I did my own tax returns – which were small and simple.
HMRC opened an investigation and invited me in for an interview, I went in on my own and I was transparent about my earnings and my tax returns.
I had made a mistake in my returns – it was clear and indisputable – the figures could have been worked out on the back of a fag packet; but rather than come to a swift and reasonable conclusion HMRC dug in for an acrimonious five year battle.
This website was set-up to help people trapped in similar situations. I’ve written ebooks that expose HMRC’s methods and offer strategies to bring investigations to an end.
In the first interview I attended (22 November 2005) Enquiry Officer Steve Coomber asked about my job (I was working as a freelance journalist) and also a David Beckham book that I had claimed as an expense. He asked, “Did you do an article on David Beckham?” I gave the following very full answer, “No, but I tried very hard to get an interview with him… I specifically went to the FA building in Soho Square and I waited outside for the manager and bought a small gift – a chocolate orange – and I gave that to him with a note in the hope in the hope of getting some sort of interview.”
Despite giving this full answer (and showing newspaper cuttings to illustrate that I had a track record of interviewing celebrities) four months later (21 March 2006) HM Inspector of Taxes Jacqui Lamper was still unsatisfied, “Are there any documents to show that you purchased the David Beckham book in the belief that you would get to interview him? Otherwise there is nothing that shows that it was not purchased for your own enjoyment…” She went on to say she was also concerned that I might have given the book to somebody as a gift or sold it on ebay.
In the end it took nine months, two interviews and more time than I care to think about to come to a conclusion over this simple issue: claiming a £10 book as an expense.
This bullish and petty attitude was characteristic of the entire investigation.
Internet War Declared On Bullying Taxman
From The Sunday Times April 6, 2008
A TAXPAYER subjected to a lengthy investigation by the Revenue has set up a website to expose what he describes as its bullying, intimidation and waste.
Nick Morgan, a freelance journalist who regularly uses the self-assessment tax system, was told three years ago that an investigation had been opened into his returns. Even though the case involved only £2,500, Morgan says the investigation “quickly snowballed into a nightmare”.
Inspectors from Her Majesty’s Revenue and Customs (HMRC) took a forensic interest in his finances, he says, demanding to know details such as how many pieces of paper he used in correspondence and the number of business calls made to London. They even questioned him about £10 he spent on a biography of David Beckham for research purposes.
Morgan says he was confronted with a “frightening blur of figures” and informed that there was “a lot wrong” with his tax return and that he had “shown neglect”. He was accused, incorrectly, of receiving undeclared payments amounting to £325.
Infuriated by the aggressive nature of the HMRC inquiries, Morgan filed a request under the 1998 Data Protection Act, which allows anyone to see most of the files held on them by HMRC. He discovered that the HMRC’s internal view of his case was different from the manner in which he was treated.
“I was astounded,” Morgan said. “In a phone call, the investigating officer had told me that things were very bad for me and I was a terrible case exhibiting gross negligence; but in her e-mails to a colleague she drew a very different picture.”
In one e-mail, the inspector wrote: “I’m feeling a bit lost in all this . . . it’s not a large settlement.”
The investigation may have cost as much as £50,000, according to Stephen Camm, a former HMRC investigator who is head of tax investigations at Price Waterhouse Coopers. Yet HMRC has offered to settle with Morgan if he will pay just £2,530.
HMRC enjoys draconian powers over taxpayers. Investigations can be started at random, without evidence of wrongdoing. If a “discovery” is made, the previous 20 years of a taxpayers’ finances can come under scrutiny. HMRC can levy hefty fines for offences as simple as late payment – and the burden is on the taxpayer to prove his or her innocence.
More than 99,000 taxpayers complained about HMRC last year. Morgan fought back by inundating the department with e-mails.
“I send on average 800 circular e-mails to around 400 staff every week,” he said. “I know it’s had an effect because I’ve got copies of e-mails from the bosses at HMRC asking their investigators to ‘get this thing sorted out’.”
