Posts Tagged ‘HMRC’

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Minimum wage

June 5, 2014

Could you live on the minimum wage?  Do you even know what the minimum wage is?

It’s £6.31 an hour, if you’re over 21.  That’s £227.16 a week if you’re on a 36 hour week.  Just under twelve grand a  year.  (And a couple of grand of that is still taxed, too)

Now imagine you’re in a crappy job that doesn’t quite pay you twelve grand a year, and you have to drive around to old people’s houses and make their dinners or get them in and out of bed, and you’re not paid except for the time you’re actually in the room with the client, because the rest of the time you’re on a “rest break” (because driving from one side of the city to another in the middle of the day is so restful) and you’re vaguely aware there’s something wrong with your wage packet because you seem to have been working like a dog for forty seven hours, counting from when you left the house till when you got home, but you’ve still got barely two hundred quid in your wage packet.

What are you going to do?

Because if you complain, if you stick your head over the parapet, why, you aren’t going to work again next week, are you?  And when you go to sign on, you’re as like as not to be told you’ve made yourself voluntarily unemployed so go away and starve quietly…

There’s an asymmetry, in other words, between the employer and the employee.  In the twentieth century you might have said, well, they ought to join a union, but Thatcher did for unions, didn’t she, so these days you’d say, well, there’s minimum wage legislation.  Ring the HMRC hotline…

Which is good, but HMRC have issued a “look how brilliant we are” press release today which has really got my goat.

First thing: is is legal to refuse to pay travelling time under those circumstances?  I don’t know, but the practice is so widely reported that I had assumed it must be.  But look at the middle of page 14 of this HMRC report which says that “time work” includes

travelling in connection with their work. This includes time spent:

o travelling between appointments (but not rest breaks)

o travelling from work to a training venue

Well, if travelling time IS included in minimum wage calculations, why not clearly say so?  Instead of issuing a press release bragging that you have

recovered average arrears of around £205 per worker.

Two hundred quid???  I mean, if it’s money they’re entitled to then, yes, they should have it – but I’d be a lot more impressed if there had been some prosecutions or that the

issued 652 financial penalties, worth £815,269

had been 652 penalties averaging £800 grand instead of totalling £815k – and so averaging £1250.  I mean, scary, right?  Plenty to keep some bastard employer from screwing his poorly-paid staff out of the money they’re entitled to in order to bump up his massive profits.  Oops – sorry, I’m being normative again…

Let’s look at the worked examples in that HMRC paper for a moment again, shall we?  Turn back to page 14 and look at example 1.

Example 1 Domiciliary care worker A is paid £6.35 per hour and is paid weekly. The employer has paid the worker £190.50 for 30 hours worked. Time records show the worker spent a total of 45 minutes that week travelling between clients that had not been recorded as working time.

How to check compliance with NMW legislation

The minimum amount paid to the worker should be £6.31 x 30.75 hours = £194.03

The worker was paid £190.50 so therefore has been underpaid the NMW by £3.53 that week (£194.03 minus £190.50).

Now, just hold on a minute there – the worker is paid £6.35 per hour.  They have been paid for 30 hours when they should have been paid for 30 hours and 45 minutes.  So they have been underpaid by .75x £4.76, but HMRC will only pursue for the difference between the NMWxhours worked and pay, and not for the difference between ACTUAL pay rate x hours worked and amount paid?  In this instance (and the 45 minutes is a pretty unbelievable travel time but let that go) it only amounts to a few pence but how is the worker to collect it?

Look at example two:

Example 2 Domiciliary worker B is paid £7.50 per hour and is paid weekly. The employer has paid the worker £225 for 30 hours worked (30 x £7.50) Time records show the worker spent 2 hours that week travelling between clients that had not been recorded as working time.

How to check compliance with NMW legislation

The minimum amount paid to the worker should be £6.31 x 32 hours = £201.92 As the worker was paid above £201.92 (i.e. above the NMW amount) no arrears are due even after taking account of the additional 2 hours working time spent travelling.

They have, however, been stiffed out of £15 – two hours’ pay – they should have been paid £240 (32 x £7.50) rather than £225 (30 x £7.50).  But because the amount they have been paid is more than the legal minimum, the HMRC NMW enforcement team is going to be no use to them.

