client, but the client did not appear on my on-line list of clients on HMRC's website. I called the on-line help desk and hung on for ages (well, twelve minutes) listening to their muzak before giving up and sending an email

“We gained authorisation as agent for this client two weeks ago via the on-line procedure but he does not appear on our on-line list in the agent’s pages on the website. Could you please investigate this and append his details to our list?

Please advise when this has been done.

Thanks and regards”

Their reply:

“Dear Mr Jon Stow
Thank you for your email.

Unfortunately we need more information to progress your enquiry. Please contact the Helpdesk on 0845 60 55 999 and have to hand your Agent Code and access to a computer. Then one of our advisors will be able to assist you further.
For security reasons specific personal data may have been removed from this email.

Regards
Online Services Helpdesk”

I responded, a little irritated I admit:

“I will telephone later, but only emailed you after hanging on for 12 minutes on the telephone this morning waiting in vain to be dealt with. Can't you call me?”

Their response:

“Dear Jon Stow
Thank you for your email.

We are unable to arrange a call back, we have all advisors on incoming calls to ensure we answer as many calls as possible.

For security reasons specific personal data may have been removed from this email.

Regards
Online Services Helpdesk”

Well, firstly they may be answering as many calls as possible but clearly there are many they are not answering, including mine. Secondly, in the time it took to reply to two emails, or even only to the second one, surely they could have picked up the phone and talked to me?

HMRC are so useless and inflexible in communication now at every level. Wholesale cuts appear to have been as much at the expense of common sense as money, but no matter how much agents and taxpayers keep pointing this out, and despite initiatives such as Working Together, HMRC's meetings with tax and accountancy professionals, where it matters no one is listening; apparently not even their head honcho, Dave Hartnett who was charged with making the cuts by Gordon Brown.

Frankly it is not only costing us agents money in wasted time, the inefficiency and lack of leadership and responsible staff must be costing HMRC more than it saves in reducing their staff's ability to deal with issues to the lowest common denominator.

 Postscript: In the interest of fairness I should say that by telephoning on a Saturday I managed to speak to a helpful lady fairly promptly and it looks like the matter will be resolved, thanks to her. However, HMRC's delivery of customer service leaves a lot to be desired, not least that we would rather not be called customers.

HMRC postal delays can cause hardship

Image via Wikipedia

My client has a part-time job. A year or so ago her husband was out of work for a short while. They both had to go to the JobCentre to see whether they qualified for benefit. They didn't qualify. However for some reason the JobCentre told HMRC that my client might be eligible for Jobseekers's Allowance. A year later HMRC issued a Coding to restrict allowances so that my client had to pay tax on her small salary because HMRC thought she had unemployment benefit as well as being employed.

I called HMRC and told them that my client is not in receipt of benefit and never has been. HMRC's call operative told me they will not issue a Code to refund tax that has already been deducted in error until my client obtains a letter from the JobCentre confirming that she never had any benefit. Her word and mine are not good enough. “Well” I said “you take three months to look at the post”. HMRC's person admitted this was true.

This should be a simple matter to deal with. However for an individual with small earnings HMRC's bureaucratic requirement for a letter from another Government department and refusal to take the word either of someone who completes a tax return or of her agent is quite likely to cause hardship. If HMRC was anywhere near up to date with the post it wouldn’t be a problem.

This sad state of affairs is due to cuts ordered by Gordon Brown. These cuts have made HMRC very inefficient and they fail to deliver a proper service to honest taxpayers. What hope they can catch the tax evaders? They very likely take three months to open all those letters from “A Well-wisher” grassing up the dishonest tax evaders and how long would it be before they took action? Actually a long time judging by how long it has takes to get people registered in the system when they have come clean of their own volition.

Wisdom of the aged

Image via WikipediaIn the week of his death there has been a lot written about Sir Norman Wisdom, who was a very funny man of his time, and in my book a lot funnier than many so-called comedians about today. There was at least no smut in his work where he essentially played the fall guy or fool. In real life of course he was no fool at all, but a shrewd cookie.

From the tax profession's angle we think of him as the man who lost the silver bullion case against the Inland Revenue. He put a lot of money into silver bullion with a view to making a fairly quick profit at a time in the Sixties when the pound Sterling was on the slippery slopes of devaluation. To cut a long story short he was found to be trading and liable to income tax on the profits of that trade. It is one of a few cases where one or very few transactions has been construed as a trade rather than an investment strategy. There is more technical commentary I could make but this is not the time or place.

A couple of the obituaries noted that Sir Norman  was  a “tax exile” in the Isle of Man. There has even been some criticism of him for having made his money and then going offshore to keep more of his income. Actually the Isle of Man is quite a nice place to go when you reach normal retirement age. Sir Norman only went when he was 65. It has a mild climate and quite low rainfall, especially when you realise it is sandwiched between a wetter Ireland and Lake District. Anyway, why should it be deemed immoral to retire to a nice place and pay a lower rate of tax as a bonus?

By the same token, is it immoral to work in a Middle East country with no income tax and at a high salary and (oh dear) not be earning it in one's country of origin , the UK, and therefore avoid being charged to tax by being non-resident? I would have thought it was a way of being responsible and making provision for family, and after all, if you are not present in a country in which you are not paying tax, you are not using the facilities that taxes are supposed to pay for?

Has it really come to this? Have politicians and commentators been brainwashed into criticising anyone who either accidentally or deliberately makes arrangements to pay less tax? Goodness me! If we use the facilities of the hotel we should expect to pay for them. Why is anyone expected to pay for the facilities they no longer use, especially if their hard-earned cash has in the past helped to build this facilities.