He has even sent e-mails from abroad, telling the recipients of his holiday weather. HMRC says some of his e-mails have been “inappropriate”.
Morgan retorted: “HMRC have a whole range of bullying tactics. They are all legal and practised every day.”
Schedule of Events of a “Small Segment Enquiry”
The following is a schedule outlining telephone conversations and correspondence between Nick Morgan (NM) and Her Majesty’s Revenue and Customs (HMRC) between 20 July 2005 and 23 September 2010 illustrating instances where HMRC failed to comply with their own published Code of Practice and in addition supplied NM with information which they later withdrew.
Investigating officer J Lamper was asked to comment on the factual content of this schedule many times but refused, in a confidential email to colleague Claudine Lashley J Lamper admitted – in a somewhat opaque sentence, “The points in his [NM’s] schedule are not necessarily factually incorrect.”
• S Coomber, Compliance Officer – 01273-225250 email@example.com
• E Fletcher, Progress Officer – 01273 225250
• Jacqui Lamper, HM Inspector of Taxes – 01273 430011
• Andrew Button, Compliance Manager – 01273 225267 firstname.lastname@example.org
• Dave Thomas, Director Complaints Team / Complaint Analyst – 02392 285074 email@example.com
• Derek Till, Complaints Team firstname.lastname@example.org
• Peter Meekings, Compliance Manager – 01273 225267 email@example.com
• Carol Mellor, Local Compliance Director – 02392 285000
• Tim Lintott. HM Inspector of Taxes 01273 225441
• Fred Chapman, Complaints Manager Local Compliance (South) 02392 285067 firstname.lastname@example.org
• Peter Canning HMRC Risk, Intelligence and Analysis Team (RIAT) Officer 01273 225287 email@example.com
• Cheryl Weeks, HMRC Complaints Team Manager 02392 285076 firstname.lastname@example.org
1) 22 May 2000 – NM sends in Self Assessment (SA) tax return with extra information in the “other information” box and a two-page letter that started, “I found the attached tax form complicated and difficult to fill out… for the sake of clarity I’m enclosing a single column of my accounts… for the tax year ending 5 April 2000.” The letter went on to ask for a tax refund because of PAYE income.
2) 27 November 2000 – NM’s SA return was unlogged, the tax rebate was refused. See file here.
3) 28 October 2004 – Peter Canning writes a note referring to NM’s tax return. Just like the April 2000 tax return there was a similar covering letter and obvious mistakes: drawings are clamed as an expense and there is a request to refund a small amount of PAYE tax. Peter Canning’s note reads, “Do you agree that I should delete No Rept signal & refund tax overpaid as claimed – ie process now / check later… [and then] take up as a full enquiry 2004 after April 2005.” Ray – a colleague – confirms this. So both HMRC officers know that the refund is incorrect but despite this they process it anyway. Refunding the money in this way will enhance a future enquiry because not only will the tax have to be paid back, but there will be interest and penalties and the strong possibility that the 2004 figure will be scaled back over six years. See note here.
4) 20 July 2005 – Letter to NM from S Coomber opening up an enquiry into NM’s tax year ended 5 April 2004.
5) 27 October 2005 – S Coomber wrote, “There is evidence to suggest that you received two payments of £325.97 during the period 6 April 2003 to 5 April 2004.” NM refuted this as being incorrect. In a later meeting HMRC agreed that it was incorrect.
6) 22 November 2005 – Meeting with S Coomber and E Fletcher. During the meeting these two officers exchanged knowing looks and smiled at each other. No agenda had been offered prior to the meeting.
7) 2 December 2005 – S Coomber wrote, “You mentioned at the meeting that you might now wish to make an additional claim for the use of a room in your home as an office… I have looked into this in more detail and you will not be able to make such a claim.” This proved to be inaccurate and misleading information. The office rent was later accepted. It took HMRC nine months to come to this conclusion.
