tag:blogger.com,1999:blog-26340877057761422092024-03-12T16:28:40.407-07:00Jon Stow's taxing timesJournal of a tax practitionerJon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.comBlogger106125tag:blogger.com,1999:blog-2634087705776142209.post-18252855390631168572015-12-16T04:04:00.000-08:002015-12-16T04:34:56.283-08:00The Chancellor's attack on landlords<!--[if gte mso 9]><xml>
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<br />
<div class="MsoNormal">
In July 2015 Chancellor George Osborne announced the withdrawal
of higher rate tax relief on mortgages of residential landlords. Those higher
rate taxpayers with higher gearing in terms of finance have had their business
models badly damaged or indeed destroyed as by 2020 they could be paying tax
when actually suffering losses in real terms.<span style="mso-spacerun: yes;">
</span>There have been a number of tax projections to prove this. At the very
least, the returns on their investments will be very low.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
If individuals own multiple properties, one cannot say that
life is simple, and that people just lie back and enjoy the return of income.
The reality is that there is considerable investment in time, plus worry
concerning risk as few tenants are perfect and some are positively headaches.
At the same time it is inevitable that repairs to properties must be made as
and when needed, redecoration is necessary, and damage has to be repaired
between tenancies.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The latest attack on residential landlords announced by Mr Osborne
in November 2015 is a 3% addition levy of Stamp Duty Land Tax (SDLT) on
property not purchased for the owner’s own permanent occupation. This takes
effect in April 2016. This is probably intended as a deterrent to would-be landlords
and those wishing to expand their portfolio. It is dressed as giving first-time
buyers a chance to own. However it ignores the premise that everyone needs a
place to live, whether owners or renters.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
At the bottom end of the market, for example in the Southend
area (I have to declare an interest), the small flats in town would not be the initial
target of first-time buyers. The reality is that landlords are providing what
amounts to social housing, and for their return on investment have considerable
risk in terms of the types of tenant. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In our own case the tenant of a flat downstairs from ours
caused a fire with a Christmas candle. We lost our tenant of course as our flat
was damaged, and incurred extra costs over the insurance recovery and legal
requirements in paying for extra safeguards in case of another fire.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Then we took a tenant of the Southend Council homeless list,
and within six weeks he trashed the flat and left, having turned on the shower
tap and leaving the hose to pour water onto the floor. By the time we found out
probably three days afterwards, the damage to our flat was considerable, it was
uninhabitable for six months due to damp, and the refurbished downstairs flat
we did not own was destroyed again.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
We residential landlords take a risk, and frankly for the
money there is no easy ride. Two years after the last event we are still carrying
forward losses from that time; yet we feel that we are doing good by providing
for a genuine need for our investment with what amounts to social housing.
Yes of course we hope to make a capital profit one day. Why shouldn’t we, given
the risks we have taken on?</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Of course the country needs more houses, but George
Osborne’s target of 400,000 by 2020 looks very inadequate to meet the
requirement. Net migration to the UK in the year to June 2015 was 336,000 so in
five years there might be another 1.5 million people. They are not all going to
buy the houses that do not exist yet and will not in 2020. They are largely
going to be renters. Where will they live? They need private residential
landlords whether those with one or two properties, or fifteen.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
If the Chancellor were honest about the new measures quite
simply being tax-raising to fund the deficit rather dressing them as social
engineering, we could understand to a degree why he had made these
announcements. However, they will be damaging to the social fabric of society
in ways that seem to have been overlooked, and amount to a very backward step
in managing the housing crisis.</div>
Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com0tag:blogger.com,1999:blog-2634087705776142209.post-17552687415884906902015-09-02T04:05:00.001-07:002015-09-02T04:05:16.176-07:00Landlords and the restriction for mortgage interest reliefIn response to signing the petition to the Government concerning the
decision to deny higher rate tax relief on mortgage interest paid by landlords,
I and every other signatory have received the following email. I will let you
read it and comment further down.<o:p></o:p><br />
<br />
<b>Government response<o:p></o:p></b><br />
<b><br /></b>
“Hi Jon Stow,<o:p></o:p><br />
<br />
The Government has responded to the petition you signed – “<a href="https://petition.parliament.uk/petitions/104880">Reverse the planned tax
relief restriction on ‘individual’ landlords</a>”.<o:p></o:p><br />
<br />
Government responded:<o:p></o:p><br />
<br />
The Government is committed to a fair tax system so is restricting relief on
landlord property finance costs to the basic rate of tax, reducing the
generosity for wealthier landlords. <o:p></o:p><br />
The Government is committed to a fair tax system so is restricting tax
relief landlords can claim on property finance costs to the basic rate of
income tax. <o:p></o:p><br />
<br />
Landlords are currently able to offset their mortgage interest and other
finance costs against their property income, reducing their tax liability. This
relief is not available for ordinary homebuyers and not available to those
investing in other assets such as shares. Currently the landlords with the
largest incomes benefit the most, receiving relief at their marginal tax rates
of 40% or 45%.<o:p></o:p><br />
<br />
By restricting finance cost relief available to the basic rate of income tax
(20%) all finance costs incurred by individual landlords will be treated the
same by the tax system. This recognises the benefits to the economy that
investment in property can bring but ensures the landlords with the largest
incomes will no longer benefit from higher rates of tax relief.<o:p></o:p><br />
<br />
By unifying the treatment of finance costs for all individual landlords, the
Government is reducing the distortion between property investment and
investment in other assets, and reducing the advantage landlords may have in
the property market over ordinary homebuyers. <o:p></o:p><br />
<br />
Less than 1 in 5 (18%) of individual landlords are expected to pay more tax
as a result of this measure. Taking account of the other measures from the
Summer Budget, the Office of Budget Responsibility (OBR) have not adjusted
their forecast for house prices. The OBR expect the impact on the housing
market will be small. Furthermore, this change is being introduced gradually
from April 2017 over 4 years. This will give landlords time to plan for and
adjust to these changes.”<o:p></o:p><br />
<br />
<b>The reality<o:p></o:p></b><br />
<b><br /></b>
Not every landlord will be affected by the change, but a
substantial number will be. It will be especially difficult for long-term
landlords with multiple properties and with a higher gearing in terms of
mortgages. As property inflation has progressed, many will have re-mortgaged in
order to buy further properties. In many cases, such a model will not be
viable, because there will be no profit left.<o:p></o:p><br />
<br />
I can sense that some will say sarcastically that their heart bleeds for the
poor landlord who no longer receives net income from their properties. Yet the landlords
affected will be in a trap. How can they divest themselves of their portfolio
in short order, and in this context, two, three or four years is not long? If
they do sell up of course the Government will reap a reward in terms of large
amounts of capital gains tax, but it is hard to see substantial benefit to the
housing market in terms of more property available to first-time buyers. Purely
in terms of numbers it is unfair and will put some landlords out of business.<o:p></o:p><br />
<br />
Of course if the property portfolio is held through a company, mortgage
interest relief will not be restricted. Yet comparatively few portfolios are
overall, especially with the higher mortgage gearing, and that is for
commercial reasons. Mortgage lenders do not like lending to companies because they
have less security. In the past I have dealt with a client who had property
portfolios worth in excess of £3M with borrowing of nearly £2.5M. He would not
be able to carry on.<o:p></o:p><br />
<br />
You might have noted that I mentioned putting landlords “out of business”. The
response from HM Government talks about property investment, but HMRC does see
rental activities as a business <a href="http://www.hmrc.gov.uk/manuals/pimmanual/pim1020.htm">in some contexts</a>.
In a business, one expects to deduct in full all one's revenue costs. Is there
a slippery slope which will bring more commercial activities to lose full
relief for finance costs?<o:p></o:p><br />
<br />
Property “investment” is not like holding a portfolio of shares or multiple
ISAs or money on deposit. There is a risk as with stock market investments, but
anyone who has been a landlord will tell you that there is a lot more
involvement as a landlord, even if you use a letting agent. It can be very
hands-on.<o:p></o:p><br />
<br />
Suppose the tenant causes a fire or a flood and you have to deal with the
insurance company, attend the site on multiple occasions to see the insurance
assessor, get builders' estimates, supervise the builders, and get the letting
up and running again. It can take many months, be pretty full-time, and very
stressful. Believe me, I have been there, fire and flood. It definitely feels
like running a business. The time commitment is often very substantial.<o:p></o:p><br />
<br />
The Government and HMRC on their behalf are being disingenuous. It suits
them to make a tax-grab from people whose effectively full-time work is from
their letting business, and who are often providing a real service to local
authorities in dealing with their displaced people requiring housing.<o:p></o:p><br />
<br />
It would not be a “fair tax system” for those whose property businesses will
be destroyed.<o:p></o:p><br />
<br />
I believe the new rules will be a costly mistake; costly for the landlords,
but also for those who need a roof over their heads but will never be able to
afford to buy. <o:p></o:p><br />
<br />
Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com0tag:blogger.com,1999:blog-2634087705776142209.post-26578470776449433972015-08-10T06:31:00.000-07:002015-08-10T06:35:13.668-07:00HMRC systems not joined up<div class="MsoNormal">
Three months ago I registered a new client for Self Assessment
as she had purchased a buy-to-let property which gave rise to a decent profit
in 2014-15. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Two days ago she and I received a Form P800 reconciling her
PAYE income and giving rise to a refund of over £800. This was on the same day
my client had emailed her spreadsheet of lettings income and expenses.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
I telephoned HMRC to suggest they did not send the tax refund
as ultimately it would not be due to my client. I was told that it was already
in the post, and as it turned out my client had the cheque today. We have
agreed she will bank it and pay back the money under Self Assessment. We cannot
trust HMRC not to lose the cheque if we sent it back, and anyway it would be
months before they dealt with it.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
I did ask the HMRC agent why they would make a refund on
PAYE when they had been advised the client had another income source and had
registered to do a Tax Return. Since the agent would not have the knowledge to be
able to answer and because her command of English was poor, the question was
effectively rhetorical. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The answer is probably that, as per usual, there is a lack
of joined-up thinking going into HMRC systems and programming. Oh, it is all so
frustrating.</div>
<div class="MsoNormal">
<o:p></o:p></div>
Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com0tag:blogger.com,1999:blog-2634087705776142209.post-76193104256995150462015-07-02T03:00:00.000-07:002015-07-02T04:51:14.195-07:00Professional firm targeted by fraudstersRecently I heard a worrying tale from a partner in a firm of accountants, who shall of course remain anonymous.<br />
<br />
Apparently fraudsters had hacked into their computer network and submitted entirely bogus personal Tax Returns on behalf of actual clients of the firm. All these false Returns resulted in substantial tax repayments which were directed to bank accounts controlled by the crooks.<br />
<br />
HMRC had spotted the frauds, although I am not sure how much money was wrongly paid to the villains.<br />
<br />
It is a lesson to all of us not to be complacent about Trojan horses and clicking on links in dodgy emails (which is apparently what let these guys in). If we are caught out it could be hugely damaging to our firms' reputations, and result in the loss of the clients whose privacy has been violated. Also, we would be patsies in allowing the tax to be stolen from the Treasury, which is the same as if it was taken from our collective selves.Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com0tag:blogger.com,1999:blog-2634087705776142209.post-7225768300396676452015-07-01T09:03:00.000-07:002015-07-01T09:03:18.634-07:00Unintended consequencesOne of my clients called me in a panic. She had received a "threatening notice" from HMRC saying that she would be fined £100 for not sending in her Tax Return. Actually, I submitted her return for 2014-15 on 11th May 2015.<br />
