Photo: Jonathan Banks
Over the last few months HMRC boss Dave Hartnett has got it in the neck for giving some big businesses (such as Vodafone and Goldman Sachs) some amazingly generous tax deals, losing The Revenue an estimated 25 billion in, errum, revenue. Why give these big companies such generous tax breaks?
There is video of him being questioned in the Treasury Select Committee late last year about this and he looks extremely uncomfortable. Some sources have suggested he bent over backwards for a few free meals and a case of Châteaux de Châteaux. Well – if that was the case – that was corporate hospitality well spent, it’s tax deductible you know!
But to bring us up to date, he’s just given The Telegraph an intervew pointing the finger at ‘the man in the street’ who pays for services such as building and plumbing (a HMRC bête noire) with cash. He said, “Tax provides the funding to run the country: hospitals, schools and everything else. Every time someone pays cash in order not to pay VAT, the nation gets diddled.”
My old flatmate used to say, when you point your finger at somebody else you are pointing three at yourself.
If I asked you to close the door what would you do? Most reasonable people would shut the door… well you might tell me to get up off my arse and close it myself – but stick with me on this one: for most people closing the door would result in a door that was completely shut. But this is not the case at HMRC as the above clip shows. Here HMRC boss Dave Hartnett gives his rather unusual definition of what ‘close’ means.
And why is this important? Well whenever you get into conflict with HMRC you will always come into this question: what would a reasonable person do? But what HMRC defines as reasonable is very different from what the rest of the world thinks of as reasonable. If they can’t use simple words like ‘close’ in a way that’s understood by most people, what hope have this team got of creating a more simple and effective tax system?
None, what so ever.
Here is the House of Commons dialogue:
Mr Tyrie: You say in your mission statement that you will close the tax gap. You are not actually going to close the tax gap, are you? You are going to reduce the tax gap; isn’t that right?
Dave Hartnett: We had much debate on this, Mr Tyrie, as to whether “close” means close so the door is aligned with the frame, or whether it is the process of closing, and it is the second of those that we are doing.
Mr Tyrie: That is another classic Sir Humphrey reply, if I may say so.
Dave Hartnett: That was the debate we had.
Mr Tyrie: Out of the top drawer, if I may say so, above the doorway. Impressive…
Dear Dave Hartnett
Here are some get-go facts. I was on a low income. I incorrectly claimed by drawings as an expense. It was an obvious mistake – which was very clear in the return. I received a small tax rebate from my PAYE employment. HMRC now what that back.
I think ESC A19 should apply in my case. Dave Thomas, Complaint Analyst dave.p.thomas@hmrc.gsi.gov.uk said that the answer was ‘NO’ his boss Cheryl Weeks, HMRC Complaints Team Manager cheryl.weeks@hmrc.gsi.gov.uk is now reviewing the ESC A19 facts, she’s written me a letter to say that it will take her two weeks to respond. My question is this: How long does it take to read a flowchart?
Have a look above or see here for a bigger pic.
And follow the logic:
Stage one:
Do the arrears arise from HMRC’s failure to use information received per PAYE95045 – PAYE95060?
OK, I don’t know what the numbers mean but I knew what PAYE means. In 2000 I asked for a tax rebate of my PAYE tax, my file was unlogged, a technician saw that my accounts were obviously wrong and the refund was rejected, see the document here. A case like this could have been nipped in the bud with some simple remedial action – but it was not. Further notes from 2004 show that a further request for a refund was granted even though it was known to be incorrect by HMRC. That document is here.
I think we can certainly say YES to this box. HMRC had the information, they knew my accounts were incorrect, but they failed to act on that information.
OK, this takes us on to box two: Did HMRC tell the taxpayer about the arrears within the time limit at PAYE95065?
So did the then Revenue figurehead Hector give me a call or drop me a simple letter saying, “Hi, you know we say tax is simple – well it isn’t, get yourself to an accountant tute suite my son or it will be a triple serving of grief.” NO HE DID NOT!
I don’t know what the time limit is, but I think it’s safe to assume that eight years is beyond that limit!
OK, so that’s a NO taking us on to the box that reads, “Was it reasonable for the taxpayer to believe their tax affairs were in order per PAYE95080?”
Here we come to a sticking point because what is “reasonable” to one person is not reasonable to another. But I’ll bet the farm that the majority of taxpayers out there believe that their tax returns are checked before they are processed. I’ll bet that the majority who write in the “other information box” believe it will be read. Why ask for information if it’s not read?
Here is what I wrote on my tax returns: “I found the attached tax form complicated and difficult to fill out. I have done my best with it and it is correct and complete to the best of my knowledge. Given that my income is so low it should be very easy to work out my tax. For the sake of clarity I am enclosing a single column of my accounts.”
Now the question you have got to ask yourself is this: am I a master criminal trying to trick the Revenue out of cash or am I somebody who is crying out for a tax officer to double-check my figures? And when I said, “… it is correct and complete to the best of my knowledge” was that a blatant lie to hide wrongdoing or did I really think my figures were accurate?
Here’s my tip for the RIAT (Risk intelligence and analysis) team: people who are trying to slip under the tax radar don’t submit letters, which scream: “look at me, look at me!”
So I’m going to give a YES here, it was reasonable for me to assume that the figures were correct. And it was also reasonable to assume that my return was read as it was processed – as indeed it was.
And suddenly here we are! At the box that says: “Give up the arrears under ESC A19”.
In a nutshell I made small (a few hundred quid) innocent (see above) and obvious (HMRC accepts that they were obvious) mistakes. HMRC saw the mistakes but failed to act on them – indeed they refunded PAYE cash when they knew that no refund was due.
QED ESC A19
Well that’s an hour of my life gone, quite why it will take Cheryl Weeks two full weeks to use the chart is beyond me.
Nick
