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I am currently sat on hold in a telephone abyss at present so thought would post the latest gem from HMRC.

Like many taxpayers I often wonder where my tax paid goes (frankly into a Civil Servant monetary abyss is the answer ...)

Lovely letter today from HM Revenue & Customs where most tas districts seem to have heavy backlogs of post and delays are increasing...

To

My Firm

Dated 16 July 2008

Dear Sirs,

NAME OF CLIENT...

Thank you for your letter of 17 June 2008.

Your letter has been sent to a more experienced officer to review. I will let you know the result as soon as I receive a reply.

To help us improve customer service please quote our reference number and provide a daytime telephone number in any correspondence.

Yours faithfully,

Mr J Dogsbody

Assistant Officer.

This letter is about the third or forth in recent weeks almost identical. They do cuase a lot of laughter in the office due to the sheer shock that HMRC would write such as letter and I think it would be a fair comment to say as fair amount of anger too. Why anger?

CHEATING THE POST TRY TARGET 

Is this letter a way of meeting post tray targets or rather CHEATING them? Bit of a coincidence that these type of replies seem a desperate attempt not to exceed a MONTH target as HMRC replies are nornally a day or so less than a month from the date of our letter. Or is that a bit cynical?

LACK OF DUE CARE AND ATTENTION TO INCOMING POST ON ARRIVAL

Why did it take a whole month to realise the post was with the wrong member of staff? What lack of management set up a post in system like this in the first place?

LACK OF BASIC TAX SKILLS BY HMRC STAFF

All our letter did was send in EIS certificates in support of the tax return entries already made and submitted, which HMRC have reversed with no letter or explanation? Not exactly a highly techincal letter !

On a less cynical note just maybe HMRC could be trying to be polite. After 20 years of dealing with HMRC on a daily basis I have ruled that out as an option frankly.

Why do I criticise HMRC alot in my posts? What other way is there of getting the message across of the waste of time, money and resources that is now at rediculous levels in HMRC and the Government generally and at my expense as a taxpayer in the UK?

I could perhaps send the following reply but as HMRC but as I doubt HMRC would get the point it would be a double waste of my time. Anyway posting it hear gets the message to a wider audience. 

REPLY

To HMRC Bootle 

Date 22 July 2008 (or perhaps I should wait till 15th August?)

Dear Sirs

CLIENT NAME

Thank you for your letter of 16 July 2008 in response to our letter of 17 June 2008.

You letter has been "sent" to the next floor down as they deal with letters that might be a waste of time and resources. They will sit on the your letter for a month and will let us know how to reply to your letter and whether it is a waste of time to reply to. When we have the result of their review we will let you know the result. 

To help us improve customer service, please quote our reference number and also provide us with a daytime telephone number that is not constantly engaged in any correspondence.

Yours faitfully,

Mr A Frustrated

Tax Adviser

Will this post change anything.....

13 May 2008 saw a massive U-turn by a government riddled with poorly informed, poorly qualified and frankly at times mad politians.

The 13 May statement should have been headed “WE NEED YOUR VOTES”…

I usually try and keep posts balanced but today I simply have to say just what I think as the shear incompetence on the part of the Government.

Following swiftly on the u-turn only months ago to correct a crazy policy abolishing business taper relief comes another massive u-turn on the abolition of the 10 pence tax band. Frankly this all comes from a totally incompetent Chancellor and Prime Minister (and ex Chancellor) who with all the u-turns and poorly drafted tax legislation seem to be totally confused by the tax laws that they have themselves been passing as law for the last ten years and have now simply lost their way completely in the haze (like many many members of the public and no doubt not a few accountants and tax advisers too).

Added to the fact that HMRC and many other Government departs appear to be losing sensitive data on an alarmingly regular basis and one which applied to a public sector business would probably see the directors in jail and the company publically humiliated – it seems that the Government and Government Departments and sectors are free to mess up over and over and cannot even see the egg on their faces until a heap of eggs has crash landed.

I think what irritates me most is that politians currently making tax law clearly have not a clue what to do and are just tinkering with an already massively complex system for what purpose?Umm scratching my head here a minute trying to give Alistair Darling and Gordon Brown at least some positive comment....

Nope cannot think of any...

VOTES?

Umm yep that seems to be the only thing on their minds. Just how shallow can it get from here until General Election day. It beggars belief...

TRUST? Well I actually voted for labour when Tony Blair got in but after the last five to seven years but sadly this Government has lost all credibility. It largely started with the lies over the war with Iraq and all those weapons of mass destruction which was a large part of Mr Blair’s downfall but it has simply got worse and worse. Also sadly yet another massive sign of financial madness from Government policies is still to come in the next two to five years e.g. record levels of house repossessions for starters – as we have only seen the beginning on that score.