That’s like saying everyone’s entitled to £57.35 a week, so if I come along and mug you and nick fifty quid out of your purse, the police won’t do anything about it if I leave you with £57.35, isn’t it?

Ah yes, but the administration of the benefits system and the justice system are different, and so are the administration of the NMW and employment law, right?  So the HMRC team that enforces National Minimum Wage can’t get involved if your employer is ripping you off in some way that doesn’t involve breaking the NMW legislation, right?

Sod that.  There’s an easy fix.  First, make it crystal clear that travelling time – except home to the first visit, and last visit to home – is working time.  Publicise THAT and the press release might be worth having.  Second, issue the workers and the employers with an official HMRC document at the end of any investigation which says clearly the rate of pay and the number of hours worked.  This then would be prima facie evidence that the worker could use to sue the employer for the rest of it, the amount they’ve ripped off that isn’t covered by minimum wage legislation – the five pence not enforced by HMRC in the first example, and the fifteen quid HMRC weren’t interested in, in the second example.

How would the worker make use of that?  Well, an individual worker could sue separately, but it’s likely to be too small an amount for an individual to take the risk.  But maybe for a collection of workers you might get, god help us, the claims management companies stepping in and suing the employer on behalf of a number of workers.  Or – and here’s a thought – how about some kind of collective worker organisation picking up the slack and advertising their services?  Anyone know any trades unions???

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Peanuts?

May 15, 2014

 

99.81% of HMRC’s staff are paid above the living wage.  (David Gauke told Parliament, so it must be true)

So that means that 0.19% of them are paid LESS than the living wage?

How many is that?

According to the 2013 Pocket Data guide they had 64,476 full time equivalents (in other words, there might be more people, but that’s the number of units of 36 hours a week you’d get if you added up the hours of the part time people: two part timers on 18 hours a week each = one “full time equivalent”)

0.19% x 62,276 = 122.

A couple of hundred part timers being paid less than £7.65 a week by the department that polices the minimum wage.  Paying above the minimum wage of £6.31 an hour but below the living wage isn’t illegal.  But it’s a pretty bloody poor show from a government department.

It would cost the nation £1.34 per hour (7.65-6.31) x 36 hours a week x 122 people x 52 weeks to put right.  In other words, about £300k.

HMRC’s total staff costs are £2,267.3 million (table 7 page 113)

It’s peanuts, comparatively speaking.  Make it right, for goodness sake.

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Demerger

April 1, 2014

Today, some interesting rumours reach me of proposals to de-merge HMRC and restore the historic brands of HM Inland Revenue and HM Customs and Excise.  I hear that the proposals, which are to go out to consultation in the next few months, will also include a clever exit from the once-controversial Mapeley contract and a move out of leased and into properties owned by the taxpayer, saving millions in rent and services payment and creating several thousand jobs in providing building and other services direct by newly-appointed staff who will also be available to perform “back office” functions at times of need.

The de-merger will also herald the de-industrialisation of tax, as both restored departments return to a local office structure.  The main change that taxpayers will see is that they will once more be able to speak to someone, face to face or over the phone, who actually knows what they are talking about, will give their name, extension number and email address, and will then take responsibility for working an issue through to its conclusion.

I hear that the de-merger will come with a hefty staffing and budget increase, to be paid for by the expected rise in collection and compliance yield and narrowing of the tax gap.  There is also likely to be a new task force bringing long-standing disputes to a conclusion via rapid litigation, following which the task force will direct its expertise into prosecution of all tax offences resulting from the new alignment of prosecution thresholds for tax, customs, excise and benefit cases.

Whether the coalition can bring this off in time before the election is, of course, in considerable doubt, but I hear that the timetable is

May 2014 consultation

July 2014 consultation ends.  Enabling legislation passed

September 2014 contracts signed for new local office accommodation

December 2014 first District Inspectors appointed and begin appointment of supporting staff

February 2015 New offices occupied and shadow operations begin while skeleton staff winds down the last of HMRC operations

1st April 2015: New IR and New C&E begin operations.