<br />
Hers is always one of the first I do each year. Why? Because she is ninety-five years old and does not like anything hanging over her.<br />
<br />
Obviously I was very puzzled about the threatening letter. It turns out this was her Notice to File a return. Normally one would expect these to be posted in April, but due to the HMRC contract with Royal Mail they are still trickling through; hence my client's was received on 1st July.<br />
<br />
Not everyone can immediately understand that some letters from Officialdom are due to inefficiency and incompetence, and therefore some people take these letters seriously, especially vulnerable people.<br />
<br />
Surely we can hope that next year all Notices to File are sent out in April and that taxpayers receiving them will not feel threatened? My ninety-five year-old was in a tail-spin and could scarcely catch her breath. Government contracts with Royal Mail should not cause such distress.Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com0tag:blogger.com,1999:blog-2634087705776142209.post-9967513346685314432014-09-22T04:43:00.000-07:002014-09-22T09:07:02.355-07:00Working Tax Credit and working hours ploys<div style="line-height: 108%; margin-bottom: 0.28cm;">
I am no expert on
Working Tax Credit (WTC), and I know that many who were on Incapacity Benefit and even Disability
Living Allowance have been pronounced “fit to work”, some say
unfairly, in the last two or three years.</div>
<div style="line-height: 108%; margin-bottom: 0.28cm;">
<a href="https://www.blogger.com/null" name="_GoBack"></a>
Word on the street is that you can get your sixteen or thirty hours
work to be entitled to WTC by being self-employed selling through Kleeneze catalogues, or
maybe selling lottery tickets for charities. How you can prove your
working hours from that, I don’t know, but maybe neither HMRC nor DWP care.</div>
<br />
<div style="line-height: 108%; margin-bottom: 0.28cm;">
Are my sources correct? Have you heard
anything about this? Does it matter?</div>
Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com0tag:blogger.com,1999:blog-2634087705776142209.post-84624028068137974202014-09-08T04:01:00.002-07:002014-09-08T04:09:26.553-07:00State Pensions, PAYE and unfairness<div class="MsoNormal">
Not all the taxpayers I look after have high incomes. From
time to time I help pensioners and others whose means are quite small.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
It may surprise many, but there are some people whose only taxable
income is from the UK State Pension. Quite often it is enhanced by the <span class="st">additional State Pension, previously known as the <a class="zem_slink" href="http://en.wikipedia.org/wiki/State_Earnings-Related_Pension_Scheme" rel="wikipedia" title="State Earnings-Related Pension Scheme">State Earnings
Related Pension Scheme</a> (</span><em><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-theme-font: minor-bidi; mso-hansi-theme-font: minor-latin;">SERPS</span></em><span class="st">) and the <a class="zem_slink" href="http://en.wikipedia.org/wiki/State_Second_Pension" rel="wikipedia" title="State Second Pension">State Second Pension</a>. This does not mean that those
pensioners are living the high life. Their total income might well be no more
than £11,000 or £12,000 a year, but that is more than the current Age Allowance
of £10,500, frozen by the Chancellor, George Osborne. That means that those pensioners
have a tax liability.<o:p></o:p></span></div>
<div class="MsoNormal">
<span class="st"><br /></span></div>
<div class="MsoNormal">
<span class="st">Quite a few new pensioners with higher State Pensions are unaware that they have a liability to tax. In fact many are
unaware that State Pensions are taxable at all. In the past year or so, I have
come across such individuals who have suddenly found themselves with unexpected
tax demands and on one occasion a demand for four years’ tax all at once.<o:p></o:p></span></div>
<div class="MsoNormal">
<span class="st"><br /></span></div>
<div class="MsoNormal">
<span class="st">I took on the poor chap who had paid HMRC for
four years’ tax, and found that actually he owed nothing because HMRC had overlooked
his entitlement to the Married Couples Allowance. This actually eliminated his
supposed liabilities, but he died before I got the tax back. His widow received the payment.<o:p></o:p></span></div>
<div class="MsoNormal">
<span class="st"><br /></span></div>
<div class="MsoNormal">
<span class="st">However, there are others who are receiving
tax demands on their State (and only) Pensions out of the blue, and still do
have a tax liability. Surely it would be less painful to bring taxable state benefits
into PAYE and ensure that no one receives any unexpected shocks? After all,
these are by definition people on low incomes, and it cannot be expected that
they will have any savings out of which they pay tax. Generally they spend what
they receive at that income level, and who can blame them?<o:p></o:p></span></div>
<div class="MsoNormal">
<span class="st"><br /></span></div>
<div class="MsoNormal">
<span class="st">Better still, why not exempt from tax any
amounts of State Pension in excess of the Age Allowance or Personal Allowance as
applicable. After all, these pensioners have done their bit.</span></div>
<br />
<div class="MsoNormal">
<span class="st">What do you think?</span></div>
Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com0tag:blogger.com,1999:blog-2634087705776142209.post-62231673191299554762014-03-07T03:53:00.001-08:002014-03-07T03:53:55.585-08:00Fair Tax and the real world
<div class="western">
There has been a lot of talk about Fair Tax and
self-appointed parties have even persuaded an august professional
institute to buy into their plan. It sounds a bit like clothing
manufacturers getting the Woolmark (remember that) for a fee of
course. The Woolmark was a guarantee of Merino wool. A Fair Tax Mark
would be no guarantee of anything.</div>
<div class="western">
<br /></div>
<div class="western">
The question is, what level of tax is fair? We are
talking about corporation (company) tax of course. All the
criticism, mainly aimed at multinational companies, is about the
level of corporation tax they pay. Now it is true that they might
have more flexibility than smaller businesses to arrange to pay a
lower level of corporation tax in the UK by transferring profit to
other jurisdictions. </div>
<div class="western">
<br /></div>
<div class="western">
At the same time, there are rules on <a href="http://en.wikipedia.org/wiki/Transfer_pricing" target="_blank">transfer pricing</a> which apply to large companies and in which HMRC take a keen
interest. All businesses need to reinvest, and to encourage this
there are quite generous allowances against tax that can be claimed
(because the Treasury wants them to) which means that taxable profit
might be lower than accounting profit.</div>
<div class="western">
<br /></div>
<div class="western">
However, I do not want to get too technical. I
will leave that to others. The government is <u>reducing</u> the main
rate of corporation tax to 20% on taxable profit for all companies,
large and small, from 1<sup>st</sup> April 2015. The previous
administration was also intent on reducing the rate, and that is
because Government perceives that with a low tax regime on profits,
overseas businesses will want to invest more in the UK. It all makes
sense to me.</div>
<div class="western">
<br /></div>
<div class="western">
My next point is one already made by Ben Saunders
who has helpfully extracted from HMRC's accounts for 2012-13 the
following figures which show that corporation tax is only the fourth
largest revenue raiser anyway:</div>
<ol>
<li><div class="western">
Income tax – £150.9bn</div>
</li>
<li><div class="western">
National Insurance – £101.7bn
</div>
</li>
<li><div class="western">
VAT – £101bn
</div>
</li>
<li><div class="western">
Corporation tax – £39.2bn
</div>
</li>
</ol>
<div class="western">
Do read <a href="http://bensaunderscta.wordpress.com/2014/02/24/fair-tax-mark-i-still-dont-think-so/" target="_blank">Ben's piece</a>, in which he points out that
in the UK, most businesses are not companies anyway.</div>
<div class="western">
<br /></div>
<div class="western">
So the Government does not regard raising money
through corporation tax as their biggest priority, and there is a
reason for this quite apart from the question of competing for
business against foreign competition. That reason is that corporation
tax is not the only tax that companies pay.</div>
<div class="western">
<br /></div>
<div class="western">
Who actually pays all the income tax recovered
under PAYE from company employees? It is the companies that employ
them. Who pays the National Insurance? The employees think they pay
their share, because it in on their payslips, but actually it comes
out of company bank accounts.</div>
<div class="western">
<br /></div>
<div class="western">
Therefore it is ridiculous to have a measure of
one tax to be regarded as “fair” and to ignore all the other tax
revenue generated.</div>
<div class="western">
<br /></div>
<div class="western">
We can take this one step further. Large companies
as well as small ones and other businesses contribute to raising the
level of employment. In fact in the UK there are more people employed
than there have <a href="https://www.gov.uk/government/news/employment-reaches-new-record-high" target="_blank">ever been</a> before. If people are employed they are
drawing far less in benefits and therefore saving the Treasury even
more money which they would have to cough up if those employees had
no work and were sitting at home.</div>
<div class="western">
<br /></div>
<div class="western">
Do not talk to me about Fair Tax. The economy is
very complicated, and the tax regime as a whole is a sort of steering
mechanism. It is crude and sometimes not very responsive, but to
extract one element is disingenuous, particularly where that element
of potential low tax on profits is an important attraction for
investment.</div>
<div class="zemanta-pixie" style="height: 15px; margin-top: 10px;">
<a class="zemanta-pixie-a" href="http://www.zemanta.com/?px" title="Enhanced by Zemanta"><img alt="Enhanced by Zemanta" class="zemanta-pixie-img" src="http://img.zemanta.com/zemified_e.png?x-id=aa4c4c8f-feb2-4bef-acd0-4c697bdcb699" style="border: none; float: right;" /></a></div>
Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com0tag:blogger.com,1999:blog-2634087705776142209.post-47859948004969359192013-07-24T05:25:00.000-07:002013-07-25T02:18:50.493-07:00Margaret Hodge and the British Inquisition<div style="margin-bottom: 0cm;">
<span style="font-family: Helvetica, sans-serif;">I
had not intended to write about the House of Commons Public Accounts
Committee’s (PAC) “investigation” into tax avoidance etc. as
many more august tax writers than I have already had their shot.
However, I have been asking myself how they could have got it all so
badly wrong, and why.</span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Helvetica, sans-serif;">We
know that there are political tax lobbyists out there who have
received funding from unions. There have been various stories in the
newspapers about individuals who have been involved in aggressive tax
avoidance schemes, such as Jimmy Carr. Somehow with the campaigners
driving the politicians there has been a shift towards questioning
why multi-national famous-name companies such as Starbucks and Amazon
do not pay much corporation tax in the UK and assuming there is some evil plot.</span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Helvetica, sans-serif;">The
PAC has had representatives of multi-nationals and of the Big Four
accountants before them to ask questions on this issue, but sadly
they have not come to sensible conclusions because they start from
the premise that the international businesses are dishonestly
avoiding paying their dues to HMRC. Many witnesses have tried to
explain that firstly, the general premise is not provable and in almost
all cases not even likely, and secondly that corporation tax paid is not
a measure of a business's contribution to the economy.</span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Helvetica, sans-serif;">All
the witnesses have been interrupted </span><span style="font-family: Helvetica, sans-serif;"><span style="font-family: Helvetica, sans-serif;"> constantly </span>when answering
questions. The Committee members, and in particular the Chair,
Margaret Hodge, have tried to insist on their own view being accepted
by arguing with the witnesses rather than allowing them to
reply fully. The whole attitude brings to my mind the treatment of
Galileo by the Inquisition in Rome in 1633, when he tried to explain that the
Earth went round (orbited as we would say) the Sun, and not the other
way round. Because the Vatican doctrine said this could not be true,
no one was prepared to look at the evidence presented. So it is with
the PAC and their attitude to supposed tax avoidance by large
companies.</span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Helvetica, sans-serif;">If
in any investigation we assume the result before we investigate, we
will inevitably bias our conclusion, and probably come up with the
wrong one. That is true in tax, in economic matters, and in science.</span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Helvetica, sans-serif;">Please
bear with me, but Robert Millikan, one hundred years ago, biased
his results in <a href="http://en.wikipedia.org/wiki/Oil_drop_experiment" target="_blank">measuring the charge of an electron</a> because he had a
wrong value for the viscosity of air. Actually he was not far wrong,
but he tended to discard results which did not support his figures.
