tiintax

The human body is a time machine.  Your mind is carried into the future, whether you want it to be or not.

When I was a child, I remember a television programme called “Twenty Five Years Ago Today” which covered, week by week, what had been happening in the second world war, 25 years ago.  So this must have been, what, the late sixties (1939-45 + 25)

To me, this was history.  Black and white, unimaginably long ago.  I didn’t connect it with the lives of the adults around me, and I didn’t understand why my grandmother would “Boo!” every time Hitler appeared, and yet it was no further away from them than Bon Jovi’s “Livin’ on a Prayer” is from us.

Twenty five years ago today it was 1987.  I was thirty one years old, starting my career as a tax inspector after five years lecturing in drama and communications in a college of Further Education.

The human body is a time machine.  The brain in my head now has come from the past.  This is the past that I remember.

When I was recruited into the Inland Revenue, a Member of Parliament and an Inspector of Taxes were both paid at approximately the same rate, the equivalent of a Grade 7 or Principal, a grade understood across the entire Civil Service.

An Inspector of Taxes – even a raw, green, trainee Inspector of Taxes – had an office of her own; a room, a desk, a cupboard, shelves.  A set of hardback Tax Cases.  A set of Manuals.

There were controversial issues: whether the clerical staff called you “Ms Bradley” or “Wendy”.  Whether “Ms” was a real title or not.  Whether it was sexist that the staff list read

• J Doe
• R Roe
• Ms W Bradley
• F Bloggs

And, yes, I had an actual argument with a District Inspector who maintained that this was “correct” and that my suggested alternatives were not.  That

• J Doe
• R Roe
• W Bradley
• F Bloggs

wouldn’t do, because then how would you know which members of staff were female????  And

• Mr J Doe
• Mr R Roe
• Ms W Bradley
• Mr F Bloggs

would make work for the typists!

And, oh, yes, we had typists!  The District Inspector had a secretary, and the rest of us had a typing pool, and we were not under any circumstances to type our own correspondence because (a) it was taking work from our typing pool colleagues and (b) we couldn’t type to Civil Service Standards anyway and (c) our time was too valuable to waste.

We didn’t have computers on our desks, and we calculated using 174 paper – paper ready ruled with convenient columns for doing T-accounts and which I still miss (I hear rumours there are still secret stocks of 174 paper around HMRC but they are jealously guarded, not least from HMRC management)

We were intensively trained according to a method which offended every bone in my teacher-trained body.  Where you would cover a new topic, do your level best to wrap your brain around it, and then tackle the practical example at the end of the chapter which would always – always – have some entirely different issue in it that hadn’t been covered by your training yet!

This was not, I argued, how you learn.  You struggle to get your head around a piece of legislation and its accompanying calculation and then you do a practical example which cements that learning.  Ah, but that IS how life in the Revenue works, was the argument.  It’s always what you don’t know that you don’t know that trips you up.

The pass mark in the exams was high.  Because, there was nothing woolly about the topic you were learning.  There was always a right answer.  And that was your job.  To find the right answer.  To require people to pay the right amount of tax.  Not too much, and not too little.

Later, after you’d passed your training, when you looked at a set of accounts and found that the taxpayer hadn’t arrived at the right answer, you would register the amount and reason for any adjustment you had made.  They were called R adjustments (for “review” – you would look at accounts as they came in and classify them as A – accept – R – review – or E – examine or investigate.)  There was a box you ticked on the form to record whether the R adjustment was in favour of the taxpayer or of the Revenue.  Because both kinds of adjustment counted.  Your job was to find the right answer.

Not to find something “reasonable” that would do.

Tell the young people of today that…

The National Audit office finally publishes its report on five of HMRC’s settlements with large businesses.  In other words, it looks at some of the cases where HMRC has had bad press for allegedly letting large corporates get away with paying less tax than they should, or without paying interest on the tax they’ve paid late.  Cases which have been brought to NAO’s and Parliament’s attention by whistleblowers.  (And given the way HMRC treats its whistleblowers I’m afraid I’m inclined to give the benefit of the doubt to the whistleblower simply by virtue of them being a whistleblower.)  Cases where there has been serious and legitimate public concern that the relationship between HMRC and its “customers” – or at least its large corporate customers – has perhaps become too cosy.

The NAO found the settlements were “reasonable”.

Let’s think about this for a moment.  Settling a tax dispute can take years – literally years.  Very clever people paid humungous salaries with almost unlimited resources at their disposal, are up against civil servants whose salaries are frozen, whose morale is the lowest in the Civil Service and whose numbers have been cut and are to be cut further.  HMRC is an arm of the State with the law at its disposal, but then proving a case to a court’s satisfaction can be incredibly difficult when you’re not talking about “did person A hit person B” but whether the movement of money happened at all and if it did what the generally accepted accounting provision treatment of it should be and how that relates to the tax legislation.

The NAO found the settlements were “reasonable”.

Not “perfect”.  Not “correct”.  Not “accurate”.  Just “reasonable”.