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Muggle morality

February 24, 2014

Let’s talk a bit about “fairness”.  Or about “morality”.  Or we can talk about “equity” instead, if you like.  After all, “there is no equity about a tax” (Mr Justice Rowlatt in Cape Brandy Syndicate, 1921), and “there is no morality in a tax and no illegality or immorality in a tax avoidance scheme.” (Lord Templeman in Ensign Tankers v Stokes in 1992).  That’s tax wizard talk: people with a professional interest in tax can sometimes get caught up in the idea that tax is legal confiscation of private property and no overbearing state ought to be able to dip its hand in your pocket without good reason and legal backing, preferably from a body of law hallowed by time and created by a democratically elected parliament.  Quite right too… except, is that really the problem, in a twenty-first century democracy?

Let’s be clear: if HMRC were coming through my front door with guns I’d be against it.  When I DO deal with the actual HMRC, I get pretty pissed off if they’re inefficient, rude or inaccurate… but please note that I haven’t (so far) disappeared into a gulag for arguing my corner with them if they happen to stray.  In general, if they put their hand in my pocket, I’d rather they didn’t but I accept I also would rather have an education, an army, a National Health Service and a few quid back from the state when I’m too decrepit to work any more: that tax is, indeed, the price we pay for civilisation.  That, then, for me is the first point where morality comes into it.  We pay taxes for a good reason, we obtain public goods as a result, and it’s pretty contemptible to take the goods and weasel out of paying towards them.

But the crunch point for me isn’t there, in the dealings HMRC has with the individual citizen, but in the relationship between the state and the multinational corporation.  The hollowing out of the state by offshoring profits to tax havens (as described, for example, in Richard Brooks’ The Great Tax Robbery) seems to me to be contributing to all kinds of inequality and unfairness (see some of the examples quoted by the Tax Justice Network).  Is the relationship between the state and the multi-national analogous to the relationship between the state and the private citizen?

Well let’s think about it.  For one thing, the multinational may well have more money.  (Walmart is bigger than Norway, Apple is bigger than Ecuador…)  They may be able to bring influence to bear which the private citizen would be unable to exercise by the exercise of their single vote.  They may be able to persuade governments to modernise any inconvenient rules (for example) “to better reflect the way business operates in a global economy“, costing the economy £450 million this year, rising to £805 million in 2016/17 against not a penny of quantified benefit.

The tax wizard might be right that there is no moral failure in a corporation arranging its affairs to pay the least amount of tax according to the law of the land.  But if the corporation has the ability to influence the making of the law by which it is taxed, is there a moral failing in its doing so?

In tax policy-making, perhaps it is politicians who are failing to make moral choices when they allow themselves to be influenced?  Or perhaps it is our fault, as citizen-stakeholders, for not holding our politicians to account?

It’s not an easy thing to do – is anyone actually doing it? (Margaret Hodge?  Any time her name comes up in the news my twitter feed comes instantly alive with tax wizards complaining about or mocking her.  Similar animus is shown towards Richard Murphy)

So what are the rest of us, those of us who aren’t tax wizards and are pretty sure the “no equity” thing is a crock, to do?  Well, fellow muggles, here’s my attempt at a muggle moral maze.

  1. If it is morally justifiable to arrange your tax affairs so that you pay the least amount of tax possible under the law, and
  2. It is morally justifiable to influence tax policy making so that laws which would tax you more heavily are not passed and laws which are favourable to you are, and
  3. It is morally justifiable to say that it is up to parliament what laws they pass, then,
  4. Logically it must then be the moral responsibility of the citizen stakeholder to exercise the only power which remains in their hands…

So to arms, citizens!  Any time someone asks you for their vote ask them a simple binary, muggle, question: are they in favour of tax competitiveness, or of tax justice?

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It couldn’t be…

February 18, 2014

If you remember this time last year, you may recall that I put in a budget suggestion that HMRC should stop traumatising pensioners who have given a bit more to charity than the tax they paid.  If they declare gift aid greater than the tax deducted from their pensions, HMRC seems to think “Aha!  Tax gap target reduction!” and treat them like evaders.  I’m sure that’s not the intention of anyone who has given the situation a moment’s thought.  Nevertheless it seems (to me at any rate) to be the effect of cutting staff and increasing targets, so that people make up their statistics in any way they can in order not to fall foul of the idiotic performance management system.  So ill-advised and over-generous pensioners are an easy “quick win” for someone.