The shame is that no doubt for psychological reasons other scientists
following afterwards and getting different results tended to do the
same, discarding results which were “off” rather than properly
challenging Millikan's conclusions and measurement.</span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Helvetica, sans-serif;">Proper
scientific research should involve reproducing any experiment on
which you intend to build under the same conditions, and then
developing your own experiments and investigations from there to make
sure there is a consistency. That is intellectual rigour, something
to which the PAC does not adhere.</span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Helvetica, sans-serif;">We
understand that the PAC members are not briefed. They do not have
people to help them with their questions. Yet it is apparent that
they do not do much research themselves. That was very obvious with
the recent questioning of witnesses about the nature of Duchy of
Cornwall, its income and tax status. There is quite a lot one can
find out about the Duchy in two minutes with Google (I put that to
the test), yet it seemed the PAC members had not got that far. They
asked their questions apparently from a starting point of total
ignorance, but at the same time their interrogation had that implicit
bias that someone must be dodging tax.</span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Helvetica, sans-serif;">I am
not going to get into the complexities of international taxation
beyond saying that Starbucks can pay royalties to their Netherlands
business and claim a tax deduction in the UK. There is international
cooperation on transfer pricing, and no one had been doing anything
wrong. It is perverse that Starbucks have now “volunteered” to
pay corporation tax by deferring claims for allowances to which they
are fully entitled.</span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Helvetica, sans-serif;">What
the PAC does not understand is that fast-growing businesses tend not
to pay much corporation tax. That is true of small businesses which might be my
clients, or very large ones. The American giants such as Starbucks
and Amazon have been familiar for a while and seemed to be
everywhere, but they are now more everywhere than they were even a
couple of years ago.</span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Helvetica, sans-serif;">Why
have they not been paying much corporation tax? Because they have had little or
no taxable profit; because they have been investing all their “spare”
money in opening new premises, buying plant and paying new employees
– yes, new employees. All that investment is tax-deductible, as it should be.</span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Helvetica, sans-serif;">Large
corporates who have no taxable profit liable to corporation tax still
generate substantial amounts to the Exchequer. They pay VAT on their sales
less inputs, they pay business rates, they pay the payroll taxes for
their employees, and they pay import duties. </span>
</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Helvetica, sans-serif;">They
boost employment by taking on workers and by driving income to their
logistics suppliers, the ones who deliver to them and the ones who
deliver their stuff to you and me. The suppliers need to employ more
people too.</span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Helvetica, sans-serif;">So
the small area upon which the PAC concentrates concerning tax on
accounts profits has nothing to do with the real contribution of
large companies employing people not only paying their taxes, but
saving the State from having to pay them benefits if they were
instead unemployed.</span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Helvetica, sans-serif;">Taxation
is according to the law, and should not be based on moral blackmail
or Aunt Sally games run by people who should know better.</span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Helvetica, sans-serif;">Of
course it is not good explaining any of that to Margaret Hodge. She
has made up her mind, and the actual reality does not suit the
grandstanding she is trying to make at the end of her political
career. </span>
</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Helvetica, sans-serif;">Footnote:
In the <a href="http://en.wikipedia.org/wiki/Oil_drop_experiment" target="_blank">Wikipedia page</a> about Millikan there is a reference to the
physicist Richard Feynman's book of anecdotes, <i>Surely You are
Joking, Mr. Feynman!</i>. Affilate link at the bottom. I thoroughly
recommend this book, which is great fun. It is a glimpse of the life
of this amazing man. If you do not wish to use an affiliate link in
purchasing, here is a <a href="http://www.amazon.co.uk/Surely-Youre-Joking-Feynman-Adventures/dp/009917331X" target="_blank">non-affiliate one</a>.</span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Helvetica, sans-serif;">
</span></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Helvetica, sans-serif;"><iframe frameborder="0" marginheight="0" marginwidth="0" scrolling="no" src="http://rcm-eu.amazon-adsystem.com/e/cm?t=wwwjonstowcom-21&o=2&p=8&l=as1&asins=009917331X&ref=qf_sp_asin_til&fc1=000000&IS2=1&lt1=_blank&m=amazon&lc1=0000FF&bc1=000000&bg1=FFFFFF&f=ifr" style="height: 240px; width: 120px;"></iframe></span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com0tag:blogger.com,1999:blog-2634087705776142209.post-78981149860835755932013-07-17T03:11:00.002-07:002013-07-17T03:11:51.295-07:00HMRC cannot do joined-up writing
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgW5hF30Zert0ciQDtYD0N93AFT2oxgSuJ7rwhqRhHjJY1TYfhGKcgFeM_nh3mVZpeuXIWls0vRu-DOuRh6jKZLP9FPqF_qL1v-L63ZDzmuXiGkRo54C7CfXqRcysM83nb_rrtXftXu3_tJ/s1600/Aug+16+2011+037.JPG" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgW5hF30Zert0ciQDtYD0N93AFT2oxgSuJ7rwhqRhHjJY1TYfhGKcgFeM_nh3mVZpeuXIWls0vRu-DOuRh6jKZLP9FPqF_qL1v-L63ZDzmuXiGkRo54C7CfXqRcysM83nb_rrtXftXu3_tJ/s1600/Aug+16+2011+037.JPG" height="320" width="240" /></a></div>
<div style="margin-bottom: 0cm;">
As anyone who reads this blog will
appreciate, I correspond regularly with HMRC. If I am dealing with an
issue other than an enquiry into a taxpayer's affairs, when normally
one officer will run the case, HMRC's correspondence is literally all
over the place.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
Not all issues can be dealt with over
the telephone, because HMRC's Self Assessment call centre agents are
limited in their power to help with anything beyond a PAYE Coding or
a payment allocation etc.. If I have to make a complaint on behalf of
a client or simply highlight some issue which HMRC are clearly
getting wrong, I have to write. The trouble is that each time I write
a letter on a particular issue, I get a reply from a different person
in HMRC.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
I believe that part of the difficulty
must be a drive for “efficiency” in this new digital age. Most
initial correspondence has to go to a PO box in Cardiff (you might
get to write to a couple of other PO boxes when you get a reply) and
I believe they scan and email my letter to some anonymous office who
knows where. If I am lucky I get a reply within anything from a
couple of weeks to three months. If I then respond my next letter
might be scanned and sent to someone else to reply, perhaps someone
in another part of the country.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
Because HMRC officers are not trusted
to think for themselves, or are not qualified to, many of the replies
are obvious “paste jobs” from standard text. They do not consider
the thrust or particular nuance of the letter to which they are
replying, and of course the second and third people to respond in
correspondence will not know what their predecessors were thinking
when they wrote their letters.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
It is no good trying to send a
follow-up letter before I have had a reply to the previous one,
because that will be emailed somewhere else, even if I attach a
copy of the earlier letter.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
Sometimes I have had two replies to the
same letter within a few weeks. On a recent occasion, a more
favourable decision was made in the second than in the first, which
is fine and they have committed themselves.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
There is no continuity in the system.
No one sees correspondence through, and if they did it would be dealt
with more quickly and efficiently. As I have mentioned before, one
letter to me was typed and never sent to me by HMRC. Often, letters I
receive from HMRC are unsigned, and I wonder whether the officer
who drafted the letter has checked it, or if anyone has read it through in their
absence, given that sometimes mistakes are only noticed in hard copy.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
I suppose the problems are that there
are insufficient technical staff of a decent standard within HMRC,
and that digital technology had led to misguided senior managers
believing that any of their officers can deal with correspondence
without a case file, even a virtual one.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
The current system wastes my time and
your time if you are a tax professional, and it wastes HMRC's time
and resources in not getting matters dealt with more quickly and
efficiently.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
It is another exasperating example
proving <a href="http://en.wikipedia.org/wiki/Hutber%27s_law" target="_blank">Hutber's Law</a>:
“Improvement means deterioration”. What do you think?</div>
Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com0tag:blogger.com,1999:blog-2634087705776142209.post-56070158059499686572013-07-15T04:56:00.000-07:002013-07-15T04:56:03.487-07:00HMRC and credit where credit's due – eventually
<div style="margin-bottom: 0cm;">
I am very pleased to report that HMRC
have allowed my longest standing claim under ESC A19 after five
letters, eighteen months, and just before going to the Adjudicator. My previous report
on the case was <a href="http://jonstax.blogspot.co.uk/2013/03/disingenuous-hmrc.html" target="_blank">here</a>
and I do think it only right to thank <a href="http://www.atlastaxchambers.com/barristers/barrister.php?member=keith_m_gordon" target="_blank">Keith Gordon</a> for his campaign and in particular <a href="http://www.taxation.co.uk/taxation/Articles/2012/10/24/48811/escapology" target="_blank">his article</a> in Taxation in October 2012 which provided more ammunition for the fight.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
Of course it should not have been a
fight. Not all cases have the same merit, but given that my client
visited HMRC after her husband's death specifically to make sure that
her pensions would be taxed at source correctly, it should have been
a simple matter for HMRC to agree to the claim. Of course they did
not, but let us be fair and say that they saw the light at last, and
be grateful.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
In some ways the pleasure I get from
this win is more than a case I had a while back when HMRC backed off
in an enquiry from unreasonably demanding £250K plus from a client I
had just taken on. It is a great feeling to see off an injustice.</div>
Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com0tag:blogger.com,1999:blog-2634087705776142209.post-47698566634100267162013-06-19T05:06:00.000-07:002013-06-19T05:06:30.098-07:00HMRC, the stick and the carrot<div style="text-align: right;">
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8SOu8cUvhO2xp9ewbfwhyphenhyphenkNztymYaAINPrdwqrwxjiCgTyGCvZx5QqFJEJunnCgnp21wdXc0GLibBM7fL5Tk6WQUsMmUNdpymuJ7DBdEzlBV7owhMF3QpFPHh3P_reFp79CwtDSF9J3mT/s1600/iStock_000005618867XSmall.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="215" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8SOu8cUvhO2xp9ewbfwhyphenhyphenkNztymYaAINPrdwqrwxjiCgTyGCvZx5QqFJEJunnCgnp21wdXc0GLibBM7fL5Tk6WQUsMmUNdpymuJ7DBdEzlBV7owhMF3QpFPHh3P_reFp79CwtDSF9J3mT/s320/iStock_000005618867XSmall.jpg" width="320" /></a></div>
<div style="margin-bottom: 0cm;">
<i>Can HMRC's aggressive stance towards
individual taxpayers be counterproductive?</i></div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
<b>Frustrated of Essex</b></div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
It is no secret, especially not on this
blog, that I have been frustrated by HMRC's attitude towards those
who found out at a late stage that tax had been under-recovered from
their pensions etc. and they had a significant tax bill. Even though
HMRC has had the power under ESC A19 to “forgive” the tax paid,
in the last couple of years they have steadfastly refused claims and
appeal which would have been accepted prior to 2011.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
We know that HMRC is under extreme
pressure to collect as much as possible. I understand that, and let
me be clear, I think everyone should pay their fair share according
to the law. I wrote last July:</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
“I would like to see all dishonest
tax-dodgers caught. The so-called black economy consisting of people
who offer to re-lay your drive or clean your house <a href="http://jonstax.blogspot.co.uk/2011/10/fat-cats-and-gutter-rats.html" target="_blank">soffits and fascias</a> for cash and all the other “cash-in-hand” people
who knock on your door cost the country billions in lost tax.”</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
It is just that in some areas, HMRC,
and maybe Government, have lost track of what might be fair with
regard to honest taxpayers, those who out themselves from the black
economy, and others whose tax affairs are in arrears and they seek to
get themselves up to date.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
<b>My own patch</b></div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
In my own practice, there are areas of
taxation I do not enjoy, do not regard as my strengths, and which I
pass to others. No one can gain the experience to be strong in all
areas of tax because there just isn't time, whether one is a
practitioner in private practice like me, or an employee.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
I have two or three favourite areas or
niches of tax that I do specialise in. One of those is in
helping”delinquent” taxpayers, which usually means those who have
not paid tax recently, to get themselves up to date and to negotiate
a decent settlement with HMRC.
</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
Those who have been “caught” by
HMRC are in worse position from the point of view of the penalty
regime than those who come forward voluntarily. That is
understandable, but I can still help them in agreeing their back-tax,
interest and penalties and getting a settlement with HMRC.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
<b>A puzzle</b></div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
Those making voluntary disclosures
should be entitled to better treatment with lower penalties. What has
worried me recently is that in one case, where the individual simply
did not have the means to pay all his tax (of course his fault) HMRC
preferred to make him bankrupt with a lower tax recovery than if they
had agreed his offer of payment of a quite significantly greater
amount over three years. HMRC preferred less jam today than the more
jam they might have had tomorrow, and by making anyone bankrupt they
have to join the queue with the other creditors. I thought this was
pretty silly.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
<b>Late return penalties</b></div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
Another issue is the new daily
penalties regime introduced by HMRC from 2010-11, and I quote them;</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
“Following a review of HM Revenue and
Customs powers new legislation was introduced. Under Schedule 55
Finance Act 2009 the way in which HMRC applies its late filing
penalties saw major changes particularly in respect of raising Daily
Penalties. This change only applied to Tax returns for 2010-11
onwards with the previous legislation and guidance remaining for
2009-10 and earlier.</div>
Where a customer has not filed a Tax return 3 months from the
return due date Daily penalties will start to accrue for a period up
to 90 days at a rate of £10.00 per day, the rate is fixed and can
not be changed (except by legislation) and in the majority of cases
this will be an automatic process. There is no longer a requirement
to apply to the Tribunal to charge a Daily Penalty or for a “fixed
£100 penalty” to have been charged before applying it. A Revenue
Determination can be considered at any time during the period of
which a Tax return remains outstanding but it is not a requirement
before a Daily Penalty is applied.”<br />
<br />
Note the irony of calling someone a customer and then in the same
sentence imposing daily penalties.<br />
<br />
<b>Disincentive</b><br />
<br />
My concern is that the daily penalties may be a disincentive to
comply in some circumstances. Someone more itinerant “self-employed”
might, if the penalty notice catches up with them, be less inclined
to let HMRC know where they are. Also, not everyone who works in the
UK was born here or even has strong ties to the UK. Many, in the face
of threats, will melt away whence they came, or to some other
jurisdiction. Of course the individual amounts of tax lost each time
might be small, but in a fluid situation of cross-border working, I
think the penalty regime may be a disincentive to comply, especially
if the first a worker knows of her or his obligations is the penalty
notice rather than the original notice to complete a tax return.<br />
<br />
Particularly with the taxation of individuals I believe HMRC
should take a more pragmatic approach to collecting tax, by which I
mean adopting methods to collect more through negotiation, rather
than less tax through preferring the stick over the carrot.<br />
<br />
Of course everyone should meet their tax obligations under the
law. Punishing especially those who have come clean or have just got
behind with their tax affairs, at the expense of lowering the overall
tax take, seems rather foolish.<br />
<br />
<b>Common sense?</b><br />
<br />
I believe there is a case for removing most of the penalties
imposed for late submission of Returns once they are submitted, with
perhaps HMRC raising their interest rate charge for late-paid tax. I
also think more common sense should be applied where an individual
simply cannot meet their tax obligations. I would not want to
encourage anyone to dodge their responsibilities; rather I would hope
they should face up to them with more encouragement.<br />
<br />
How do you feel about HMRC's aggressive stance? Do you believe it
is counterproductive?<br />
<div class="zemanta-pixie" style="height: 15px; margin-top: 10px;">
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Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com0tag:blogger.com,1999:blog-2634087705776142209.post-80135434809709932722013-03-01T06:02:00.001-08:002013-03-01T07:34:24.890-08:00Disingenuous HMRC<br />
<div style="margin-bottom: 0cm;">
Last June I mentioned a lady on whose
behalf I had made a <a href="http://jonstax.blogspot.co.uk/2012/06/hmrc-loses-plot-over-esc-a19.html" target="_blank">claim under ESC A19</a>. She had visited the local
office of HMRC, back when they had one, to ensure that her tax would
be dealt with correctly following the recent death of her husband.