8)2 December 2005 – Meeting notes sent to NM from HMRC. They contained factual mistakes and inappropriate comments. E Fletcher recorded NM’s name incorrectly as “Steve Morgan” her notes of 16 March 2006 state: “My stupid error”. S Coomber asked NM to sign and return the meeting notes: “[I] need you to sign and return one copy.” Then on 22 December 2005 S Coomber wrote, “I still require the… signed copy of the notes of our meeting.” And on 23 January 2006, “I do still require… a signed copy of the notes of our meeting.” On 17 March 2006 J Lamper wrote, “I have amended the notes… I would appreciate it if one copy is signed and returned.” On July 3 2006 NM sent S Coomber an interview transcript from NM’s own recording of the whole meeting and asked him to sign it. 18 July 2006 S Coomber refused. On 27 February 2007 J Lamper said, “You’ve made far too much of it [the notes].” On 12 February 2007 D Thomas acknowledged this was an error on the part of HMRC, “I think we… attached too much significance to obtaining signed copies of our meeting notes.”
9) 5 December 2005 – NM phoned S Coomber and asked him from what point tax should be paid: should it be the date an invoice is issued or when payment is received? S Coomber was unable to give a clear answer and NM asked him if he could answer in writing, S Coomber refused. NM said that this was an important issue. S Coomber then said, “Ideally when payment is made… that is normal.”
10) D Thomas acknowledged this was an error on the part of HMRC. In his letter of 12 February 2007 he wrote, “I’m afraid that when you spoke with Mr Coomber… you were given the wrong advice.” J Lamper insisted that she could allow NM to take the point of payment as a tax point butshe was not going to. On 4 July 2006 J Lamper wrote the opaque sentence, “I have not advised you that it is unreasonable to pay tax from the point you receive payment.”
11) 27 February 2006 – NM returned a HMRC questionnaire. As NM and his wife paid the bills and living expenses through a cash kitty NM was unable to give exact amounts and so he wrote: “all figures are estimates” on both the covering letter and questionnaire. HMRC have used these estimates as an investigative tool despite knowing that they were based on little more than guesswork. 12 February 2007. D Thomas stated, “Perhaps… you should have shown greater care when completing the questionnaire.”
12) 21 March 2006 – J Lamper wrote, “I have no interest in estimating how much paper you use or how many business calls you made to London.” This is incorrect J Lamper has taken a forensic interest in the smallest detail of NM’s business.
13) 25 April 2006 – S Coomber offered a figure of £1,000 as a global settlement for NM’s expenses – this was unrealistic because it ignored a large number of valid expense receipts. On 1 June 2006 J Lamper increased this to £2,500 then on 14 November 2006 she increased it again to £3,000, which NM accepted. J Lamper later reneged on this agreement.
14) 25 April 2006 – S Coomber wrote, “What I now require is factual evidence [for the expenses claimed and that you are still in possession of said items]” On 29 April 2006 – NM wrote, “I’m in possession of many of the items listed as expenses… if you could tell [me] what items you are interested in and what evidence you need… I will do my best to provide you with what you require.” No reply was received by NM.
15) 26 May 2006 – Second interview with HMRC officers and NM. J Lamper and S Coomber in attendance. Once again no agenda had been offered prior to the meeting.
16) 26 May 2006 – Interview notes record, “J Lamper agreed that if the difference in figures was just £100 it would not be an issue. HMRC tried not to be petty and pursue insignificant amounts.” This has not been NM’s experience of this investigation.
17) 1 June 2006 – J Lamper wrote, “I think matters can now be resolved swiftly…”. This was not the case. J Lamper proceeded to open up a second year (2004 – 2005) to investigate.
18) 3 June 2006 – NM wrote a letter to S Coomber stating that he wished to self amend his 2004 – 2005 figures.
19) 22 June 2006 – Tax year 2004 – 2005 opened up for investigation by S Coomber.
20) 26 June 2006 – NM wrote, “Please acknowledge the letter I sent to you [on 3 June 2006 regarding self amendment]… and respond to it.”
21) 29 June 2006 – S Coomber wrote, “The enquiry has now been opened and any amendment that you were to make now would not be dealt with until the end of the enquiry.” On the same date S Coomber filled out a “self” 12 month review, the “Review by Manager” section was not filled in.