My budget suggestion?  Just stop it!

I said a bit more than that, of course (you can read the full thing here)

So I sent it in last year and… nothing happened.

Being incorrigibly curious, I then put in a Freedom of Information Act request to find out what had happened to it – envisaging a correspondence between one team and another that went something like

  • “Shall we do this?”
  • “Who did it come from?”
  • “That Bradley woman.”
  • “Oh well then; no.”

But actually what I got was something a bit more interesting…

Nothing.

They had no record of having received my budget submission, even though it had gone through the dedicated “portal” that they set up last year.  I asked them to go back and review the FoI request and they came back and said, in effect, no, honest guv, we can’t find anything anywhere.

How odd, I thought.

So this year, I put the same suggestion in again.  This year the arrangements are slightly different: you send the suggestion in to a dedicated email address (rather than through a web portal) and you were assured you’d get an automated response.

My email went in at 15.55pm on 14th February.  The closing date was 14th February, so by any stretch of the imagination I was within the deadline.  And I confidently awaited my automated response.

And waited…

And waited…

Yesterday, I sent a follow up email to the Treasury’s general correspondence address asking them to check, because I really would like someone to look AT the suggestion this year, rather than just FOR it!

This morning?  I get an email from the Treasury budget.representations@hmtreasiury.gsi.gov.uk address which reads:

Dear Ms. Bradley,

I can confirm the safe receipt of your budget representation.

Thanks,
George

Now, that’s NOT an automated response (because, several days late and personally addressed?)

And… George?  George???  It couldn’t be, could it…?

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Tax Returns: Don’t Panic!!!

January 27, 2014

If you’re at all like me you haven’t done your tax return yet and you’ve suddenly realised there’s only FIVE DAYS left in which to do it.  So, as it says in large friendly letters on the headline of this piece: don’t panic!  There IS still time – just not much.  I plan to blog my way to a tax return – travel with me.

First things first, then – can I get onto the HMRC website???

If you’re in the same boat, make sure you type “hmrc.gov.uk” into your browser rather than searching for “HMRC” or “tax returns” on google.  Why?  Because there are a few websites out there that prey on people who don’t go online much.  They pay google for the kind of “advertising” which consists of bumping them up to the top of the google search page.  If you do what most people do and click on the top entry on google then you are going to them instead of to the HMRC site.  Bottom line: you can find yourself paying money to the wrong people.  So, if you’re not sure what any of this means look on your screen now – towards the top left hand side you should see a white space where it says https://tiintax.com/.  That’s what I mean.  In THAT space, type “hmrc.gov.uk” – when you do, you’ll leave this webpage and arrive on the HMRC one.  Do that now, and then press the back button to come back here.

See what I mean?

Have you done a tax return online before?  I have, so I know you need a log in and a password.  I’m afraid if you haven’t got either of them you’ll be in trouble at this point because you haven’t really got time to get both out of HMRC before Friday.  However there’s still hope – look at this screen cap of the HMRC site landing page where you’ll see it says “do it online”.   If you’re trying to do your tax return look underneath “do it online” to where it says “log in”.  Click there and here’s another screen print of what happens.  You should go to a page that offers you a list of different services and self assessment is on its own at the top of the list.  Click on self assessment and…

You should get a screen that looks like this.

At this point you might find the “user ID” is already filled in for you (mine was, from the last time I used the site, although of course I deleted it before I took the screen print).  If it is filled in, then I advise you to write this number down somewhere safe!!! Because you can get back onto the site relatively quickly if you have the user ID but not the password, but to get both will take you days, because you’ll have to phone HMRC up and they send them out by post.  And, as you can imagine, at this time of year you aren’t going to get them before Friday unless you’re very, very lucky.

All may not be lost; if you’re on a mac try file>edit>autofill form.  It may just be that you entered the user ID *and* the password some time in the past and your computer remembered it for you.  I can’t tell you how happy I was to find that I’d done this, and so I could get onto the site this morning, check that I don’t owe them any money but I do owe them a tax return.