Her claim for relief from a quite considerable amount of back tax
owing as a result of HMRC's failure to act following her visit was
turned down.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
On behalf of my client at the end of
May 2012 I appealed against the decision. At this stage it was by
making a formal complaint given that the relief requested is actually
discretionary as far as HMRC is concerned.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
I had heard nothing from HMRC by
September so I telephoned and was advised that the matter had been
“brought forward” which is Civil Service speak for not actually
having done anything but not yet lost the file or record. I called
subsequently without getting news of further progress, and again
after the January tax return rush was over. I was then told by the
call centre that I would get a call back from the relevant office
within five working days.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
I did get a call back within two days
from a Complaints Officer. The conversation went something like this:
</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
Complaints Officer (CO) “We replied
to your letter of 30<sup>th</sup> May last July. Did you not receive
it?”</div>
<div style="margin-bottom: 0cm;">
Me: “No.”</div>
<div style="margin-bottom: 0cm;">
CO: I think it was probably never sent.
I will fax you a copy. You won't be surprised to learn that your
request for relief (under ESC A19) has been turned down again”.</div>
<div style="margin-bottom: 0cm;">
Me: “Why was I told in September that
the record had been brought forward if a letter had been sent?”</div>
<div style="margin-bottom: 0cm;">
CO: “Because your client has
complained to her MP so we kept it open.”</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
So I received the faxed letter with the
date “July 2012” but no actual day typed or written in, so it is
fair to assume that the letter was indeed never sent and that Royal
Mail are not to blame.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
The reasons the further request for
relief have been turned down include that the end-of-year pension
providers' PAYE Returns submitted in May each year do not count as
information HMRC could reasonably have used although they “appreciate
how tempting it is to assume these immediately become available for
ESC A19's purposes.” Well, blow me, if someone send me an email,
letter or fax that I actually receive (unlike HMRC's letter) I have
the information and it is my fault if I neglect to do anything with
it.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
The seven-month-old letter goes on to
stress that the information they receive allows them up to four years
to review the tax position. Well, we know that. It's the law. It has
nothing to do with whether HMRC acted properly and whether they
should give up the tax they did not collect in accordance with a
long-established concession and precedent.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
They at least concede that my client is
not a liar and accept she did visit the tax office after her husband
died. However according to HMRC she could not apparently have
“reasonably believed” her tax affairs were in order following the
issue of an incorrect coding. That assumes she would have had some
knowledge of tax (something HMRC unreasonably wishes to impute on all
taxpayers in a recent consultation on the concession) and that her
understanding was not skewed in the trauma of bereavement.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
My client and I are not
leaving it there and we will return to the fray. We have further
grounds for complaint in their not sending the letter and not
mentioning it over the telephone two months after it had been typed
and left on file, unsigned. Of course the whole letter is complete
and utter nonsense arguing in the face of what would have been a
simple case of allowing the relief if a request had been made in 2010
or earlier.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
There is no doubt that HMRC has sent
round a memo instructing that all claims be turned down on whatever
grounds. Their correspondence is disingenuous and frankly, they might
as well abolish the concession altogether rather than just change it,
if they are intending to turn down all future claims.
</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
HMRC need not be afraid of one bad
write-up in the Daily Mail if they even get one. After all, the
politicians and the public have too much fun bashing the
multi-nationals for sensible tax planning, and for whatever reason
this tax abuse of small taxpayers who are mostly pensioners is being
largely ignored by the media. It seems that politicians who count in this matter are <a href="http://www.theyworkforyou.com/whall/?id=2012-12-04a.245.0" target="_blank">not going to help</a>.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
Isn't it all a disgrace?</div>
Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com0tag:blogger.com,1999:blog-2634087705776142209.post-59371429916213358572012-10-21T09:06:00.000-07:002012-10-22T04:35:31.902-07:00The thought police and the right amount of tax<table cellpadding="0" cellspacing="0" class="tr-caption-container zemanta-img" style="float: right; margin-right: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><div class="zemanta-img">
<div class="zemanta-img">
<div class="zemanta-img">
<div class="zemanta-img">
<a href="http://commons.wikipedia.org/wiki/File:Venedig_BW_1.JPG" imageanchor="1" style="margin-bottom: 1em; margin-left: auto; margin-right: auto; text-align: clear:right;"><img alt="Secret denunciations against anyone who will c..." border="0" class="zemanta-img-inserted" height="350" src="http://upload.wikimedia.org/wikipedia/commons/thumb/6/6a/Venedig_BW_1.JPG/300px-Venedig_BW_1.JPG" style="border: none; font-size: 0.8em;" width="300" /></a></div>
</div>
</div>
</div>
</td></tr>
<tr><td class="tr-caption zemanta-img-attribution" style="text-align: center; width: 300px;">Secret denunciations against anyone who will conceal favors and services or will collude to hide the true revenue from them. (Photo credit: <a href="http://commons.wikimedia.org/wiki/User:Berthold_Werner" title="User:Berthold Werner">Berthold Werner via </a><a href="http://commons.wikipedia.org/wiki/File:Venedig_BW_1.JPG" target="_blank">Wikipedia</a>)</td></tr>
</tbody></table>
<h3>
<b>Being shot at</b></h3>
<h3>
<b> </b></h3>
These days it is really tough being a tax professional in the UK. There is hardly a day goes by without some media frenzy about supposed immoral tax avoidance, and we get all the blame as the villains of the piece. Many of us might be forgiven for being confused by all the hot air and smoke and mirrors into forgetting what tax avoidance is, so if you have, please <a href="http://jonstax.blogspot.co.uk/2012/07/tax-avoidance-and-avoidance-of-doubt.html" target="_blank">remind yourself here</a>. <br />
<br />
The Jimmy Carr affair was the worst flare-up this year with the “comedian” being lambasted for wanting to pay less tax on his surprisingly high income. Yet in truth while only 26% of the population <a href="http://cdn.yougov.com/cumulus_uploads/document/ic8lcj9svf/YG-Archives-Pol-ST-results%20-%20121019.pdf" target="_blank">think tax avoidance is morally acceptable</a> as against 64% who don't, 42% would probably employ someone to help them avoid tax as against 29% who wouldn't. On the face of it there are double standards among those asked, but perhaps not if we think about this a bit more.<br />
<br />
I do not advise my clients on tax avoidance. If they engage in a scheme provided by someone else, that scheme will not have been recommended by me. I would likely brief the client on the risks of an HMRC enquiry and that the scheme might not work and that the client will very likely have to wait a long time to find out if it does.<br />
<br />
What I do offer my clients is ways of paying the least amounts of tax under the current law as intended by Parliament. That is as morally acceptable as telling someone petrol is cheaper at one service station than it is at another, isn’t it?<br />
<br />
<h3>
Oppressive Culture </h3>
<h3>
</h3>
<h3>
</h3>
The current climate or political culture, supported joyfully by the media, is that people and especially businesses should pay as much tax as possible. This now extends to international or multinational companies being expected by the press to pay tax when they have not made any money in the UK. Normally if one has no profit (i.e. no net income) one should not have to pay tax, but apparently it is thought that Facebook and Starbucks should, just because they are big and make profits elsewhere.<br />
<br />
In a tax forum a well known tax commentator likened our tax system to the East German model, and it seems that some learned judges have been intimidated by the political climate into reaching decisions which favoured HMRC, but seemed strange. I had better not say more because there would be nothing worse than being sued by a lawyer.<br />
<br />
Just the same, there is no public political dissent from the notions that not only should we not indulge in tax avoidance schemes, but that reasonable tax planning with contractors working through personal service companies is somehow morally beyond the pale. That is notwithstanding that so many Government agencies have insisted on contractors working through companies to avoid their obligations as employers on the human resources side, including giving notice, redundancy, providing pensions, as well as avoiding paying Employer's National Insurance on their tight budgets.<br />
<br />
<h3>
The new Communism</h3>
<h3>
</h3>
So the three main political parties all sing from the same hymn sheet, and anyone in politics brave enough to disagree would be instantly lambasted and attacked by the media, with the Treasury and Opposition spokespeople getting on their high horses. They would be joined by the usual suspects, purporting to represent the best interests of the workers on whose behalf they claim to speak.<br />
<br />
Sadly, what has happened somehow over the last dozen years is that the State has instilled this belief amongst so many that there are others who are up to something, somehow fiddling their taxes down. Because so many people have suffered in the economic downturn, this belief is whipped up by politicians and their willing media by envy (it sells newspapers).<br />
<br />
So in many ways our capitalist state has become like an old Communist State. I <a href="http://www.openculture.com/2011/06/renata_salecl_the_paradox_of_choice.html" target="_blank">recommend this</a> if you can spare ten minutes more of your time. Privately no one really believes everything they are told but publicly they are afraid to speak out simply to say that the picture painted is totally false. <br />
<br />
From the public opinion poll mentioned above, we might infer that some of the 64% who say that tax avoidance is unacceptable say it because the thought police would get them, but privately admit they might do it themselves given the chance. Somehow, those of us who advise on tax but do not do tax avoidance have just the same been tarred with the same brush as the tax avoidance promoters.<br />
<br />
<h3>
We are innocent, OK?</h3>
<h3>
</h3>
The tax avoidance “industry” is a relatively small and accounts for £5 billion out of the £32 billion <a href="http://www.hmrc.gov.uk/stats/mtg-2012.pdf" target="_blank">tax gap</a> estimated by HMRC. That is not small beer even at less than one-sixth of the tax “lost” but very few tax professionals are involved in tax avoidance anyway. We are not wicked for assisting our clients through the diabolical bureaucratic tax maze that has been created. We help our clients get on with their lives and their businesses, to help stimulate the economy and help get the country out of the mess created on the watch of many of the current leading politicians.<br />
<br />
Are we allowed to be heard outside our own cloisters?<br />
<div class="zemanta-pixie" style="height: 15px; margin-top: 10px;">
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Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com3tag:blogger.com,1999:blog-2634087705776142209.post-1746561372925292032012-09-28T06:20:00.000-07:002012-09-28T06:20:57.752-07:00HMRC wasting our money on trivial matters<br />
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjgI3FmLWNoHDfHoDJj90VPNjCKH0-erV7p7rIhIG1pGyN4VKGj9CudPAenEk4YSt4gOgRamx5s_tJeuzooZAs0fsYncBqCEFmCg6PY1YHUJrFbdLunGZ-XTS5pvWUf9jFhvdoY5Otg2WER/s1600/Aug+16+2011+037.JPG" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjgI3FmLWNoHDfHoDJj90VPNjCKH0-erV7p7rIhIG1pGyN4VKGj9CudPAenEk4YSt4gOgRamx5s_tJeuzooZAs0fsYncBqCEFmCg6PY1YHUJrFbdLunGZ-XTS5pvWUf9jFhvdoY5Otg2WER/s320/Aug+16+2011+037.JPG" width="240" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Posting paper</td></tr>
</tbody></table>
<div style="margin-bottom: 0cm;">
<span style="font-family: Georgia, Times New Roman, serif;">These two cases nearly slipped by
without my noticing, but really we have to wonder why HMRC do not use
their resources rather better.</span></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span></div>
<div style="margin-bottom: 0cm;">
</div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Georgia, Times New Roman, serif;">In <a href="http://www.financeandtaxtribunals.gov.uk/Aspx/view.aspx?id=6434">Eamas
Consulting LLP v HMTC 4.4.12 TC 02009</a><span style="color: black;"><span style="font-size: x-small;"><i>
</i></span></span><span style="color: black;">
a partnership received a paper Tax Return for 2007-08 in April 2008.
