Outside inNovember 19, 2013
Has HMRC gone to the dogs?
I keep hearing tales of mishandling of people’s tax affairs by HMRC – factually incorrect decisions, idiotic telephone handling, computer-generated correspondence tone deaf to nuance and stuffed full of incomprehensible jargon…
But then I would, wouldn’t I? I’m writing a PhD about tax policy-making, I write a blog about HMRC consultations, and I’m an ex-Inspector, so any time the “what do you do?” question comes up in polite conversation I’m going to have to mention tax. I’m retired (what did you do before?) I’m a student (what are you studying?) I write a blog (what’s it about?)
Now, when you are a tax inspector you quickly learn (and are in fact told by your colleagues) not to mention it at parties. This is because, just as doctors never say what they do because someone will immediately buttonhole them about the odd pain they get in their left knee, so mention of tax will always bring people’s own tax questions out of the woodwork. When I passed my driving test the examiner asked me what I did (he was just making conversation while he filled in the forms) – and then spent so long asking my advice about a capital gains tax question that my poor instructor was convinced I’d failed again! And the “ex” part of ex-inspector means that people are, if anything, MORE inclined to tell me about their tax problems these days because I’m no longer one of “them”.
And conversations about a government department are never going to be about how well conducted it is – it’s like the old Lenny Henry joke about the policeman never pulling you over to tell you the way you took that corner was well ‘ard. No-one makes a funny story out of how they did their tax return and it was easy and everything worked just fine.
So there are several reasons why my view of HMRC might not be accurate. First, because anecdotage tends towards the humorous “catastrophe” and away from boring competence. Second, because I’m a tax policy wonk and, just like the doctors, everyone has a tax story just as everyone has a human body story. (Death and taxes, universal experiences, remember.)
But my view of the Department may also be different because, when I was inside HMRC, it felt like I might be able to do something about it. If someone said they’d had a bad experience with x I could suggest they tried doing y or speaking to so and so. Now, I’m just another bloody civilian and I can queue up on the helpline like everybody else, so there’s also something about my own perceptions of the Department being different.
And yet… and yet…
What about Robert Smith v HMRC (TC2768)? Yes, there was an avoidance scheme involved so I can’t say my heart bleeds for the taxpayer. But it was an avoidance scheme HMRC knew all about, had issued a technical note on, and where the taxpayer had given enough information in his return for HMRC to have challenged him. But – and there was actually a handwritten note on his file which said ”on sick leave 21/11/02 to 3/3/03. No action during that period and therefore SA window for Enquiry already closed 31/1/03. Too late!” - HMRC missed their window. By which I mean that – through HMRC management not adequately covering the sick leave of one of their officers – they missed the statutory window of opportunity to enquire into the return. And remedied it by deciding they could make a “discovery” assessment. While the taxpayer in me thinks, well, good, he didn’t get away with an avoidance scheme, the citizen in me thinks, hang on, whatever happened to finality and only one bite of the cherry…
Well what about W Maxwell (TC2849) where one of the pieces of metadata for the case is “unconscionable”? Mr Maxwell was a pensioner and his accountant kept telling him his tax affairs were up to date and everything was OK but in fact the accountant was seriously ill and not keeping up with his work. The accountant then died and Mr Maxwell – who had known nothing of his accountant’s illness – found another accountant and thought he was up to date. However he in fact made late returns (because his former accountant hadn’t made them as he’d believed) and so HMRC charged him penalties. In spite of the fact HMRC had apparently allowed other clients of the dead accountant some leniency, nevertheless they seem to have decided to throw the book at Mr Maxwell – but, as tax barrister Keith Gordon pointed out in Taxation, “The facts were crying out for relief and it is amazing – for which I mean seriously concerning – that the case would have passed through a number of different HMRC officers, none of whom seemed to be able to act conscionably”
Get that? Different levels of HMRC review and still no-one had the wit to say, hang on a minute, do we really want to throw the book at this guy?
Well how about a deceased taxpayer whose executor sends in the trust return for her estate on paper in January when paper returns have to be in by the end of October? An electronic return is made before the end of January – the electronic return is on time, but there’s a nasty wrinkle that means you can’t avoid a penalty for making a late paper return by making the same return electronically later. The trustees explained they hadn’t meant the paper “return” to be taken as a return, they were just writing to make it clear this would be the last return and the estate had now been distributed, and it was the electronic return which was the actual return for the period.
Now, we could all argue this one till the cows came home, but – but, the penalty was £100, the taxpayer had died, the estate was distributed, and the electronic return was on time. You’d have to have a heart of stone not to say “oh all right then, just this once”, surely?
Well, suppose you had knowledge that didn’t make it into the report of the case: I don’t know, make up your own. Perhaps you just didn’t like the cut of their jib for some inscrutable reason of your own – but even so wouldn’t you, at the very least, make sure that before you went to court, for a hundred quid penalty, that you had a copy of the damned return you were talking about???
15. HMRC have produced no evidence to the effect of the return filed on 14 January 2013 was a valid return even though this is an appeal where it was clear that the nature or status of the paper document sent to HMRC was in dispute. The document itself has not been produced and there is no evidence that this document (which the Appellant described as a “copy” of the online return) was signed by the Appellant.