What next?  Well, in my case, it’s clear a big old space on your desk and, at the same time, search for the proverbial Safe Place in which you’ve been putting all your receipts and payslips and odds and ends of tax-related paperwork ready to Get Serious.  Tomorrow.  Let’s not get carried away, after all!

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Three. Probably.

January 15, 2014

A search on “open consultations” in the category “HMRC” on gov.uk today tells me there are three open consultations.  I’m not sure I believe them after the shenanigans I reported on in my 7th January post (customer service tip: if someone tells you a site isn’t working, the least helpful response is “I don’t currently see any technical problems…”) but let’s roll with it.

The three are:

Real time information: legislative changes.  Opened 29th November (so why didn’t it show up when I searched on the same terms on 7th January?) and it closes on 24 January.  Incidentally, wouldn’t it be really, really helpful if you could search on closing date on gov.uk?  Or at least that you could tell from the search results when the consultation closes and didn’t have to click through to find out?

Onshore employment intermediaries: false self-employment.  Opened 10 December, closes 4 February.

Assistance with electronic filing of VAT returns.  Opened 20 December, closes 14 February.

So let’s start with the Real Time Information (RTI) one.  RTI, in case you didn’t already know, is the PAYE equivalent of Universal Credit – it’s the New! Improved!  All-singing!  All-dancing! method of making sure that Universal Credit will work because the government will know, from timely information from employers, who has worked where and when, so people will – perhaps, if it all works, fingers crossed – finally be able to dip in and out of paid work without screwing up their benefits for six months.

But from an employer’s viewpoint, it’s a royal pain.  You have to report payments to employees when you make them, not at the end of the month or quarter or year or whenever you can stop to draw breath.

There’s little point looking at the actual consultation, because this is one of the Finance Bill consultations – in other words, the policy has already been decided and we’re not being asked for our opinions on whether it’s a good idea or not, just for technical comments on whether or not the regulations that have been written will actually work as described.  And I don’t really feel like doing the government’s unpaid copy-editing for them this morning so we’ll skip that.

There are a few interesting things we might want to think about, though.

First of all, the TIIN (surprise!)  They aren’t publishing a TIIN with this because they’ve already published one.  In fact they’ve published two, one for the penalty regime here and one for the actual policy change.

The one for the penalty regime says that there will be no actual exchequer impact.  In fact the government says it doesn’t expect to get any money in from these penalties at all, or at least an amount which shows up as “nil” on a TIIN.  If memory serves, that’s something like a quarter of a million threshold (grateful if anyone can confirm or amend this figure please?)

That’s a good thing, of course.  The point of penalties is to change behaviour, not to collect money.  The idea is that people should make the change to RTI and get used to sending the same information they would always have sent, just a bit earlier and in a different way.  I can see two problems with that.

First of all the level of the penalty.  It needs to be a “smacked wrist” amount – enough that you know not to put your hand into the fire but not so great that your parents get done for child abuse.  So if you’re a small business with up to nine employees, it’s a hundred quid.  Enough to make you want not to incur it, but not enough (one hopes!) to bankrupt you.

But look at paragraph 16 of the condoc:

16. Regulation 67I sets the size of the late filing penalties as follows:

 £100 for schemes with 1 – 9 employees;

 £200 for schemes with 10 – 49 employees;

 £300 for schemes with 50 – 249 employees; and

 £400 for schemes with 250 or more employees.

If I have 300 employees on the average wage of £26,500 then I’m paying out over half a million in wages every month (£26,500 x 300 / 12 = 662,500).  Now, in comparison to £662,500, is £400 a “smacked wrist” or is it, well, peanuts?  An amount which it might very well be worthwhile my incurring so I can sort out my RTI submission at my own pace?

In other words, I think they got the gearing of the penalties a bit wonky.  But it’s too late now, we’re not being asked to comment on that.

Secondly, as I have commented before, there’s not a great deal of point charging “smacked wrist” penalties if you don’t actually go out and collect them, and is HMRC now committed to sending someone round to knock on the employer’s door if they incur a £100 or £400 penalty and explain to them how it arose and, more to the point, what they can do to avoid incurring another?  Otherwise I think that “exchequer effect – nil” may turn out to be, shall we say, optimistic?  Or should that be pessimistic?