HMRC issued a penalty notice in February 2009 indicating they had not
received it back. The partnership said they had submitted a nil
return as soon as they had received it, and indeed paper Self
Assessment Returns had been submitted on behalf of the two partners
also in April 2008.</span></span></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Georgia, Times New Roman, serif;"><br />
</span></div>
<div style="margin-bottom: 0cm;">
<span style="color: black; font-family: Georgia, Times New Roman, serif;">The
lead partner then requested a duplicate paper Return, which was
eventually both received and completed in August 2009 also showing
“nil” partnership income, but by which time a second penalty
notice had been issued as the July deadline had passed.</span></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Georgia, Times New Roman, serif;"><br />
</span></div>
<div style="margin-bottom: 0cm;">
<span style="color: black; font-family: Georgia, Times New Roman, serif;">There
were telephone calls with HMRC and letters written to different
offices which no doubt caused confusion. Anyway, the partnership
appealed on the grounds that a Return had been submitted in April
2008 and HMRC should be able to find the original Return, even though
the partnership could not find a copy.</span></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Georgia, Times New Roman, serif;"><br />
</span></div>
<div style="margin-bottom: 0cm;">
<span style="color: black; font-family: Georgia, Times New Roman, serif;">A
second First Tier Tribunal (referred from the Upper Tribunal) found
that on the balance of probability the partnership had submitted the
original Partnership Return in April 2008 since the Returns of the
individual partners, with nil profits from the partnership, were
submitted then. The appeals against the penalty notices were allowed.</span></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Georgia, Times New Roman, serif;"><br />
</span></div>
<div style="margin-bottom: 0cm;">
<span style="color: black; font-family: Georgia, Times New Roman, serif;">What
a waste of money with HMRC staff going to three tribunal hearings,
when a little common sense would have saved everyone time and worry!</span></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Georgia, Times New Roman, serif;"><br />
</span></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Georgia, Times New Roman, serif;"><span style="color: black;">In
<a href="http://www.financeandtaxtribunals.gov.uk/Aspx/view.aspx?id=6435">Kathleen
Lomas v HMRC TC 02010</a> the older lady taxpayer received a letter
on 10</span><span style="color: black;"><sup><span style="font-size: small;">th</span></sup></span><span style="color: black;">
January 2011 telling her that she needed to complete a Self
assessment Tax Return for the year ended 5</span><span style="color: black;"><sup><span style="font-size: small;">th</span></sup></span><span style="color: black;">
April 2010. She called HMRC and was sent a paper Tax Return which she
sent back, duly completed on 17</span><span style="color: black;"><sup><span style="font-size: small;">th</span></sup></span><span style="color: black;">
January 2011. This Return was "captured" by HMRC's system on 27th January. The lady had an underpayment of £270.84 which she paid in
March 2011, the day after she returned from abroad, having been away
since 18</span><span style="color: black;"><sup><span style="font-size: small;">th</span></sup></span><span style="color: black;">
January. </span>
</span></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Georgia, Times New Roman, serif;"><br />
</span></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Georgia, Times New Roman, serif;"><span style="color: black;">The
lady had upon her return found a penalty notice because she had not
submitted the Return on-line, the deadline for paper returns having
been 31</span><span style="color: black;"><sup><span style="font-size: small;">st</span></sup></span><span style="color: black;">
October 2010, two and a half months before she was sent the paper
return for completion.</span></span></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Georgia, Times New Roman, serif;"><br />
</span></div>
<div style="margin-bottom: 0cm;">
<span style="color: black; font-family: Georgia, Times New Roman, serif;">The
taxpayer appealed against the penalty notice and the First Tier
Tribunal found that HMRC had waived the requirement for e-filing by
issuing a paper return in January. Again, common sense should have
prevailed, and only did when the case reached the FTT. Judge Geraint
Jones Q.C. said “The appellant is a lady who, it is accepted, has
no blemish on her tax return or tax payment record over the last 40
years. There is no reason whatsoever to doubt her veracity.”</span></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Georgia, Times New Roman, serif;"><br />
</span></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Georgia, Times New Roman, serif;"><span style="color: black;">In
neither case was there any great precedent being set. “Reasonable
Excuse” allows HMRC to cancel penalty notices. Once upon a time,
more junior staff of HMRC, or perhaps historically in the Inland
Revenue, could exercise their discretion and cancel charges which
seemed unreasonable. Since these cases went to the Tribunals, it
seems that even very senior staff of HMRC have no power to make
sensible decisions or they are incapable of doing so. </span>
</span></div>
<div style="margin-bottom: 0cm;">
<span style="font-family: Georgia, Times New Roman, serif;"><br />
</span></div>
<div style="margin-bottom: 0cm;">
<span style="color: black; font-family: Georgia, Times New Roman, serif;">It
does not inspire confidence in HMRC's ability to extract “the right
amount of tax” from the taxpaying public whether errant or
otherwise when they apparently show such incompetence in dealing with
trivial matters and waste our resources at the same time. What do you
think?</span></div>
<br />
<div class="zemanta-pixie" style="height: 15px; margin-top: 10px;">
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Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com1tag:blogger.com,1999:blog-2634087705776142209.post-45902400708976908852012-09-15T09:04:00.000-07:002012-09-15T09:09:12.768-07:00HMRC's review of Extra-Statutory Concession A19<table cellpadding="0" cellspacing="0" class="tr-caption-container zemanta-img" style="float: right; margin-right: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><div class="zemanta-img">
<a href="http://commons.wikipedia.org/wiki/File:HMRC%2C_Belfast%2C_October_2010.JPG" imageanchor="1" style="margin-bottom: 1em; margin-left: auto; margin-right: auto; text-align: clear:right;"><img alt="English: Her Majesty's Revenue & Customs (HMRC..." border="0" class="zemanta-img-inserted" height="450" src="http://upload.wikimedia.org/wikipedia/commons/thumb/4/4b/HMRC%2C_Belfast%2C_October_2010.JPG/300px-HMRC%2C_Belfast%2C_October_2010.JPG" style="border: none; font-size: 0.8em;" width="300" /></a></div>
</td></tr>
<tr><td class="tr-caption zemanta-img-attribution" style="text-align: center; width: 300px;">Her Majesty's Revenue & Customs (HMRC) office, Wellington Place, Belfast, Northern Ireland, October 2010 (Photo credit: <a href="http://commons.wikipedia.org/wiki/File:HMRC%2C_Belfast%2C_October_2010.JPG">Wikipedia</a> by <a class="mw-userlink" href="http://commons.wikimedia.org/wiki/User:Ardfern" style="background-color: #f9f9f9; background-image: none; color: #0b0080; font-family: sans-serif; line-height: 19.200000762939453px; text-align: start; text-decoration: none;" title="User:Ardfern">Ardfern</a>)</td></tr>
</tbody></table>
<br />
<div style="margin-bottom: 0cm;">
As you may know, HMRC is <a href="http://jonstax.blogspot.co.uk/2012/06/hmrc-loses-plot-over-esc-a19.html" target="_blank">currently resisting</a> all claims under Extra-Statutory Concession (ESC) A19,
which for the uninitiated is a concessional treatment for taxpayers,
usually unrepresented and who have not been required to submit tax
returns, who find themselves with tax liabilities where PAYE codes
have been issued incorrectly.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
HMRC has issued a consultation document
which is <a href="http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ConsultationDocuments&propertyType=document&columns=1&id=HMCE_PROD1_032156" target="_blank">here</a>. </div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
This is the response I am sending to
HMRC. It is based on my own experience with no cribbing from anyone
else.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="font-size: small;">Response begins:</span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
5. Summary of Consultation Questions</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<b>Taxpayer responsibilities</b></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
5.1 Do you agree with the removal of
'reasonable belief' to be replaced with an objective test based
around 'taxpayer responsibilities'?</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="color: green;"><b>No. Most
taxpayers under PAYE are not tax specialists and have no need to
employ agents since their affairs should be simple. Many claims under
ESC A19 arise where individuals have two or more small occupational
pensions. With modern software they are entitled to believe HMRC will
get their tax liabilities right even if they have no concept of the
automated system. A majority of such taxpayers will believe
reasonably that their affairs are in order even if they are not.</b></span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<b>HMRC responsibilities</b></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
5.2 Do you think that the introduction
of HMRC responsibilities makes it clearer in regard to what
information HMRC must act on? Has HMRC identified the correct
responsibilities and/or are there others that should be included?</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="color: green;"><b>It is
important that HMRC does take responsibility for taking action in
relation to all information received and this should include <u>all
P14 and other end-of-year information</u>. It is inexcusable that
HMRC even resists currently claims under ESC A19 where it is clear
they had relevant information as per Forms P14 received from
employers and pension providers, which should have been deal with
timeously.</b></span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<b>'Exceptional Circumstances' test</b></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
5.3 Do you agree that the 'Exceptional
Circumstances' section is now redundant and can be removed from ESC
A19? If not, for what circumstances do you think it should be
retained?</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="color: green;"><b>This question
is slanted in itself. Low income taxpayers could endure serious
hardship if information not properly used by HMRC involves notice of
further liability less than 12 months after the relevant period or
which had built up over two years.</b></span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<b>Capital gains tax</b></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
5.4 Can you identify any issues with
the removal of CGT from ESC A19? HMRC would be particularly
interested to hear examples of where a recent request has been made
in relation to CGT and ESC A19.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="color: #00ae00;"><b>It is less
likely that a claim would be necessary in relation to capital gains
issues since most taxpayers should be aware of the tax.</b></span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<b>Time limit for requesting HMRC looks
at ESC A19</b></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
5.5 Do you agree with introducing a
time limit for individuals to contact HMRC? Can you identify any
issues with HMRC adopting this approach?</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="color: green;"><b>The time limit
should be a fixed period of at least nine months after receiving Form
P800, in the interest of fairness. To change the dates in HMRC's
example:</b></span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div align="LEFT" style="margin-bottom: 0cm;">
<span style="color: green;">“<span style="font-family: Times New Roman, serif;"><span style="font-size: small;"><b>HMRC
notifies Mrs Smith of an underpayment for the tax year 2015-16 by
sending her a P800 Tax Calculation on 15<sup>th</sup> March 2018. Mrs
Smith considers it was HMRC’s failure to deal with information
which led to the underpaid tax. Mrs
Smith should contact HMRC: as soon as possible after receiving the
P800, or, upon receiving her Tax Code Notice for 2018-19, but in any
case, before 6 April 2018.”</b></span></span></span></div>
<div align="LEFT" style="margin-bottom: 0cm;">
<br /></div>
<div align="LEFT" style="margin-bottom: 0cm;">
<span style="color: green;"><span style="font-family: Times New Roman, serif;"><span style="font-size: small;"><b>This
would leave Mrs Smith three weeks to notify HMRC of her claim, which
would be unfair. Theoretically on HMRC's proposed change Mrs. Smith
might have no real time to notify at all. Surely nine months is a
fair and reasonable period to make a claim?</b></span></span></span></div>
<div align="LEFT" style="margin-bottom: 0cm;">
<br /></div>
<div align="LEFT" style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<b>Other considerations</b></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
5.6 HMRC plans to issue supporting
guidance alongside the revised wording. What format would be most
appropriate for this? For example, online guidance, a Question and
Answer document or updates in the PAYE Online Manual.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
5.7 Are there any terms within the
revised concession which you feel require further explanation or
expansion?</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="color: green;"><b>On-line
information should always be available, but a paper Question and
Answer Document should be available for all taxpayers should they
need it. </b></span>
</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="color: green;"><b>However HMRC
has not demonstrated that there is any need to amend the current
guidance on operation of ESC A19. Clearly the present Concession has
been reinterpreted in HMRC's favour in the last two years with even
very excellent and one would have thought irrefutable claims being
denied, requiring taxpayers to make formal complaints.</b></span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="color: green;"><b>HMRC should
view the Concession not as a drain on Treasury revenue, but as it was
formerly; to bring justice to taxpayers who can ill-afford late and
unexpected tax demands when HMRC should have properly collected the
tax at the time the relevant income was received. </b></span>
</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="color: black;">End
of response</span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="color: black;">I
am very unhappy both about the proposed revision of ESC A19 and agree
with Keith Gordon that there is no need for any change. If you have
not done so already, please hurry to sign <a href="http://www.change.org/en-GB/petitions/hm-revenue-customs-do-not-change-esc-a19" target="_blank">Keith's petition</a> against
the change. </span></div>
<br />
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Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com0tag:blogger.com,1999:blog-2634087705776142209.post-37355571331565549952012-08-11T07:39:00.000-07:002012-08-13T04:47:14.878-07:00HMRC errors and the older taxpayer<div style="text-align: right;">
</div>
<br />
<div style="margin-bottom: 0cm;">
<b>Post-modernism</b></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
Recently I was looking on-line for the
first time at the record of a taxpayer who has been retired for
thirty years. As one would expect, he isn't exactly in the first
flush of youth, and although very much “on the ball” to the
extent of doing his supermarket delivery order on-line, I don't
expect him to be well up with our modern tax system.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
Modern is a term I should use loosely.
Of course I mean “current” in that the system creaks badly
because HMRC relies too much on automation and their computer
systems, and have extracted the human element too much or too early.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<b>Mystery</b></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
My older taxpayer's record showed that
he had had £1,500 tax coded out from his pension in 2011-12. That is
quite a lot, and I could not see where this previous apparent
underpayment of tax had arisen. The on-line details were not
sufficiently specific.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
We asked for an explanation from HMRC
over the telephone, but the agent could not help and said he would
arrange for a letter of explanation to be sent.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
To HMRC's credit, that letter arrived
within two weeks. However it explained that the underpayment of tax
had arisen in 2005-06 but had been collected in 2008-09 so it hadn't
needed to be collected again.