As for drafting Tax Law as a Chartered Tax Adviser I cannot help but say what I think and that is that this Government has put the writing on the wall for all to see. “Not a clue”

Do Politians on their high wages, expense claims and allowances and gold edged pensions give a damn? Not really that much is pretty obvious… They are simply trying to look after number one is what it seems to me and will do whatever it takes to do just that.

If they started caring about the citizens of this country then just maybe we might see sense from them.

Well here it is plain and simple the text of HMRC's press release today being Gordon Brown's PLEADING for your votes..... 13 May 2008 Chancellor’s Announcement

Helping low-income customers affected by the changes to the personal tax system announced at Budget 2007

It felt like needed to make a post on the Blog today at close of play perhaps I am thinking of it as a bit of therapy...

It fact it now feels like I am in one of those American soaps where the embattled person needs to see their therapist... what is being a tax adviser doing to me! 

Having qualified as a Chartered Tax Adviser in 1990 and dealt with a wide variety of tax issues and situations at all levels I like to think I am reasonably capable at my job. In fact I have always said I love my job and sad as it might seem I "do" (just about at times) still love my job...The only part of my job I hate is dealing with HM Revenue & Customs or indeed the ever increasing level unclear poorly drafted and often unfair or unreasonable tax legislation.

In trying to resolve a dispute today between advise HMRC had given a client I had a joyful call to Mr Taxman at CIS Helpline (he would only give me his first name despite wanting my full name nice touch I have to say, why was he trying to hide?). Part way through the call he refused to speak on "speaky phone" as a partner was also involved in the call, as he was well aware from the beginning (two off us talking) so we had to take the call of speaker phone and relay Chinese whispers for the rest of the call (pathetic frankly). And he refused to give his surname, clearly understanding a formal written complaint was to be shortly winging its way in, then on supposedly transferring me to his supervisor he simply cut us off.

Was a surprised... Surprised would be the wrong world this is what you expect from HMRC routinely, but I never cease to be amazed at just how, rude, unhelpful and simply useless HMRC Revenue & Customs staff are. There is a systematic total lack of respect for taxpayers, accountants and members of the public at HMRC from the top management right down to the lowest level of assistant.

I would hasten to add this is not EVERY member of HMRC's staff is like this, in fact it is a breath of fresh air when you actually speak to someone who is helpful and polite although this is increasing rare.  If you are really really lucky you will very occasionally come across one with a sense of humor but they are am endangered species being hunted down by their managers it seems…

HMRC have told a Limited company client that has purchased two buildings to convert into flats that they are deemed to be a "developer" and therefore have to be registered under the CIS scheme.  HMRC did not dispute that the client is not deemed to be a contractor on level of construction type expenditure grounds which is well below the limits so in order to be able to tell the client, and indeed the main building contractors accountants (a multi million £ company) why exactly HMRC were “right” and that our client should be registered for CIS as the property owner, as they were saying, I asked for the legislation or public guidance that I could then pass on to the client and the builders accountant to show HMRC's opinion was correct.

Response. "It is in our internal guidance".

OK I reply "which part of the internal manuals which I can pass on the builders and my client".

The reply "it is not in any publicly available guidance.".

"What about statute" I reply.

"It is not in statute either" comes Mr HMRC's reply.

Bearing in mind this is the specialist CIS unit I am speaking to at HMRC I reply "so what you are saying here is that this is unpublished HMRC opinion, on which there is no guidance or statute how am I supposed to advise my client professionally and properly?"

Bearing in mind the call took around 1 hour 20 minutes of which around 50 minutes was spent on hold the answer came ...

"Get your client to call us here at the CIS unit and we will tell them over the phone..".

The fundamental point here is that Government and HMRC management fail to see this is exactly why there are so many rogue ORC's (Officers of Revenue & Customs).

So basically HMRC can make the rules up as they go along...

Now why is that? The answer seems pretty clear to me... Government has now become a leading expert in writing legislation which is poorly drafted, so widely drafted no-one knows the boundaries in which to work, and the rules become ever more complex year on year on year.

So what is needed? A radical shake up at HMRC would not go amiss for starters but it is perhaps time we had a change of Government if for no other reason that complacency and stupidity goes out the window and maybe we get so shred of common sense. This is not a party political statement by the way. With so many career politicians I personally can't see a clear winner on the Common Sense stakes. But after over ten years of madness personally I think it would be just good to have a change. I cannot see it being any worse but I can see it getting even worse if things carry on as is… Hopefully it a fresh approach might just see some levels of reality and humanity returning. Even the Monster Raving Loony Party could frankly do a better job on lots of issues…

Tax has truly gone totally potty… a direct reflection perhaps on the people writing and enforcing the rules…

What do you think? Have your say here and express your opinion...

    http://www.opinionpolls.me.uk/polls/Government/HMRC-performance.asp

Anyone who has had a tax investigation or enquiry will probably be hopping mad about the amount of time it took up and the potential costs involved.