And finally, what about the equalities impact?  I said in my response to the consultation on the actual policy that I was worried about the impact on “care and support” employers, which is HMRC jargon for people who have employees but who aren’t businesses.  People who employ nannies, for example, or, more worryingly, people who are given a “care budget” instead of a home help and have to get on and organise their own support package including paying their carers and working out the tax due on their pay.

In the TIIN for the actual policy it says under equalities impacts that

Care and support employers will also have the option to file RTI on paper, and those wishing to use this option will report RTI from April 2014. This date has been deferred from April 2013 in line with customer feedback, to allow more time for HMRC to thoroughly test the new paper forms and guidance with customers who will use them.

So.  We’re not publishing another TIIN.  We’re not updating the equalities impact, then?  Has there actually BEEN any testing of the impact on care and support employers?  Are they happy, or at least confident they’ll be able to comply?  Does anyone know?

Sigh.  I’d write to my MP again, but it’s Nick Clegg and I think he’s probably getting sick of hearing from me about inadequate government equality impact assessments by now.  Over to you.

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Get Carter

November 11, 2013

One of the things I am becoming increasingly interested in academically, and which you may have noticed as a recurring theme in this blog, is the disjuncture between people-who-know-about-tax and everybody else.  The most useful terminology I have found for this so far is to use a simile taken from Harry Potter and call the two groups “tax wizards” and “tax muggles”, particularly as the Potter analogy allows for people like me, a “squib” who knows about the existence of the tax wizarding world but doesn’t lay claim to any of its powers.

Let us thank goodness, then, for the Low Incomes Tax Reform Group, a charitable offshoot of the Chartered Institute of Taxation, which aims to be, well, I suppose the Potter analogy would be the Ministry of Muggle Affairs – to

‘Target for help and information those least able in the community to afford to pay for advice and make a real difference to their understanding of the systems of taxation and related benefits whilst working to make them more equitable and accessible for their needs.’

They supported and won a test case, TC02910: L H Bishop Electric Company Limited and related appeals (I’m afraid I can’t find a link to this that isn’t on a paid website but here’s LITRG’s press release about it) about mandation of VAT reporting online.  In other words, some people can’t, won’t or at least find it very difficult to, conduct their VAT relationship with HMRC purely over the internet and wanted the same exemption that people with religious beliefs that prevent them using computers have.  (Incidentally, I had always rather lazily believed that this exemption was in place for the Plymouth Brethren but I see from their website that apparently they have been using computers for five years now… in which case, who DOES get the “religious” exemption?  Does anyone know?)

The argument was, essentially, that people who don’t use computers because they’re old – they didn’t learn at school and they have no particular desire or need to learn now, and they find it harder to take on board new information by reason of their age – and people who have a disability – either a cognitive disability that prevents them absorbing the information on a computer screen or a physical disability which prevents them using a screen or keyboard – ought to be exempt from having to file online.  In addition, people who live somewhere that doesn’t have a broadband service sufficient to get them onto the HMRC system, again, ought to be exempt.

The HMRC argument can be summarised as: “tough.”  Or, at least,

  • ask a friend or family member to do it for you on their computer
  • use a computer in a library
  • pay an agent
  • use a computer in an HMRC enquiry centre, or
  • use the Sekrit Phone A Friend service they invented just for this case (don’t ask)

The tribunal, it’s fair to say, wasn’t impressed.  Libraries are closing left right and centre.  HMRC enquiry centres are either closed or scheduled to close.  Asking or paying someone else to make a return has privacy implications.  And HMRC inventing a telephone filing method but then not telling anyone about it, well, this is what the tribunal had to say…

435.
The current version of telephone filing, as offered to the joint appellants, requires the taxpayer to agree three months in advance with HMRC a day and time (in HMRC’s business hours) when HMRC will ring the taxpayer in order for the taxpayer orally to state the figures on the VAT return…