</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<b>Goalpost shifting</b></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
All this is a bit worrying. In an era
where HMRC wants to move the goalposts further than they have already
done informally with regard to <a href="http://jonstax.blogspot.co.uk/2012/06/hmrc-loses-plot-over-esc-a19.html" target="_blank">ESC A19</a> because they say they are
better at end-of-year reconciliation of liabilities, I cannot see how
they would have picked up this error from way back if someone like me
hadn’t picked it up.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<b>Crying foul</b></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
We expect HMRC to hold errant taxpayers
to account. We expect them to collect “the right amount of tax”
by which I mean the amount properly due under the law. Unfortunately
we as taxpayers do not seem to be able to hold HMRC to account over
their errors.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
I am going to ask for interest on the
refund due as a consequence over and above the generous 0% currently
prescribed. I will be wasting my time no doubt, but my older
pensioner has been deprived of a not inconsiderable amount of money
over twelve months. He should be entitled to compensation, don't you
think?</div>
<br />
<div class="zemanta-pixie" style="height: 15px; margin-top: 10px;">
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Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com0tag:blogger.com,1999:blog-2634087705776142209.post-79717217658797187702012-07-23T06:40:00.000-07:002012-07-23T08:58:29.730-07:00Sympathy for tax dodgers?<table cellpadding="0" cellspacing="0" class="tr-caption-container zemanta-img" style="float: right; margin-right: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><div class="zemanta-img">
<div class="zemanta-img">
<div class="zemanta-img">
<a href="http://commons.wikipedia.org/wiki/File:Sainsbury%27s_old_logo.png" imageanchor="1" style="margin-bottom: 1em; margin-left: auto; margin-right: auto; text-align: clear:right;"><img alt="English: J Sainsbury PLC Sainsburys old logo." border="0" class="zemanta-img-inserted" height="40" src="http://upload.wikimedia.org/wikipedia/commons/thumb/f/fb/Sainsbury%27s_old_logo.png/300px-Sainsbury%27s_old_logo.png" style="border: none; font-size: 0.8em;" width="300" /></a></div>
</div>
</div>
</td></tr>
<tr><td class="tr-caption zemanta-img-attribution" style="text-align: center; width: 300px;">Would they steal from Sainsbury's? (Photo credit: <a href="http://commons.wikipedia.org/wiki/File:Sainsbury%27s_old_logo.png" target="_blank">Wikipedia</a>)</td></tr>
</tbody></table>
The Daily Mail is not my favourite newspaper, but in view of its significant readership on and off-line, it must be one “the public” likes and therefore its readership is representative of “the public's “ views.<br />
<br />
As I write this there is more <a href="http://www.dailymail.co.uk/news/article-2177433/BBC-tells-stars-dodge-tax-Workers-face-ultimatum-books-face-sack.html" target="_blank">faux outrage</a> because the BBC had decided to save licence-payers money by avoiding paying Employer's NIC on the pay of many of its staff's remuneration by engaging them as contractors. Additionally they avoided falling foul of the considerable costs which would be incurred in having these people as employees, including pension schemes and paying them off when they were sacked; this as opposed to waiting for their service company contracts to lapse. Very sensible, I would have thought.<br />
<br />
As we know, the BBC's practice in this regard is in line with many Government departments, local authorities and the NHS. We should all be upset if those bodies didn't do their best to save taxpayers' money.<br />
<br />
Yet somehow the couple in <a href="http://www.dailymail.co.uk/news/article-2176869/Gail-Fox-Ronald-Donkin-Couple-260-000-car-boot-sales-jailed-dodging-tax-takings.html" target="_blank">this story</a> of tax-dodging crooks in the same newspaper attracts sympathy from the commenters. You will not have time to read all the comments. It is hard to read very many without getting annoyed. A couple of classics are “at least they weren't scrounging benefit from the state as well as earning money” and “victim-less crime”.<br />
<br />
For the record I think this pair of tax dodgers deserved everything they got, but judging from the comments I am in the minority in “the public”.
Apparently it is not so bad to fiddle your taxes as it is to fiddle a claim for benefit. I suppose the person who thinks robbing the State of £85,000 is a victimless crime probably believes that it is the same as shoplifting at Sainsburys. After all, no one gets hurt so it must be all right.<br />
<br />
Except of course people do get hurt. Honest taxpayers have to pay more because some are on the fiddle. Sainsburys' shareholders (including our pension funds) lose and customers have to pay more to subsidise the losses. Where is the difference? It is stealing. In both cases it amounts to stealing from you and me.<br />
<br />
I suppose it is too much to suppose that the politicians quoted in the BBC story would have much grasp in understanding the issues before feeling free to comment, so at the other end of the spectrum I shouldn't expect the Daily Mail readership to grasp that most of them are being robbed by these market traders outside the system.<br />
<br />
We are all being mugged by the fiddlers. I think tax avoidance (legal) is a question of personal morality for individuals and as long as they abide by the law it is up to them. I can have a view but accept it may not be the same as theirs. Tax evasion is breaking the law and I am sure we are all agreed it is immoral. Or are we?
<br />
<div class="zemanta-pixie" style="height: 15px; margin-top: 10px;">
<a class="zemanta-pixie-a" href="http://www.zemanta.com/?px" title="Enhanced by Zemanta"><img alt="Enhanced by Zemanta" class="zemanta-pixie-img" src="http://img.zemanta.com/zemified_e.png?x-id=cab528a8-ae0a-45eb-8da0-455d7278837a" style="border: none; float: right;" /></a></div>Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com0tag:blogger.com,1999:blog-2634087705776142209.post-70679541545983144972012-07-18T03:41:00.000-07:002012-07-18T03:41:22.362-07:00HMRC tip-off hotline and catching the crooks<br />
<div style="margin-bottom: 0cm;">
<span style="font-size: medium;"><b>Grassing up</b></span></div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
We are told that <a href="http://www.accountancylive.com/croner/jsp/Editorial.do?contentId=2199932&BV_UseBVCookie=yes&channelId=-601052" target="_blank">74,000 calls</a> were made
to HMRC's tip off-line in 2011, reporting suspected tax evaders. That
is apparently rather fewer calls than were made in 2010.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
I would like to see all dishonest
tax-dodgers caught. The so-called black economy consisting of people
who offer to re-lay your drive or clean your house <a href="http://jonstax.blogspot.co.uk/2011/10/fat-cats-and-gutter-rats.html" target="_blank">soffits and fascias</a>
for cash and all the other “cash-in-hand” people who knock on
your door cost the country billions in lost tax. Dave Hartnett banged
on about this, I remember. He was right in that respect.
</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
<span style="font-size: medium;"><b>Burst water mains</b></span></div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
The tax leakage through dishonest
tradespeople is very likely much larger than the (legal) avoidance by
large corporates and the illegal <a href="http://www.mirror.co.uk/news/uk-news/vat-fraudsters-who-made-39m-903381" target="_blank">VAT fraudsters</a>
though I am always very pleased when tax crooks are caught and
sentenced. Even the driveway-laying tax evaders can apparently get
<a href="http://www.zephyrsouthwest.com/2012/06/five-family-members-sentenced-following-500000-tax-evasion-fraud-investigation/" target="_blank">large scale</a>. </div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
Most of the 74,000 tip-offs will relate
to small scale tax-evasion though in aggregate there will be a large
amount of tax lost. That is tax stolen from honest taxpayers' back
pockets, considering that the rest of us have to make up the deficit
caused by the fiddlers.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
<span style="font-size: medium;"><b>Resources</b></span></div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
What concerns me about the tip-off line
is HMRC's resources to deal with the information received. They may
have the profiling software, but the false and malicious allegations
will need to be weeded out and then the others followed up.
Logically, it would be easier to concentrate on the bigger fish
because the potential tax recovery would be greater. With any
investment in business, the yield is important because it means more profit,
even when we are talking about HMRC. <span style="background-color: white;">Apparently they <a href="http://www.guardian.co.uk/business/2012/jun/23/tax-revenue-tribunals-staff-billions" target="_blank">lack resources</a> even in
that area.</span></div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
HMRC have “task-force” campaign
around <a href="http://www.accountingweb.co.uk/article/hmrc-task-force-tracker/521073" target="_blank">specific types of businesses</a>
but it seems to me this is just nibbling around the edges. I think
that, coupled with the profiling software, more well-trained and
preferably experienced staff should be taken on. That is anathema to
those on high who want to see further staff cuts in Government
departments, but potentially the yield should justify the investment
costs.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
If HMRC want experienced tax people with noses for weeding out the crooks, maybe they should hire some
tax practitioners from the private sector. I could make myself
available on a part-time basis if I had a suitable offer (I mean
it) but my point is that experience in real tax issues is what HMRC
requires to sniff out smaller-scale tax evasion. Unfortunately with
the cuts and early retirements, experience is what HMRC staff lack.</div>Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com0tag:blogger.com,1999:blog-2634087705776142209.post-18514232285438500282012-07-17T13:15:00.000-07:002012-07-17T13:15:14.303-07:00Tax avoidance and the avoidance of doubt<br />
<div style="margin-bottom: 0cm;">
<i>This is most of a response I wrote
in a private forum when amongst other absurd suggestions I saw it
suggested that claiming expenses against business income was a form
of tax avoidance. It may have been tongue in cheek but it did
wrong-foot a couple of other posters in the forum. </i>
</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
<i>Post the Jimmy Carr affair it is
still worth repeating in addition to earlier posts here.</i></div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0.5cm;">
I think it is useful to say that tax
avoidance is not:
</div>
<ul>
<li><div style="margin-bottom: 0cm;">
Claiming expenses against business
income to determine taxable profit. That is what our tax returns
require us to do.
</div>
</li>
<li><div style="margin-bottom: 0cm;">
Using tax breaks given to us by
our Treasury such as (in the UK) ISA investments and putting money
into Enterprise Investment Schemes and Venture Capital Trusts, thus
getting relief from income tax and capital gains tax.
</div>
</li>
<li>In the UK, paying out our company profit in dividends with
minimal salary to avoid paying Employers and Employees' National
Insurance Contributions. Despite the hue and cry over people
contracted through their companies to work for Government
departments and Quangos, the Treasury is quite aware that this is
common practice so again we must assume that it is “the will of
Parliament”. That is an important phrase, by the way.
<br />
</li>
</ul>
<br />What is generally accepted as “tax avoidance” in the world
of tax professionals is using arrangements which have a degree of
artificiality and that are without commercial reality; there would be
no commercial reason for doing them other than to reduce or avoid
tax.<br /><br />The current furore is over Jimmy Carr. Apologists for
more aggressive tax avoidance quote the words of Lord Tomlin in
Inland Revenue Commissioners -v- Duke of Westminster; House of Lords
1936, when he said “Every man is entitled if he can to order his
affairs so that the tax under a tax statute is less than it would
otherwise be. Whatever the substance of the arrangements may have
been, their fiscal effect had to be in accordance with the legal
rights and obligations they created.”<br /><br />However it is no
longer 1936 and Lord Templeman told us back in 1986 that tax
avoidance was reducing a tax liability by means within the law, which
were not intended by Parliament. Tax mitigation is arranging our
affairs and those of our clients to reduce our liabilities in a way
that Parliament has considered. This followed from then recent
history in tax litigation. <br /><br />In 1982 the Inland Revenue, as it
then was, had two major successes with cases known as Ramsay v. IRC
and IRC v. Burmah Oil Co. Ltd. Basically it was determined that any
arrangement which has pre-arranged artificial steps with no
commercial purpose other than to reduce tax liabilities would
effectively fail. This is a simplification, but the rulings
established what has become known as the Ramsay Principle, which
would mean that any wholly artificial scheme to reduce tax would
fail. The General Ant-Avoidance Rule (GAAR) which the Government has
decided to implement following an enquiry conducted by Graham
Aaronson QC will seek to reinforce that principle, though I rather
think we will see a great deal more work for the lawyers.<br /><br />I
worked on avoidance schemes myself. I enjoyed the intellectual
challenge way back and I <a href="http://www.jonstow.com/business-tax-and-snake-oil-schemes/" target="_blank">make
no secret</a> of it. Avoidance is something I have returned to in
writing <a href="http://jonstax.blogspot.co.uk/" target="_blank">several
times</a> and also see <a href="http://practicalgrowthsolutions.com/2012/03/tax-schemes-%E2%80%93-beware-of-false-profits/" target="_blank">here</a>.
<br /><br />If tax avoidance is a moral issue it is a personal one as I
say <a href="http://jonstax.blogspot.co.uk/2012/07/publics-double-standards-over-tax.html" target="_blank">here</a>,
and apologies for all these links. I feel that there are certain
things that need to be said for all professional tax practitioners,
and I have an article along the same lines published in one of the
professional newsletters.<br /><br />My concern over many of the tax
schemes being sold is that those who go into it often do not
appreciate the risks any more than do the non-tax professional
introducers and “financial advisers”. I use the term loosely.
