tiintax

I’m not sure whether to be cheered or depressed at the fact that my reader stats have remained about the same, in a week when I haven’t been posting (on account of it being the first week of my PhD studies, of which more later).  Anyway…

I see that there was a consultation which closed last week on the HMRC ambition to “clarify” their extra-statutory concession A19.  Now this gives me problems on several levels.  First of all, the completist in me goes “hang on, I thought the aim of this blog was to reply to ALL of HMRC’s consultations this year?”  I know there have been a couple lately where my response has been along the lines of ‘I’m not going to respond to this one because it’s too stupid…’, but the A19 one I didn’t see.  At all.  I mean, I can see it now, on the page for lapsed consultations but where was it on the tax tracker???  Did I miss it, or was it never there?  I mean, if (as it says on the “lapsed consultations” page) it opened on 3 July, why isn’t it on the tracker page under July?  Oh, and while we’re on the subject, the DirectGov page for “all” government consultation websites lists an HMRC site and an HMT site, but NOT the tax tracker site!  No wonder people – well all right, no wonder I, at least – get confused!

Don’t worry, though – next month the DirectGov page will be overtaken by the Gov.uk site… which is in beta testing now.  Here’s what I sent them by way of feedback today…

I seem to remember that at one point there was an aspiration to have all government consultations available from one webpage. At least direct.gov has a link to all government *consultation* pages on one page – well, except the tax tracker! – but the beta version of gov.uk doesn’t return any hits for consultation that seem relevant. Is the aspiration still in existence, and will it be met by gov.uk?

The automated response says they’ll, er, contact me if something changes!

So let’s have a look at A19.  Well, to start with, why on earth are we having a consultation about “clarifying” the wording of an extra-statutory concession?  An extra-statutory concession is where HMRC uses its powers to administer tax to achieve a sensible answer where the strict application of the law throws up something hard-edged and unpalatable – so for example there are rules that say if companies are controlled by the same people they only get one small companies rate.  You can’t split up your billion pound business into a thousand little companies and say they’re all entitled to small companies rate.  And for a married couple you add together all of their companies.  But there’s an extra statutory concession that lets you off the strict application of this, so that if a plumber marries a hairdresser their companies don’t necessarily get aggregated (but if a plumber marries the owner of her biggest supplier, a plumbing supplies company owner, well, tough)

Now I admit I thought that all of the extra statutory concessions were being reviewed with a view to either legislating or abolishing them, but I see that the latest technical note I can find on this (2010) says:

The House of Lords’ decision in the Wilkinson {note} case clarified the scope of HM Revenue & Customs’ (HMRC) administrative discretion to make concessions that depart from the strict statutory position. HMRC is therefore reviewing its concessions. Although it is likely that the majority can remain as they are, some are thought to be beyond the scope of HMRC’s discretion. Of these, some can be legislated to preserve their effect; others will need to be withdrawn. {Note :R v HM Commissioners of Inland Revenue ex p Wilkinson [2005] UKHL 30}

Nevertheless, the point remains – if we’re talking about an extra-statutory concession, shouldn’t our first thought be whether we need to have the concession at all?  But no:

The consultation is designed to explore the option for a revised version of Extra-statutory Concession (ESC) A19. It is not intended to cover whether ESC A19 should exist or the scope of concessions, but rather how HMRC may be able to improve the clarity of this particular concession ensuring it continues to be applied appropriately.

Ok… define “clarity” and “appropriately” in that last sentence, please!

Essentially the concession says that, where HMRC has messed up by not making use of information that taxpayers or their employers have sent to them, then HMRC won’t pursue them for tax they didn’t know they owed.  Which is pretty clear, no?

Well, no.  Apparently HMRC need to define “information”… because they aren’t going to guarantee that they can be bothered to look at correspondence from employers, perhaps?  Anyway, if the concession is changed, they will only accept “information” from employers and from the DWP on specified forms or the RTI equivalent.

But from the taxpayer… the proposed definition is

1. Direct communication from a taxpayer (or someone authorised to act on their behalf) informing HMRC about a change in income, allowances, benefits or personal circumstances.

You know, I think a tweet directed at @HMRCgovuk would count as information for those purposes.  Test case, anyone?  “@HMRCgovuk I just gift-aided £1k to @somecharity, love @FBlogs”

The plain fact is the ESC exists to protect unsophisticated taxpayers from HMRC errors, and for HMRC to seek to change it by introducing the weaselly concept of “taxpayer responsibilities” is monstrous.  Look, particularly, at the last paragraph of this:

Taxpayer responsibilities

As set out in the HMRC Charter HMRC expects individuals to take responsibility for getting things right even if they have authorised someone to act on their behalf.

HMRC expects individuals to:

 Tell it about any changes in their circumstances that will affect their payments or claims.

 Check their tax code to ensure the information included is correct and up to date.

Sometimes where there has been a change in personal circumstances, it might not be clear whether it has an effect on the amount of income tax an individual has to pay. If an individual is unsure as to whether a change of circumstance affects their tax code they should contact HMRC.

Now I’m an ex-tax Inspector and I spent much of this afternoon on the phone with HMRC trying to sort out my mum’s P800 which turned her overpayment into an underpayment by means of a mystery “adjustment” which we eventually deduced was on account of her making too many gift-aided charitable donations – yes, when pensioners helpfully tick the box to help the charity get gift aid, HMRC are happy to pursue them for the last penny.  But there are always, as Donald Rumsfeld famously remarked, the “unknown unknowns”.  How would someone like my mum know that she didn’t know that she had to pay more tax before she could tick the box?

Maybe the consultation will produce a sensible outcome and the concession will remain as it is.

But if it doesn’t, maybe we should all check with HMRC before we do *anything*.  Because it seems to be our responsibility, if we’re unsure whether a change of circumstance affects their tax code, to contact HMRC…

“Hello?  HMRC?  I’ve just started a PhD.  Does that affect my tax code?”