440.
HMRC does not accept that telephone filing is inconvenient. They point out that the HMRC agent would ring back if the taxpayer was engaged. But the protocol established by HMRC for telephone filing is that the agent will only ring back twice, and will then write a letter to the taxpayer in an attempt to re-arrange the phone call.
441.
I find reliance on the postal service to re-arrange a phone call is unrealistic: VAT returns are due on set days. Unless the taxpayer arranges the first call to be on a date long before the due date, he would run the risk that if the call has to be re- arranged, the new date will be after the due date.
442.
HMRC do not suggest that the arrangements for the re-arranged call can be made over the phone. It is not part of the protocol, and as evidence above has shown it is very difficult to contact HMRC by phone.
443.
I find telephone filing is not a very convenient option for submitting a time sensitive document, the late submission of which will incur penalties.
and then (and this is my personal favourite part of the judgement)

496. Its concessionary status was not the only controversy over telephone filing. There are (at least) three reasons why it might be unlawful:

  • It may ignore s 25(4) Value Added Tax Regulations 1994;
  • It is an unpublished and largely secret concession;
  • It may be “Wednesbury unreasonable” in that HMRC do not appear to have considered all relevant matters
Unfortunately, though, the judgement isn’t going to be much use to most people, since (as far as I understand the rather detailed technical arguments) the litigation was only possible because there was a decision by HMRC (to put the taxpayers into the first tranche of people, those who had to file their VAT returns online from 1 April 2010) whereas most people will have to file online from April 2012 by generally applicable legislation and not by an appealable HMRC decision.So…  judicial review of the legislation, would seem to be the next step for people who are affected by the change to online filing but unable to make the change by reason of age, disability, or inadequacy of broadband.

Now moving HMRC’s services online was part of a programme of change that came out of the 2006 Carter Review (which noted that:

3.7 Some people still expressed opposition, as a matter of principle, to compulsory use of online services, especially for certain groups, such as pensioners.

so HMRC can hardly claim they hadn’t been warned!)

Carter also was reporting from a different world, where online services would be accessible via free publicly funded services like libraries and HMRC enquiry centres:

5.9 We also recommend that HMRC should work with other public and voluntary organisations to ensure that access to the internet, and appropriate assistance with using IT, are available locally, for example at libraries and UK Online centres, for taxpayers who wish to file their returns online but do not own a computer.

The impact assessment for the Carter changes was updated in March 2009 and contains (at Annex C) a rather good suite of specific impact assessments including an Equality Impact Assessment and an assessment of the extent to which the proposals have been subjected to “rural proofing”.  My problem with these is that they are just words: it is no earthly use to anyone to identify that the solution may be:

through a visit to an Enquiry Centre (EC) to file (if mobility permits) or a visit by an HMRC employee with a laptop  [IA p34]

if you then close down the enquiry centres and fail to set up a mobile service of HMRC employees who can come round to your house with a laptop.

However the TIIN for the specific requirement for VAT to be filed online dismisses any concern for equality altogether:

Equalities impacts

Equalities impacts were considered in July 2008. This covered all the business taxes covered in Lord Carter’s report and concluded that the requirement to file online and pay electronically did not, of itself, disadvantage any specific group of customers from an equality standpoint (although, as with any change, some customers might need help to adjust).

Or, to put it another way, “we did this already, didn’t we?  Get stuffed.”

I look forward to seeing if the Ministry of Muggle Affairs chooses to fund a judicial review of the regulations mandating online filing.  If so, I’d be interested in seeing what they make of the equality assessment and its oh so helpful assumption that Carter is OK because HMRC thought about equality a bit in the noughties so we don’t have to bother with all that stuff any more.

Oh, and the rural proofing?

Other impacts

None.

Yeah.  Right.

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Wizengamot

September 11, 2013

So I was at a meeting of the Wizenagemot yesterday…

Ah.  I probably need to step back a bit and explain?  You see, it’s my belief that the debate about tax is divided between two groups.  There are the tax professionals on the one hand – people like HMRC and HMT and accountants, tax specialist solicitors and barristers, tax specialists in large businesses and policy thinktanks and lobby groups.  People who understand that a painting can be “plant” and whether or not a jaffa cake is a biscuit.  Let’s call them the tax wizards.