I read a great article in The Sunday Times this week by Nick Morgan a journalist who had a tax enquiry into his own affairs.

You can read about his case on his website www.tax-hell.co.uk it has some very useful information for anyone (including tax professionals) involved with tax investigations and enquiries. 

His case is simply the tip of the iceberg. He is certainly not alone. HMRC however simply do not seem to care. HMRC has little respect for taxpayers and business of the UK.

HMRC also has such a shocking lack of understanding about how businesses work and the level of red tape and regulations they now have to cope with. 

Today I am dealing with a case where HMRC would love to effectively shut a business down simply because they are in the building trade and paid one months PAYE late and paid their Corporation Tax a little late. HMRC will of charged them 8% late payment charge but this is not sufficient compensation for HMRC they would also like to write to all the customers of this business basically saying the company is a bit naughty and therefore we will be withdrawing the gross paying CIS certificate.  I am clearly appealling this one all the way. When HMRC behave so madly you just have to fight them all the way.

As a consequence it is possible that around 50 plus people could be out of a job and a profitable business paying lots of tax will be crushed.  A business that has paid ALL it's tax and on time the vast majority of the time for a good number of years, a regular reasable sized non troublesome "customer" of HMRC. Tax madness and HMRC and the Government gone totally potty.

In another case I am appealing a seperate case where HMRC want over £1000 in fines for late NIL CIS monthly returns. This is simply unreasonable.

The logic of this government and HMRC is simply astounding and beggers belief. It is a tax world gone mad.

When a new member of staff starts at HM Revenue & Customs the first thing they are passed is a stick.

The team leader when asked what this is for then replies. "Look in this job we beat taxpayers with a stick if they make ANY mistakes, no matter how small use the stick and use it well, and don't hesitate to use it".

"But what about helping taxpayers?" asks the new trainee...

"Help... don't be stupid why would we want to waste time doing that. There is more MONEY to be made with the stick and you will get no thanks or praise from me for helping but you will be rewarded for stick useage....the better the beating the better the rewards..."

Although nothing to do with tax while researching a tax issue today and "consent orders" I came the article below. I have to say after pondering on all the legal costs no doubt funded by the taxpayers of this country in full (including a Judicial Review) I wonder if Victims or the families of victims get the same level of legal state backing in pursuing their attackers through the courts?

Surely if you come to an agreement in court after "taking advice from your counsel" costs of subsequently running a Judicial Review are somewhat unreasonable?

If the Jones' in Artic Systems had agreed to pay the £3000 or so wanted by HMRC in court after asking their counsel,  then subsequently changed their minds and appealled the decide (agreed on) I wonder is they would have been given the right of appeal by the courts?

The world and the legal system has gone mad for sure. I wonder how many tens of millions Heather got today, sorry just heard approx £24million, in the divorce courts for four years of marriage? ... thats around £16,000 for every day of marriage, plus all the money she no doubt spent while she was married to Sir Paul, holidays luxuries etc. Not bad going, and at least it was not more which I thought it probably would be so on this occasion the courts have seen a little bit of sense. But then again lots of people warned him before he married her (or at least thought so, as I sure did) "this is not going to end happily, or before very long". The only good thing is that now Heather might well end up meeting a guy after her money  as they say "what goes around comes around"...

Courts just so often seem to be detacted from reality and common sense on a week in week out basis. Too many brandy's possibly. 

I am sure the legal profession are not complaining though whether defence or prosecution.

Another bit of madness found today is here for your delight...

"ASBOs "By Consent"  

We are at any time now expecting confirmation of the Government's plans to change Capital Gain Tax particularly as they affect business.

Although not officially confirmed yet it is rumoured that the rate will be halved to 9% on gains of up to £750,000 on the buying and selling of business assets although the assets qualifying for a lower rate are not known. 

Promised before Christmas and then delayed while ministers considered the mess they had got themselves into with the rash and poorly judged previous proposals to increase capital gains tax on business sales to 18% (an 80% increase) we are still awaiting confirmation.

The original proposals seemed to be Alistair Darling trying to make his mark after 10 year with Gordon Brown as Chancellor of the Exchequer and were rushed out in the Pre Budget Report.

The rate of capital gains tax for investors and people with rented residential properties, second properties,  holiday homes and other non "business" investments is due to be cut substantially by anything between 22% to 16% depending on how long the asset had been held.

With the hugh growth in Buy to Let Properties as investments quite why Government has chosen to penalise business investors in favour of Landlords is not clear but that is the route Government seems to be taking.