22) 4 July 2006 – Letter from J Lamper in which she confused hypothetical figures with proposed figures.
23 ) 22 August 2006 – S Coomber issued a section 19A Notice for Records 2005 incorrectly. HMRC was already in receipt of these records.
24) 31 August 2006 – S Coomber has a meeting with J Lamper, both agree that there is no point in continuing the investigation. S Coomber’s meeting notes say, “I had found minor additions to turnover and disallowed certain expenses. This had resulted in yield of approx. £1 K. If I used the figures proposed by Lamper for 2004, the yield for the enquiry would total approx. £2K plus any interest. I said that I did not think it was worth prolonging the enquiry any longer or going back to earlier years as it had taken us this long just to get where we are. Morgan would argue any penalty and the case could become drawn out even longer than it has already. Lamper agreed that it was probably best to now close the enquiry for the years 2004, 2005 and settle for what we had got.”
25) 5 September 2006 – S Coomber wrote. “…travel insurance [has] been disallowed as [it] has a dual purpose.” In a letter of 25 May 2007 J Lamper says, “he [NM] should be allowed a portion of the [travel insurance] expense.”
26) 4 October 2006 – S Coomber wrote, “The figure for your expenses was agreed with you at our meeting held on 26 May 2006.” This is incorrect, see entry below dated 13 October 2006.
27) 9 October 2006 to 13 October 2006 – NM phoned S Coomber three times. NM’s calls were not returned despite S Coomber being in the office all week.
28) 13 October 2006 – NM wrote to S Coomber, “You appear to be confusing the £2,500 in expenses for office rent – which has been agreed – with my remaining expenses, which haven’t… I feel that misunderstandings like this could be dealt with more effectively by phone but despite calling you three times last week you failed to return my calls.”
29 )?? October 2006 – S Coomber left the investigation. J Lamper stated in a letter of 10 January 2007 that S Coomber left because of “technical issues” while S Coomber himself said he left for “personal reasons”. You can listen to the conversation where he says this here.
30) 10 November 2006 – In a telephone conversation J Lamper accused NM was treating this investigation “like a game”. She also said that telephoning the HMRC helpline for advice was, “unhelpful”. You can listen to the conversation where she says this is here.
31) 14 November 2006 – After becoming confused about theoretical projections J Lamper wrote, “It’s not helpful for you to put forward hypothetical figures.”
32) 20 November 2006 – J Lamper stated, “I feel we should now avoid discussing matters over the telephone and restrict ourselves to written correspondence.” This was retracted by J Lamper on 10 January 2007.
33) 6 December 2006 – NM wrote to J Lamper asking if a discovery had been made on this case. 10 January 2007 J Lamper replied, “I am unable to see where I have referred to discovery.” NM asked her to give a clear yes or no answer and elaborate. In a letter dated 15 February 2007 J Lamper attempts to explain but fails to give specific examples of where discovery has been made. In a telephone conversation of 22 February 2007 J Lamper said that discoveries had been made but she was – once again – unable to give pertinent examples, stating that the letter she had written should answer all questions. She refused to talk further about the matter. You can here the conversation here.
34) 10 January 2007 – Letter to NM from J Lamper opening up an enquiry into his tax year ended 5 April 2006.
35 )10 January 2007 – J Lamper wrote, “I have concerns as to whether or not the invoices you have provided are contemporaneous… I now believe that there are further issues to be addressed regarding your invoices… it would seem to me that in order for the invoices to show a date of 16 December 2006 then they must have been typed on that day…” NM used date fields for his invoices that use his computer’s internal clock to generate dates – this is common practice. The accusation was unfounded and NM offered proof of this.
36) 10 January 2007 – As part of a nine-page letter J Lamper wrote (referring to the tax year ending April 2004) “You say that you had two landlines in Brighton. Please could I have details of the one that was purely personal including the telephone number.” The tax year in question ending April 2004 – had at this point – been open for over a year and a half. Two fully trained tax inspectors had been working on it. NM freely and willingly filled out an income questionnaire, attended two interviews, provided documents and had written over 30 letters. And yet J Lamper was still asking some very basic questions.