While the introducers are often to a degree covered by the insurance
of providers, their professional reputations are at risk as many of
these schemes will fail.<br /><br />The individuals trying to avoid tax
often do not understand that HMRC will dig into their tax affairs and
those of their companies, and if their families are involved, their
affairs too. Anyone using a scheme should have a strong stomach and a
capacity to sleep at night whatever the stresses and strains of daily
life. The tax relief, if it arrives, may be a long time coming, and
it may be clawed back later. <br /><br />Some schemes I would advise any
client of mine not to touch with a bargepole knowing who is behind
them. Because they have been “approved” by Counsel, a leading QC
or whatever it says in the blurb is no sort of guarantee. Other
Counsel may disagree and they might be appearing for HMRC in the
future. What Counsel provide for a scheme is a protection for the
providers in not getting sued, and you can always find a tame
barrister to agree your arrangement will work. I should know because
I have.<br /><br />For one of the reasons above I would not be happy if
my client chose the scheme I saw circulated this past week. However
it would be my client's decision and we would declare the scheme in
the tax return under the “Disclosure of tax avoidance schemes
(DOTAS)” box unless it didn't have a scheme number. If it did not,
I would write an essay for HMRC with every detail I knew, unless the
client asked me not to. If she or he asked me not to disclose I would
resign.<br /><br />The professional bodies don't want <a href="http://www.taxjournal.com/tj/articles/icaew-chief-denounces-promoters-abusive-tax-avoidance-schemes-48881" target="_blank">their
members involved</a> in creating aggressive schemes anyway, so if I
did work on an extreme one myself as a designer I might be subject to
disciplinary action (not that I am an ICAEW member), even though I think it should be my call and not
that of a professional body.<br /><br />
<br />
<div class="zemanta-pixie" style="height: 15px; margin-top: 10px;">
<a class="zemanta-pixie-a" href="http://www.zemanta.com/?px" title="Enhanced by Zemanta"><img alt="Enhanced by Zemanta" class="zemanta-pixie-img" src="http://img.zemanta.com/zemified_e.png?x-id=ccb5365b-90a4-4cb4-8e4b-e648522d5c9a" style="border: medium none; float: right;" /></a></div>Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com1tag:blogger.com,1999:blog-2634087705776142209.post-63284037966084716962012-07-02T10:12:00.000-07:002012-07-02T10:14:02.088-07:00The public's double standards over tax avoidance and tax evasion<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi8kQpI_h7VgZOcKcKcNkwOcegbytjQeGak56gygr0incsYWwKC-dRkuCUXh5oDoVEqIP4DmC9qXD7xnGvx7TUObd7xkTYwXKgD_nHtht-wMh32yVpjZ6p2Ou1VF9dyKU0TUPIrwBHhDRSr/s1600/Aug+16+2011+027.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi8kQpI_h7VgZOcKcKcNkwOcegbytjQeGak56gygr0incsYWwKC-dRkuCUXh5oDoVEqIP4DmC9qXD7xnGvx7TUObd7xkTYwXKgD_nHtht-wMh32yVpjZ6p2Ou1VF9dyKU0TUPIrwBHhDRSr/s320/Aug+16+2011+027.JPG" width="320" /></a></div>
<span style="font-size: medium;"><b>Outrage</b></span><br />
<span style="background-color: white;">To be in Britain in 2012 means that it is quite impossible to
avoid strident headlines about wealthy and earning individuals
avoiding tax by utilising schemes. The case of the comedian, Jimmy
Carr, has attracted particular publicity and it has led to confusion
among not only the public but also journalists as to the difference
between avoidance and evasion of tax.</span><br />
<br />
In case anyone here is still confused. “tax avoidance” means
avoiding paying tax by perfectly legal means if often rather arcane
and somewhat artificial. “Tax evasion” means failing to declare
to HM Revenue & Customs income, gains or commodities or services
which should be taxed according to the law. Therefore tax evasion is
illegal.<br />
<br />
<b style="background-color: white; font-size: large;">Avoidance of doubt</b><br />
<br />
<span style="background-color: white;">I believe </span><a href="http://practicalgrowthsolutions.com/2012/03/tax-schemes-%E2%80%93-beware-of-false-profits/" style="background-color: white;" target="_blank">my position</a><span style="background-color: white;"> on tax avoidance is clear.
</span><span style="background-color: white;"> and I am aware of my own </span><a href="http://www.jonstow.com/business-tax-and-snake-oil-schemes/" style="background-color: white;" target="_blank">responsibilities</a><span style="background-color: white;"> as a provider of taxation
advice. </span><span style="background-color: white;"> However, may I spell it out a bit further? I do not recommend any
tax avoidance scheme (a cunning plan devised by some specialist
provider), and will not introduce my client to any arrangement which
has any degree of artificiality. If one of my clients is approached
by someone else then I will ensure she or he understands the risk and
pain of close scrutiny by HMRC before making a decision.</span><br />
<br />
<span style="background-color: white;">I do not go as far as the politicians in saying that tax avoidance
is </span><a href="http://www.bbc.co.uk/news/uk-politics-18521468" style="background-color: white;" target="_blank">morally wrong</a><span style="background-color: white;">.</span><span style="background-color: white;"> In the case of large corporate entities, the duty of the directors is
to their shareholders, and that means preserving as much of the pie
as possible to feed those who have invested their money in the
business and incidentally in the livelihoods of their employees.
There is an awful lot of confusion and strident headlines from
irresponsible or plain ignorant journalists about avoidance. Most
recently I saw a large corporate which had been in the news over a
tax avoidance issue being accused of further avoidance because it had
made a real, not artificial loss, and therefore had no profit to tax.</span><br />
<br />
I suppose in defence of journalists, many are being bombarded with
material from so-called experts who may be campaigners with bees in
their bonnets.<br />
<br />
<b style="background-color: white; font-size: large;">Morality</b><br />
<span style="background-color: white;">Really, in respect of money which is legally ours, the moral
judgement as to its use is in our own hands. I may not respect
someone who makes no contribution to society, but I will not set
myself up publicly to pronounce on moral issues. I have known vastly
wealthy and successful people who gave absolutely nothing to charity,
and of course personally I thought they should. Many years ago I also
knew a very famous person who gave a great deal of his money to
charity in a very low-key way. I wish the public knew what a really
good and decent person he was (and a very nice man anyway), but I
don't think he would have wanted the public to know, quite apart from
my being bound by confidentiality. My lips are sealed.</span><br />
<br />
Of course I do help my clients to pay less tax by claiming every
possible relief and arranging their affairs to pay less tax in a way
“that Parliament intended”, which is a phrase becoming popular
with tax judges.<br />
<br />
<b style="background-color: white; font-size: large;">Shady customers</b><br />
<span style="background-color: white;">The public is swept along by the media hysteria about avoidance
and yet there is still so little about tax evasion. Tax evasion is
illegal. Every time someone offers to re-felt your flat roof or
re-surface your driveway with a really good discount for cash, that
means they will probably not declare the income in their tax returns.
Of course, being the dishonest fraudsters they are, that means that
if you have a problem later, you probably won't be able to get them
back to fix it.</span><br />
<span style="background-color: white;">Some of these driveway people actually don't believe in paying any
tax at all and </span><a href="http://hmrc.presscentre.com/Press-Releases/Tarmac-tax-fraudsters-are-jailed-67c11.aspx" style="background-color: white;" target="_blank">this lot</a><span style="background-color: white;"> robbed the Exchequer of over half a million pounds</span><span style="background-color: white;"> which is our money. If they don't pay their share, we honest
taxpayers have to pay more. This </span><a href="http://m.accountingweb.co.uk/article/hmrc-secures-plumber-conviction/527556" style="background-color: white;" target="_blank">dodgy plumber</a><span style="background-color: white;"> also got caught too</span><span style="background-color: white;">.</span><br />
<br />
<span style="font-size: medium;"><b>Accessories to fraud?</b></span><br />
<span style="background-color: white;">As long as the public aids and abets fraudsters by paying them
cash, everyone else loses out. It is likely that far more tax is lost
to dishonest small traders than in respect of legal tax avoidance by
a far smaller number of wealthy individuals.</span><br />
<br />
In the end we can all do our share of ensuring that everyone pays
their “fair share” of tax, and that means not parting with bank
notes when a cheque or credit transfer or payment be card would
normally be appropriate. Just because a few avoid tax legally is no
excuse for assisting dishonest people to dodge tax, because they
might as well be nicking that tenner from your back pocket.<br />
<div class="zemanta-pixie" style="height: 15px; margin-top: 10px;">
<a class="zemanta-pixie-a" href="http://www.zemanta.com/?px" title="Enhanced by Zemanta"><img alt="Enhanced by Zemanta" class="zemanta-pixie-img" src="http://img.zemanta.com/zemified_e.png?x-id=6fc4fc5f-1527-4f8c-a5c1-9a9ea1b3db48" style="border: none; float: right;" /></a></div>Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com0tag:blogger.com,1999:blog-2634087705776142209.post-73764106604213543202012-06-17T11:45:00.000-07:002012-06-17T11:47:28.959-07:00HMRC loses the plot over ESC A19<table cellpadding="0" cellspacing="0" class="tr-caption-container zemanta-img" style="float: right; margin-right: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><div class="zemanta-img">
<a href="http://commons.wikipedia.org/wiki/File:Treasury.london.arp.jpg" imageanchor="1" style="margin-bottom: 1em; margin-left: auto; margin-right: auto; text-align: clear:right;"><img alt="HM Revenue and Customs seen from Parliament Sq..." border="0" class="zemanta-img-inserted" height="218" src="http://upload.wikimedia.org/wikipedia/commons/thumb/f/f6/Treasury.london.arp.jpg/300px-Treasury.london.arp.jpg" style="border: none; font-size: 0.8em;" width="300" /></a></div>
</td></tr>
<tr><td class="tr-caption zemanta-img-attribution" style="text-align: center; width: 300px;">HM Revenue and Customs seen from Parliament Square (Whitehall, London, England). Photographed by Adrian Pingstone in June 2005 and placed in the public domain. (Photo credit: <a href="http://commons.wikipedia.org/wiki/File:Treasury.london.arp.jpg">Wikipedia</a>)</td></tr>
</tbody></table>
<br />
<div style="margin-bottom: 0cm;">
<span style="font-size: medium;"><b>The Concession</b></span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
For those not familiar with Extra
Statutory Concession A19, here is HMRC's <a href="http://www.hmrc.gov.uk/esc/esc.htm" target="_blank">own commentary</a> on the subject. To quote the beginning:</div>
<br />
<br />
“If you think that HM Revenue & Customs (HMRC) should have
already collected the tax due in your Tax Calculation (P800) because
the information had already been provided to it and HMRC have failed
or delayed to use this information, then in some limited
circumstances HMRC may agree not to collect it.<br />
<br />
An 'Extra Statutory Concession' (ESC A19) allows HMRC to do this
and it only applies to individual taxpayers who owe Income Tax and
Capital Gains Tax. It does not apply in any other circumstances where
amounts owing to HMRC are in dispute.<br />
<br />
The circumstances are that HMRC should have used the information
provided within 12 months after the end of the tax year in which it
is received to notify the taxpayer of any arrears.”<br />
<br />
<div style="margin-bottom: 0cm;">
As it says on the tin, the relief is
concessional and therefore discretionary. So what am I complaining
about?</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="font-size: medium;"><b>Recent history</b></span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
Back in the summer of 2010 HMRC had
improved their software for finding overpayments and underpayments of
tax mainly in respect of the majority of people taxed under PAYE who
are not required to submit tax returns under Self Assessment. These
differences covered a number of years generally from 2006-07 onwards
though I believe there were an odd few from a year or so earlier.
</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
If HMRC were not fairly quick in
recovering what tax they thought they were owed, they would have been
statute-barred from collecting it. So they set about sending out
calculations of tax generally outstanding for the previous three or
four years.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
Many of the people caught out were
pensioners with usually more than one occupational pension, though
the pensions themselves are often quite modest. Obviously there was a
furore and a campaign in the newspapers, many of which drew attention
to ESC A19. Individuals with unexpected tax demands of often £5,000
- £6,000 made claims under ESC A19 and many, possibly most of the
claims by pensioners in this situation were allowed. Great, and it
seems only fair that people of modest income with almost none from
savings (with such low interest rates) should not be landed with such
an unexpected tax burden.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
However, not all the underpayments of
tax (yes, and some overpayments) were found in the first wave. HMRC
have continued to run their program, many more differences have been
found, and calculations sent to unsuspecting taxpayers including many
more pensioners.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="font-size: medium;"><b>A sad tale</b></span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
Consider the case of one lady, who
following the death of her husband a few years back, actually visited
an HMRC office back in the days when one could, and went through her
income sources requesting that HMRC made sure her tax affairs would
be in order. Four-and-a-half years later (at the end of 2011) she
received a demand from HMRC for more than £6,000. Apparently she had
been given allowances against more than one occupational pension.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
She made a claim under ESC A19, which
has been refused and her appeal turned down. Yet all pension
providers must have advised HMRC by 19th May annually of the amounts
paid to their pensioners in the previous tax year. Surely “HMRC...
failed to use information received about a source of income, within
12 months after the end of the tax year in which the information is
received” especially when you consider the lady visited HMRC's
office back in 2007.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
Yet HMRC says the lady fails the
<a href="http://www.hmrc.gov.uk/esc/esc.htm#3" target="_blank">“reasonable belief” test</a>. Presumably because the HMRC officer she saw in 2007 did nothing
following her visit and did not type a note into the computer system,
HMRC is prepared to call the lady a liar.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
<span style="font-size: medium;"><b>Patent unfairness</b></span></div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
HMRC seems to be resisting every ESC
A19 claim now. I suppose there has been an internal memo that to much
tax was being lost or leaked because of the claims made.
</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
Yes, we are dealing with a concession.