It could be perhaps that many career MPs have second properties, and property portfolios but little business skills or understanding?   Afterall we are now starting to see the big cracks in the ecomomy after 10 years of Gordon Brown. Petrol soon to be over £5 a gallon, other fuel prices rising by up to 23%, Council Tax bills going up by over twice the rate of inflation. Many businesses putting their prices up due to the fast rising cost of living and trading. Overall an inflation position due to go nowhere but up. So what will Government due? It's Government's and Bank of England's only answer it seems is to drop interest rates. Basically the UK economy revolves around interest rates. Probably a reflection of the trilllions of personal debts now in the UK which are not going to go away. Personally I think dropping interest rates as they have in the UK will just mean when we do get the correction that is due, it will be all the more harsh.

Afterall Japan had almost 0% interest rates at one point and that economy still nose dived. Trying to run an economy based on interest rates to me seem flawed and a sign of just how flimsey the UK economy has now become.

A very happy 2008 to all Tax Blogs.co.uk readers.

As the 2007 Tax Return deadline of 31 January 2008 approaches fast here are some tips for saving time, money and stress.

• If you use a Tax Adviser or Accountant to complete your tax return supply all your details in one go, and sorted into a neat order. Like many businesses Tax Advisers and Accountants usually charge on a time spent basis. Therefore sorting and adding up a lot of petrol receipts or putting bank statements in order or invoices raised in order takes time and therefore costs fees. Organised clients usually pay less in fees therefore invest in yourself and get organised.
• Supply copies as opposed to original documents and make sure you keep the originals safe should you need them. If advisers have to copy documents before returning them to you again this take time and can cost you extra fees.
• Supply and further information requested by your adviser promptly. Scanning documents and and emailing them saves time, avoids relying on Snail Mail and means queries or question can be sorted quicker.
• Make sure you give your contact phone numbers on all documents and emails. The assumption your accountant knows your phone number off pat or does not have to spend any time looking it up or finding it can also save time and therefore costs.
• Don't leave it to the last minute. Some advisers might charge a premium charge for working overtime late into the evening dealing with your affairs. Give your adviser all the information neatly and in plenty of time.
• Make sure you supply the right information. The tax year in the UK runs from 6 April to 5 April so for the 2007 tax return the period runs from 6 April 2006 to 5 April 2007.
• Retain and or obtain from any banks or building societies certificates of any bank interest received during the year and let your adviser have copies. Make sure you have included all your bank accounts. Even current accounts often pay interest monthly now.
• If you are a pensioner let your adviser know whether your state pension is paid weekly, four weekly (i.e. 13 payments in the year) or monthly. Make sure you keep the annual notification from the Department of Work and Pensions of your weekly rate. This usually changes each year around 6th to 10th April. So the weekly rate notification for the April 2006 increase is what your adviser needs for the 2007 Tax Return. If you give your currently weekly rate that is higher (normally) and is relevant for your 2008 Tax Return after April 2008.
• Keep Dividend vouchers and let your accountant have copies.
• Keep Contract notes for sales of shares and unit trusts. Batch these for the same share holding to match purchase notes with sale notes of the same holding. Put them in order and let your accountant have copies.
• Write a list of everything supplied (and include your phone number and mobile and email address) so your adviser can see at a glance you have included everything.
• Make sure your tax return goes in on time. A flat £100 fine by HMRC applies if your return is in late (after 31 January) and increases to £200 if the return is more than six months late.
• If Partnership Returns are late EACH partner in the practice will received a £100 fine (increasing to £200 as above) for the lateness!
• Pay your tax on time - 31 January 2008. HMRC charge interest for late payment (7.5% from 6 January 2008 was 8.5% from 6 August 2007 and 7.5% from 6 September 2006 and 6.5% from 6 September 2005) (details click here) plus surcharge penalties of 5% for balance payments paid after the end of February increasing to 10% if paid after the end of July.
• Pay your tax online to make it easier to track the payments. For detail of how to pay online click here    
• Submit your tax return electronically so you know HMRC have received it on time rather than relying on the postal system.
• Keep receipts for payment of tax and submission of returns as your evidence and record.
• If HMRC issue a tax calculation or adjustment to your tax return do not rely on it being correct it is quite common for HMRC to make mistakes.
• Don't assume that anything you are told by HMRC is correct. Many staff are poorly trained and obviously their opinion is bias. Furthermore everyone in the tax field is very busy in January so you are more likely to get the quick rather than correct or full answer to any queries.
• Be accurate and tax care. HMRC can fine for incorrect returns. HMRC raise large sums each year from fines and penalties don't become another target for the extra funds.
• If you are not sure what you are doing GET PROFESSIONAL ADVICE.

If you need help why not try our online directory of UK Tax Advisers to find a tax adviser in your local area !

www.tax-directory.co.uk