37) 15 January 2007 – A Button sent a letter to D Till, stating, “Quite frankly the length of this enquiry has rather more to do with the way Mr Morgan has approached it than anything the Inspector has done… the problem here is that Mr Morgan is underrepresented… I would certainly agree that we have spent a disproportionate amount of time on a case that is a small segment enquiry.”
38) In a letter of 12 February D Thomas wrote to NM, “You probably won’t thank me for saying so, but I think it’s only fair to qualify this by pointing out that in my view the most significant contributory factor is the way in which you have reacted to our enquiries. In part, I think that this is because you have been relying too heavily on your own knowledge of accountancy and taxation matters… in a scenario such as this, a little knowledge can be a dangerous thing.”
39) 24 January 2007 – J Lamper sent NM a Notice of Further Assessment for the year 2000 – 01. This year was calculated on a receipts basis. J Lamper now insists NM use an invoice basis, this radically alters NM’s figures for this year.
40) 20 February 2007 – Telephone conversation between S Coomber and NM in which S Coomber threatened to hang up. You can hear the conversation here.
41) 21 February 2007 – Under the Data Protection Act 1998 NM received disclosure of HMRC’s file relating to this investigation.
42) 22 February 2007 – Telephone conversation with J Lamper in which J Lamper accused NM of being “obsessive” and creating “smoke” to delay and confuse the enquiry. J Lamper also threatened not to answer future telephone calls. J Lamper said that she was gong to renege on all previous offers and decisions. You can listen to a recording of this conversation here.
43) 27 February 2007 – Telephone conversation between J Lamper and NM. NM asked repeatedly what evidence J Lamper needed to satisfy her that his wife was wealthy (an important factor in the investigation). J Lamper avoided giving a straight answer and then changed the subject. She accused NM of twisting things [information] around. J Lamper added that she valued her job and if she had lied to NM she’d be in awful trouble at the end of this enquiry. J Lamper said, “At the end of the day I have to be reasonable. I can’t mislead you or send you in the wrong direction.” J Lamper’s final bit of advice was (somewhat ironically) “Don’t get hung up on the small details.” But she failed to say what evidence she required.
44) 9 March 2007 – Celia Barlow MP wrote to Bernadette Kenny, Director of National Services, HMRC to draw her attention to this case.
45) Mid May 2007 – Simon Growcott, a representative for Celia Barlow MP, spoke with Compliance Manager A Button at HMRC Brighton. NM’s understanding of the conversation was that A Button wanted the case brought to an end and the only outstanding matter was the wealth of NM’s wife. If that could be proved, the case could be closed. 21 May 2007 – NM sent evidence to A Button giving proof of his wife’s wealth. The case was not closed down.
46) 29 May 2007 – J Lamper sent a letter to NM asking for further documentary evidence about amounts entering his NatWest account – the majority of this evidence was already in J Lamper’s possession.
47) 23 July 2007 – NM provided the documentary evidence required.
48) 25 July 2007 – J Lamper left a message on NM’s phone saying, “I’d like to discuss with you the best way to proceed.” NM wrote an email to Peter Meekings stating, “I am a writer on a very low income. During two years of investigation I’ve written over 70 letters in response to HMRC inquiries. What can now remain to be discussed? I was offered a global figure in settlement, but the offer was withdrawn (see… 25 April 2006). “The way to proceed” is to close this investigation with immediate effect or have it referred to the Special Commissioners.”
49) 26 July 2007 – J Lamper wrote a letter stating, “I will not be responding to the schedule of events or the points that you raised in your letters… and neither will Mr Coomber.”
50) 26 July 2007 – J Lamper left a message on NM’s phone stating, “I would like to conclude it [the investigation] in a way you agree or are happy with.”