Yet the current attitude of HMRC is patently unfair as I have no
doubt that if the initial claim had been made in December 2010 rather
than December 2011 it would have been allowed and the tax written
off. It is hardly the lady's fault that HMRC took an extra year to
re-calculate her tax liabilities and certainly not her fault that
HMRC failed to act following her visiting their office in 2007 at her
own initiative. Except, as I said, that they seem to be calling her a
liar.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
In my view it is patently unfair that
almost identical claims made a year apart have been treated entirely
differently. I have no doubt that back in 2010 some more extreme
claims were allowed by mistake.
</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
I do not think it unreasonable to
expect that HMRC should be even-handed in dealing with similar cases
where taxpayers really were entitled to believe that HMRC had all
relevant information. Internal directives (yes, there must have been
one) should not mean that one British taxpayer should be treated
differently from another.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
What is your experience?</div>
<br />
<div class="zemanta-pixie" style="height: 15px; margin-top: 10px;">
<a class="zemanta-pixie-a" href="http://www.zemanta.com/?px" title="Enhanced by Zemanta"><img alt="Enhanced by Zemanta" class="zemanta-pixie-img" src="http://img.zemanta.com/zemified_e.png?x-id=3b8872d1-6ac3-4695-b2aa-d0b7989c3c88" style="border: none; float: right;" /></a></div>Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com0tag:blogger.com,1999:blog-2634087705776142209.post-29211948042817573912012-03-08T02:38:00.000-08:002012-03-08T02:38:24.907-08:00Hypocrisy and unreasonable expectations of tax reduction<br />
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjfgd0DLk5IQBCPQnGPYQvnWX55RZwQUEy94tzCc3OUEL63ZVcjSfYtn3YYgLlzKxn6wgYKKZl2-QBoYZe5bWCD06OIWmhdvMXeW2_fxLjsGmyMepgueCvYpZMZQavx8OkP1yT8RLAwFQQU/s1600/DSC00811.JPG" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjfgd0DLk5IQBCPQnGPYQvnWX55RZwQUEy94tzCc3OUEL63ZVcjSfYtn3YYgLlzKxn6wgYKKZl2-QBoYZe5bWCD06OIWmhdvMXeW2_fxLjsGmyMepgueCvYpZMZQavx8OkP1yT8RLAwFQQU/s320/DSC00811.JPG" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Or a cat in the West Indies</td></tr>
</tbody></table>
<div style="margin-bottom: 0cm;">
I have been <a href="http://practicalgrowthsolutions.com/2012/03/tax-schemes-%E2%80%93-beware-of-false-profits/" target="_blank">writing recently</a>
about tax avoidance schemes and the <a href="http://en.wikipedia.org/wiki/Siren" target="_blank">Sirens</a>
who lure unsuspecting business owners and higher paid employees
towards their rocky outcrops.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
Please don't misunderstand me. I am
certainly not against people managing their affairs to pay less tax,
and it can be done without worry. It is just that there are so many
offers from tax avoidance specialists which claim to reduce tax on
business profits to very little in the hands of the business owners
extracting it as income. The appeal is both to the greedy and to
those who resent paying so much of their hard-earned cash in tax when
they are making such a contribution to the economy by employing
people. I have some sympathy with the second category.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
When I was in the tax avoidance
“industry” I saw both categories. I guess that in these
moralistic times post-banking crisis it is hard to sympathise with
the greedy but maybe it always was. I had a certain distaste for some
of the clients I saw way back; those who wanted the yacht in
Gibraltar and the house in Barbados mostly paid for by the Treasury.
Those others who were less selfish but wanted more control over their
money were easier do deal with. Yet both groups had to be apprised of
the risks.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
The world has changed. The climate has
changed. Legal tax avoidance is second only to illegal tax evasion on
HMRC's hit list. It is a <a href="http://www.jonstow.com/business-tax-and-snake-oil-schemes/" target="_blank">hard thing</a> to do
with a scheme these days.
</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
I am all for helping people save money
by paying less tax. It is a significant part of my business.
Sometimes though I get frustrated both by the clients' unreasonable
expectations and the double standards on behalf of Government, by
which I mean the machinery of the Civil Service and the environment
which came about under the previous administration where there was
(is) one rule for some working with Government organisations and
another for others who don't.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
We have seen a <a href="http://www.guardian.co.uk/education/2012/feb/01/student-loans-company-tax-row" target="_blank">recent row</a> about the
head of the Student Loans quango
working through his service company. We in the tax profession all
know that the arrangement has nothing to do with saving him tax, but
it <u>is</u> related to the Government avoiding its responsibilities
as an employer re periods of notice, pension contributions and the
like. And that is what happens throughout the Civil Service and the
NHS where the “employer”, i.e. Government, prefers to pay
contractors generally through an agency rather than having them as
employees.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
So all these contractors can save a
load of tax either working through their company or using an
<a href="http://en.wikipedia.org/wiki/Umbrella_company" target="_blank">“umbrella scheme”</a> which for some reason HMRC often looks on benevolently.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
I had a prospect come to me recently
who wanted to have a service company to save him tax. He worked for
one company, has done for eight years, and expects to do for a few
more. I had to tell him that with the degree of control the firm and
his agency had over him, he was a quasi employee and would be liable
to the IR35 legislation which effectively would tax him as an
employee. It wasn't on in his particular case. However, if he had
been working ultimately for a Government or local Authority
department my advice would probably have been different.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<div style="margin-bottom: 0cm;">
So we have overaggressive tax avoidance
schemes which may not work. We have sensible tax mitigation which is
the sort of work I do. In between, we have incredible hypocrisy in
the Civil Service in how they engage many of their workers, and
ignorance amongst Government Ministers who do not understand the
culture of hypocrisy which has grown up over employment
responsibilities and tax. That can't be right, can it?</div>
<br />
<div class="zemanta-related">
<h6 class="zemanta-related-title" style="font-size: 1em; margin: 1em 0 0 0;">
Related articles</h6>
<ul class="zemanta-article-ul">
<li class="zemanta-article-ul-li"><a href="http://www.jonstow.com/business-tax-and-snake-oil-schemes/">Business tax and snake oil schemes</a> (jonstow.com)</li>
</ul>
</div>
<div class="zemanta-pixie" style="height: 15px; margin-top: 10px;">
<a class="zemanta-pixie-a" href="http://www.zemanta.com/" title="Enhanced by Zemanta"><img alt="Enhanced by Zemanta" class="zemanta-pixie-img" src="http://img.zemanta.com/zemified_e.png?x-id=bb9367b1-9fd3-423a-9360-ac74decc1682" style="border: none; float: right;" /></a></div>Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com0tag:blogger.com,1999:blog-2634087705776142209.post-56192417089200534942012-02-02T09:54:00.000-08:002012-02-02T09:54:31.000-08:00Money Laundering checks and the criminal elementAs a business defined as an “Accountancy Service Provider (ASP)” we are expected to check the IDs of new clients with regard to the Anti-Money Laundering Regulations (MLR), which we do diligently. We now have means of doing on-line checks, but I worry that there is such a racket in forged papers that even these on-line facilities might not be sufficiently rigorous, as an established ID of any longevity might pass even more sophisticated tests.
<br />
<br />
Recently I received the following as a spam comment on one of my WordPress blogs:<br />
<br />
“Our team is a unique producer of quality fake documents.
We offer only original high-quality fake passports, driver’s licenses, ID cards, stamps and other products for a number of countries like:
USA, Australia, Belgium, Brazil, Canada, Italia, Finland, France, Germany, Israel, Mexico, Netherlands, South Africa, Spain, United Kingdom. This list is not full...”<br />
<br />
There is a lot more but I have not quoted further because although I doubt they will sue me for breach of copyright, you already have the picture.<br />
<br />
Nearly four years ago I met someone who said he was a national of a country bordering the Black Sea. He produced a passport which looked OK to me, and a utility bill in the same name with the address of the flat he was staying in and said that he rented. This guy wanted to register as self-employed, so I completed a 64-8 with the National Insurance number he provided. HMRC then registered a lady I had never heard of as a client of mine, because apparently this National Insurance number was hers.<br />
<br />
I tried to check with my new client in case the number he provided was wrong, but I never heard from him again. I assume he had “done a runner”. I was quite relieved actually.<br />
<br />
Of course as a good ASP I reported this incident to the relevant authorities and never heard a thing from them, and I told HMRC who apparently couldn’t have cared less.<br />
<br />
I am all for using the MLR ID procedures with new clients because it is some sort of deterrent for dodgy characters, but as regards our being unpaid police, how are we to know just through document-checking just who some people are? I certainly did not spot what was probably a false passport. In reality I wouldn't know one if it slapped me round the face.<br />
<br />
Experience might lead us to do further checks if we have doubts, but our role as unpaid police or UK Border Agency staff cannot be particularly effective, especially if our reports continue to be treated with such indifference.Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com0tag:blogger.com,1999:blog-2634087705776142209.post-61097392765743590442011-11-01T11:36:00.000-07:002011-11-01T11:36:40.855-07:00Hartnett, HMRC and Hutber's Law<br />
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiTjpvnZHs1jBwdwOIL2Z8csXYe9Ff3POL6lIb3VtqHmQnW3EfbEBvr-8TfvWBgET908RxpsF8pfgUEndfCD9jeZh-UXQ7CZyt40ZZer9ET0IYkg05AMA9svLvoQwvnE2naO3qOoiT8A5gI/s1600/DSC00802.JPG" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiTjpvnZHs1jBwdwOIL2Z8csXYe9Ff3POL6lIb3VtqHmQnW3EfbEBvr-8TfvWBgET908RxpsF8pfgUEndfCD9jeZh-UXQ7CZyt40ZZer9ET0IYkg05AMA9svLvoQwvnE2naO3qOoiT8A5gI/s320/DSC00802.JPG" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">A non-resident's outlook</td></tr>
</tbody></table>
<div style="margin-bottom: 0cm;">
My sort of tax practice involves quite
a lot of technical issues. It is not necessarily because I look for
trouble, but because I specialise in certain more complicated areas
of tax and people come to me because they are in trouble. That
doesn't necessarily mean they are in trouble with HMRC (The Revenue),
though they may be. It is quite often because they are having trouble
dealing with HMRC because they cannot find anyone in HMRC who
understands their problem, let alone is able to help them find a
solution.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
Recently I had an issue with a
non-resident client whose pension suddenly started to be taxed
because HMRC did not understand it was not taxable by reason of there
being a Double Taxation Agreement in place. Some innocent in HMRC had
issued a PAYE Code and decided that the client, who had no taxable
income in UK should fill in a tax return. Persuading HMRC to leave
the client alone took a lot of time, telephone calls and a tax return
completed showing no taxable income. It really was the only way.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
Last week, I had an issue with another
client whom I believed to be non-resident by both past and current
evolving standards. I wanted to telephone the HMRC Centre for
Non-Residents as it is now called, which is in Liverpool. I could not
find the number on HMRC's website. I called the general agent's
number and was told that the only way for a non-resident or his or
her agent to discuss that person's affairs was to call the public's
HMRC call centre number.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
Even then (this is hard to believe even
for an old hack like me) apparently the Centre for Non-Residents does
not take telephone calls. One has to ask to be referred to a technical
officer who will call back and may be able to help.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
Actually a technical officer did call
me back, so this cost me only time (but time is money) as my
telephone calls are all inclusive in the business package. However,
to get through in the first place I had to go through an automated
button pushing system, the first with three options and the second
with six, so I had been on the line a while before I spoke to my
first human. Suppose I has been a non-resident UK taxpayer by design
or HMRC's default, calling from Tuvalu or Patagonia. How much would
it have cost hanging on? Would a technical officer have phoned back
anyway?</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
It is very difficult to pick up the
telephone and be put through to anyone at HMRC who knows about tax
rules. It would be almost impossible for a lay person to get through
to the right tax official. Yet HMRC and Dave Hartnett like to call
taxpayers “customers”.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
Back in the Seventies, the late Patrick
Hutber, City Editor of the Sunday Telegraph, stated his law
“improvement means deterioration” referring to changes in
services which large corporates said streamlined their services. One
of those was not letting bank customers have back their cancelled
cheques, still a source of irritation to me. Yet HMRC won't let their
technical staff be contacted by the public. Indeed they now have only
two addresses where one might write about a new issue which has
cropped up and therefore there is no way of tracking where your
letter might be until or unless you get a reply. That is no way to
treat customers.</div>
<div style="margin-bottom: 0cm;">
<br />
</div>
<div style="margin-bottom: 0cm;">
If Patrick Hutber were alive today he
might, after re-stating his law, refer to an older one in the
language of my aforementioned client who wrongly had tax deducted
from her pension “Plus ça change (plus c'est la même chose)”.
The more things change, the more they stay the same.</div>
<div style="margin-bottom: 0cm;">
<br /></div>
<br />
<div class="zemanta-pixie" style="height: 15px; margin-top: 10px;">
<a class="zemanta-pixie-a" href="http://www.zemanta.com/" title="Enhanced by Zemanta"><img alt="Enhanced by Zemanta" class="zemanta-pixie-img" src="http://img.zemanta.com/zemified_e.png?x-id=4224c30f-9831-458f-90c8-d1a9af9f5e34" style="border: none; float: right;" /></a></div>Jon Stowhttp://www.blogger.com/profile/03106962372787803823noreply@blogger.com1