Artificial contrivances to avoid paying tax may or may not be morally questionable depending on your point of view. They probably are. Using tax free investment options must be OK since the Government allows for them in legislation. Using methods of reward that suffer lower taxes is no different from buying your food at Lidl instead of Waitrose or Fortnum and Mason, is it? We buy our petrol at the cheapest places and avoid motorway service areas. We have the choice. Why pay more?

Not being in the UK is a matter of lifestyle choice, surely? I wish politicians, some journalists and tax campaigners would grow up.

HMRC cost -cutting will cost them dear

HM Revenue and Customs has announced that in future, where a taxpayer is represented by an agent, that agent will no longer receive copies of various forms. The forms which now only taxpayers will receive include PAYE Coding Notices (really helpful as this is an area of problems currently). Other forms and letters which taxpayers' agents will no longer have include:

• Letter advising of a new Universal Tax Reference and advising that a Tax Return will have to be completed in future.
• Letter advising that a Tax Return will not be required in future.
• Tax calculation form showing HMRC's computation of the annual liability. 

HMRC thinks that they will save £1.25M in making this change. Of course in terms of paper and postage this may be true, but how much time in terms of telephone calls from agents will they waste when the taxpayers have failed to pass on the forms or in respect of Codings which should have been adjusted, but were not, due to a breakdown of communication between client and agent?

HMRC likes to refer to taxpayers as “customers”. We always say that if we taxpayers were customers we would take our business elsewhere. If we were really customers we would be contemplating loss of customer service without a cut in our charges. Anyway, in the end it is one more cut in HMRC which will make them more inefficient at a time when a few more properly qualified staff could actually bring them more money in. At the same time there is more cost and inconvenience to the public

I am all for cutting waste. It seems very short-sighted to make cuts which will end up costing more money and making communication harder. Are HMRC so deep in their dark tunnels that they have lost touch with the real world? It often seems like it.

PAYE corrections: tax advisers as spectators

It might be thought that the audit of the PAYE system which has brought to light the overpayments and underpayments of tax under PAYE would bring in work for accountants and tax practitioners. This is not going to happen.

Overpayments of tax will be refunded by HMRC automatically. Those who have underpaid will fall into two categories. The first will be the people who knew their Codings were likely to be incorrect because they actually looked at them when the brown envelopes came through the post. Any anomalies will be because the benefit figures were wrong or the tax rates or allowances were wrong because there was a second job or a change in circumstances. It is likely that those who did not correct Codings which were wrong hoped that HMRC would not notice.

The second category will be those ostriches who never looked at their Codings. They will still not look; they will shrug their shoulders when they get notification of an underpayment.

Neither category of taxpayer will want to appoint an agent to manage the situation. It would be adding insult to injury to have to pay someone a fee when they already have to cough up some more tax. Anyway, in general it would not be worthwhile for agents to take anyone on as a client to look at their coding history. The fees which could be charged would not be sufficient to cover an agent's costs. Most of the people affected would not have a Universal Tax Reference (UTR) as they would not be filling in Tax Returns. That would mean that authorisation would have to be done with a paper application which would probably take three months for HMRC to process, by which time the Codings issue would be water under the bridge,

None of we agents' existing clients will have a problem. They will have had Tax Returns completed for them. Any overpayment or underpayment will have come out in the wash of Self Assessment.

So we can only look on, shake our heads, wonder at the noise and know that those who have underpaid probably knew there was an issue as they hid their heads in the sand.

PAYE overpayments, underpayments and intrusions

This week has seen a media-whipped furore over the inadequacies of the PAYE system and I am not going to expand on what others have said. If you want a sensible summary of the position then please look here.

There are a couple of worrying things which go beyond the “failure” of HMRC's PAYE system. It has to be remembered that Dave Hartnett, the Permanent Secretary for Tax, who has taken a lot of flak for a slightly undiplomatic comment on BBC's Money Box is not a politician but a Civil Servant. If he were politician he would perhaps be more careful, but anyway he would gave been out of office with the change in Government if he had been simply in the pocket of Alastair Darling and more significantly, Gordon Brown. Of course in the longer term there might be a conflict with the new administration, but Mr. Hartnett has been in the higher echelons of HMRC for a while now.

The point is that the cumbersome PAYE system is not perfect. It is better than it was in providing information and that is how the discrepancies in tax collected have come to light. HMRC has been forced to make many spending cuts over the last few years, which can't have helped. These were mainly driven by Gordon Brown as Mr. Hartnett told a number of tax practitioners on the one occasion a couple of years ago when I had a chance to talk to him. If the system were perfect we would not be having a new consultation which is now in play to see how it can be overhauled.

Mr. Hartnett can be careless with his words as he was on the radio and perhaps when talking to us tax advisers a couple of years ago. He may be overly suspicious of motives behind questions as he seemed a little paranoid about the supposed involvement of all tax advisers in tax avoidance when he addressed the meeting I was at.

That does not mean that his privacy should be treated as a target by the media Yes, he is in charge of an important Government department, and should be more media-savvy. However, he didn't get to the top because he was no good. He was a successful Inspector of Taxes and was involved in a number of high profile cases on the Revenue's behalf. He is at the top because he is good and not because he is a politician.

I knew he lived in Hertfordshire because he told our group. I have no interest in his house or what cars his family owns. He is not a footballer or rock star who feeds off media interest and is seen as fair game for exposés (if anyone should be?). What he has, he has earned, but it is none of our business, and nor is it the business of a possibly fictional neighbour of his, quoted in a Sunday newspaper story.