51) 30 July 2007 – In a confidential internal memo J Lamper wrote, “I’m feeling a bit lost in all this… [it’s] not a large settlement.” Yet three months later (10 October 2007) she sent NM a letter proposing a large settlement figure. She wrote “I appreciate that £4,800 is going to be higher than the figure you would like me to be proposing… I have to start with the figure that I consider is due.”
52) 31 July 2007 – In a confidential internal memo J Lamper wrote, “The points in his schedule are not necessarily factually incorrect but are out of context.”
53) 31 July 2007 – In a confidential internal memo J Lamper wrote, “I haven’t insulted him [NM] mostly I was… trying to make him go away.”
54) 31 July 2007 – In a confidential internal memo J Lamper wrote, “The 3rd year was opened because he has submitted much lower income and wanted to carry back losses against the settlement… I said that I wanted to check the losses. I’ll have to agree most of them because I don’t see that I will now get any further.”
55) 6 September 2007 – J Lamper sent her final assessments for 2002, 2003, 2004, 2005 and 2006. The total was £2,531, she did not say what the penalty was going to be. NM requested that the case be taken before the Special Commissioners. On 18 October 2007 P Meekings said that the case was being referred to the Regional Appeals Unit.
56) 10 October 2007 – J Lamper proposed a universal figure of £4,800 as a point to start negotiation. She said, “I appreciate that [this] is going to be higher than the figure you would like me to be proposing…. I have to start at the figure I consider due.”
57) 20 December 2007 – J Lamper sent a 30 page letter to NM re-evaluating the entire case. The new total (without penalties) was £6,664 – almost triple the original figure! In a letter of 6 Feb J Lamper said, “I am planning to submit a recommendation that the penalty for making an incorrect return is 45%” With penalties and interest the figure is £12,000.
58) 24 December 2007 J Lamper writes to NM, “I do not agree that the schedule is factually correct.” But in a confidential email of 31 July 2007 she admits, “The points in his schedule are not necessarily factually incorrect.” To date J Lamper has not drawn NMs attention to any item in the schedule that is factually incorrect.
59) ?? January 2008 – J Lamper leaves her job as Self Assessment Investigator to become the Interventions Team Manager at Brighton VAT office. Even though she is no longer investigating SA cases she takes active files with her.
60) 17 January 2008 – J Lamper now has a new boss, T Lintott, in a letter he revises the 20 December figure – more than halving it – and offers a global settlement of £5,000.
61) 31 January 2008 – NM talks with T Lintott on the phone, N Morgan says that he is prepared to come to a negotiated settlement but is has to be based on the actual figures of the case. Both parties quickly agree that a Statement of Fact should be drawn up in preparation for a preliminary meeting at the Special Commissioners.
62) 4 June 2008 – Notes obtained through the Data Protection Act showed that HMRC was aware that NM’s returns had basic and clear errors as far back as November 2000. However HMRC failed inform NM or to take any remedial action. HMRC capture operators guidance states “In all cases you should read all the information given in the Additional Information boxes on the return and read and act upon as necessary any warning messages that are displayed.” See http://www.hmrc.gov.uk/manuals/sammanual/SAM121331.htm The notes also showed that HMRC refunded tax even through they knew it was incorrect to do so. The notes are here NM phoned Peter Canning and asked him to shed some light on this investigation. He was less than forthcoming, and hung up the phone, you can listen to the call here.
63) 20 June 2008 – Letter from C Weeks saying she would consider if ESC A19 apples in my case.
64) 4 July 2008 – C Weeks rejects ESC A19.
65) 11 February 2009 – figures negotiated and agreed – the final figure is £4,208.
66) 4 September 2009 – Appeal physically taken and handed in to the adjudicator’s office.
67) 23 September 2009 – the adjudicator writes, “Due to the volume of complaints we have received it make take several months before we look at the case… because of the pressing need for us to use our resources to clear the backlog of work, we are not in a position either to provide, or respond to requests for regular updates either in writing or by telephone.” So what they are saying is that they don’t have the time and resources to tell me that they don’t have the time and resources to look at my complaint!
68) 23 September 2010 – A year on and not a peep from the adjudicator.