The executive summary of the NAO report says:

For each of the five settlements, we asked Sir Andrew Park to consider whether:

• the settlement value was reasonable in view of the circumstances of the case;
• the settlement was consistent with the Department’s Litigation and Settlement Strategy;
• the Department obtained appropriate legal advice and acted upon the advice at all relevant stages; and
• the Department followed its own procedures.

7 In evaluating reasonableness, we have considered whether the settlements represent fair value for the Exchequer and were in the public interest. This included considering whether the settlement was as good as or better than the outcome that might be expected from litigation, considering the risks, uncertainties, costs and timescale of litigation.

Incidentally, I looked for the Litigation and Settlement Strategy – the NAO report helpfully provides a link, but it appears to be broken.  A search of the HMRC site provides lots of commentary about the strategy but not, so far as I can find, a copy of the actual strategy itself.  Hmmm… now where have I heard that before? <coughs making a noise sounding like “customer-centric strategy”>

It’s a depressing thought: HMRC has been cut too far for the mantra that its job was to “collect the right amount of tax; not too much and not too little” to be applicable any more.  Now it’s satisfied with a “reasonable” amount.

Meanwhile, UK uncut took a different view.

Yes, I know “people are being annoying on the internet” is hardly news, but I was annoyed by a thread on twitter this morning.  People were recounting occasions when they had telephoned the Department and had good customer service, which, yay!   But what annoyed me was that the Department they thought they had telephoned was the Inland Revenue – which, as any fule kno, was merged with Customs and Excise to form Her Majesty’s Revenue and Customs in 2005, or seven years ago!

A little bird tells me that this may not, entirely, be the fault of public ignorance.

“Work to update the office signs outside HMRC buildings is almost complete. HMRC’s Estates and Support Services has been working with contractors to remove external signs that referred to HM Customs and Excise or Inland Revenue…”

Yes folks, after a mere seven years, the work to update the signs outside the Department’s buildings with their new name is almost – and don’t you just love that word “almost”? – complete!

Except…

“HMRC’s enquiry centres were initially not included in the project, but are now next on the list to have their signs replaced.”

“Enquiry Centres”, of course, being the buildings that the public actually visit!

Of course, I have no way of telling whether little bird is actually telling me the truth, so let’s crowd-source it.  If you happen to be passing an HMRC office today, please have a quick look at the name plate outside and post your photo onto twitter.  Use the hashtag “7yearpix” and we’ll regroup and compare notes later.

I am fascinated this week by a tax case.  CIR v J Bentley, a first tier Tribunal case (TC 01927, which can be downloaded from this page)

The Tax Tribunal is how disputes between HMRC and taxpayers are settled if no agreement can be reached, and the First Tier is the equivalent of the Magistrates’ Court, dealing with what you might call low level disputes.

Mr Bentley was a pensioner who decided to fill in his own tax return to save money.  He’d had an accountant do it previously but thought he could do it himself with help from HMRC staff.  He turned up at his local HMRC office on 31 January, the day of the deadline, but HMRC wouldn’t deal with him then and there and offered him an appointment on 3rd February.  He went on 3rd February and filled in his return then, and was charged a penalty for the return being three days late.  He appealed on the grounds he had a reasonable excuse.

The HMRC argument is interesting:

… a prudent taxpayer would have appreciated that such appointments, especially on the filing deadline of 31 January, would be pre-booked and therefore unobtainable at short notice on one of HMRC’s busiest days. The Appellant should have acted sooner and made the necessary arrangements at an earlier date.

But there was nothing in the HMRC publicity to say “you need to allow [x amount of time] before the deadline if you want us to help you”.  An insider might know that HMRC customer service is, shall we say, a bit patchy, but would Joe Public?

…it does not appear to be in dispute that he did, prior to the deadline, seek to make an appointment, and that he did take the first available appointment which was on 3 February 2011, and that he did file the return on that date. The Tribunal is satisfied on the evidence that he would have accepted an appointment and have filed the return by 31 January 2011 if an appointment had been available on or before that date. The return was thus 3 days late, due not to his own conduct but due to HMRC’s unavailability.

The tribunal said that Mr Bentley DID have a reasonable excuse – he’d turned up before the deadline, and the fact that HMRC couldn’t cope with the demand was their problem, not his.

It sounds like a reasonable conclusion to draw.  But what does it mean for the Department?

There have been enormous staff reductions at HMRC in recent years, and the much vaunted £900m “increase” in compliance spend is actually only a £900m reduction in the amount by which HMRC’s budget was to have been cut and a redeployment of staff to compliance work from other tasks.

Other tasks like, say, the routine policy work of preparing 22 consultation documents in May?

Other tasks like dealing with people trying to make their returns on time.

I imagine, following the Bentley case, that HMRC centres will soon have large notices in them saying something like “please allow 10 days before we can give you an appointment, and more at busy times”. (Whenever I see something like that it always feels like the organisation is giving up and saying “we’re crap and we know we are.”)

There must come a point when salami slicing at the resources put into collecting tax leaves you without enough people to do the job.

Are we nearly there yet?