And then there are the people who don’t understand that “there is no equity about a tax” but think that there ought to be some kind of principle of “fairness” involved.  People whose “idosyncratic and ill-informed” views about tax are “a joke to those who understand the subject”.  The tax prats .  The citizen stakeholders.  People who pay their taxes and don’t understand why everyone else doesn’t seem to have to follow the same rules.  The tax muggles.

Well, if you’re a tax muggle you may not be aware that there’s an active debate in the tax wizarding world about this thing called the Tax Gap, which is the difference between the tax that HMRC collects for us, and the tax that they ought to be able to collect if everyone paid their dues and no-one made any mistakes.  And you don’t have to be a wizard to understand that this gap is never going to be zero because, after all, nobody’s perfect, but everyone is clear that it ought to be as small as we can reasonably make it.

Ah.  And there’s the rub.  Because David Gauke, the Minister for Magic doesn’t think there’s much of a problem with the tax gap at all.  He told the meeting that the UK tax gap was “relatively small by international standards”.  (Does anyone have a source for this, by the way?)

He also told the meeting that he made “no apology” for HMRC’s staff and budget being reduced, which was a bit of a brick considering that the meeting had been called by ARC, the section of the FDA that represents senior officials in HMRC, and that their agenda was to explain that they thought they could make a big hole in the tax gap if they could just have a few more people and some decent treatment for their members.

The meeting was at Portcullis House (and isn’t THAT a fabulous building!  Wow!) and involved tax wizards from HMRC and ARC, the Exchequer Secretary, his Labour Shadow and the Chair of the backbench Lib Dem Treasury Committee, as well as Richard Miller from ActionAid.  It was chaired by Vanessa Houlder from the Financial Times and was extensively tweeted here (although not at the time – no signal inside Portcullis House).

I am not sure there was any great meeting of minds resulting from the event.  The politicians spoke to their briefs, the campaigners argued the tax gap is bigger than HMRC’s calculation, and I sat there wondering (a) what does it matter and (b) when was ARC going to get back to the “give us more resources” point?

What does it matter?  Well, everyone agrees there IS a tax gap.  Everyone agrees that it is a good thing to endeavour to keep the tax gap as small as feasible.  There is some broad agreement on what elements are included in the calculation of the tax gap so we know where to direct attention.  So what does it matter in practical terms whether underpaid corporation tax is around 3-4 billion or 12 billion?  Can we just agree that it’s either “shedloads” or “a fuckton” and that in either case we’d like some of it back, please?

Which takes me back to (b).  I was surprised, frankly, that ARC didn’t drive home their point a little more strongly.  When your Minister says he makes no apology for cutting your staff and resources, surely you exercise right of reply and say, “yes Minister, but” and then hit him with your stats?  The stats you’ve politely buried in the Notes to Editors to the press release linked in the bibliography to the polite paper you’ve put together for the meeting?  Because, you know, he won’t have read that far.  Even his staff are unlikely to have read that far.  So when you have him sitting two seats away from you, you pass him another cup of coffee and give him your elevator pitch: invest £312.3m in us and we’ll bring you in eight billion quid (£8,260m)

As Saint Sir Bob apparently never actually said “give us the fucking money!”

Yes, Minister?

 

 

 

 

[note: edited 16/9/13 to add a link to the FDA reporting of the event – first link in the article]

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Eleven

June 20, 2013

Bit of an interesting exchange here, between David Gauke and Shaun Woodward, the Labour MP for St Helens South.

He asks how many people will be made redundant if the St Helens enquiry centre closes, and how many people they served.  Apparently there are five jobs at risk, but the numbers of visitors is the interesting bit:

Number
2008-09 15,900
2009-10 13,315
2010-11 17,070
2011-12 14,545
2012-13 13,296

So… five people answered between thirteen and seventeen thousand enquiries.  Take the middle number, 14,545.  Divide it by 5, and you get 2909.  Divide that by the average number of working days in a year, 252, and you wind up with about 11.

Eleven people a day.

Sometimes you might deal with them in a minute – point them towards the phone.  And sometimes you might be on sick leave, in a meeting, or training.  Filling in your paperwork and doing your performance management review.

Eleven people a day.

Not exactly twiddling their thumbs, the HMRC staff, were they?  So where are those taxpayers – sorry, customers – sorry, people – going to go to for help now?