Monday 12 May 2014

Excessive Powers for the Revenue

For evidence that being in power goes straight to politicians' heads, look no further than plans to give the Revenue the right to seize 'unpaid taxes' direct from bank accounts.  Oh, they protest, we are only after a minority of people - and There Will Be Safeguards!

Seeveral years ago I sold up from a company of which I was part-owner.  It was a complicated transaction, and I found myself in disagreement with the Revenue over the tax I owed - the disputed amount was a six-figure sum.  The matter took nearly 2 years to settle, but it was handled professionally enough (though not expeditiously), resulting in my side of the argument prevailing.  Even then, I didn't much enjoy the accountant's bill for the effort involved.  What, do we suppose, would have been the situation if HMRC had wielded the power to grab first and *discuss* later ?

I think we can guess accurately enough: we know these people of old - the ones who use anti-terrorist legislation to enforce litter laws; the council officials who can say: "We make no apology for using all the powers Parliament has given us".

There is estimated to be between £5-10 billion at stake in disputes with HMRC over just the simpler personal 'tax-avoidance schemes', never mind the more complex and corporate ones.   Perhaps there isn't much sympathy with Jimmy Carr et al in such matters: but the additional amounts under the general heading of 'money the Revenue would like to get its hands on' must dwarf this amount.  An initial gravy-train for accountant and lawyers, no doubt (compensation for cutting the Legal Aid budget?) - but shortly thereafter it will reduce the UK to a cash economy, and the boom will be in offshore accounts and capacious mattresses.  VAT revenues will plummet and the domestic banking sector will implode.  No foreigner will go anywhere near a UK-based bank.

Think carefully, Genius George.



dearieme said...

As long as the other side of the deal is that we can perform citizens' arrests on the taxmen and hold them until contentious matters are settled, I see nothing wrong with the proposals.

hovis said...

I saw this in the budget and was amazed/angry in equal measure. Glad to see you have recognised the fingerprints of genius George all over this one.

The question here is not over tax paid or not. If I were to come along take £10,000 from you just because I wish (and claim it is mine) is in effect theft. Passing a law allowing me to do so does stop it being theft, it simply make most people order their affair differently and undermines the trust that there is a rule of law, rather than whim and diktat.

Bill Quango MP said...

i had a VAT bill in 1985 for £40,000.

i claimed that the actual amount was zero as it was not a VAT rated business, being under the threshold, but suggested £4 would be about right.

In the end we settled on around £40 which was way over but it got rid of them.

In those days a taxman came every year to audit us. And this was a tiny businesses barely registering any turnover or profits.

These days I haven't seen a taxman for years.
Nor has anyone I know.

I recall Gordon axed them all.

hovis said...

just seen this

What utter bollocks, I know Camoron, and Genius George are a bit thick, and the Telegraph is now nothing but an excreble rag ( come back Conrad Black you fraudster - at least you ran a decent newspaper.)

Do they expect us to roll over?

andrew said...

IANAL, but I think that there would be an appeal under human rights legislation:-
Article 1 / Right to property.
There is a qualification that the state has the right to secure the payment of taxes, but to balance that there is the principle that no one shall be arbitrarily deprived of his property.
I would say that taking the money first is just that - arbitrary.

People dont generally pay the fine or serve the sentence until they have been found guilty / liable and that means exhausting all appeals - as a reasonable number get found not guilty/ not liable, and this process can take an unknown, arbitrary amount of time and result in a fine that is not what the HMRC thinks is is initially - they will be seizing an arbitrary amount.

We didn't send Abu Hamza to Jordan and then discuss whether the extradition was legal.
Why are my freedoms - and your freedoms less important than his?

Scan said...

andrew, Payment on Account is totally arbitrary (and utterly 'king disgusting too) but they get away with that theft just fine.

Timbo614 said...

I can't help but agree with Nick & others on this one.

7 years ago I had an almighty problem with Tax and borrowing to pay it. Partially my own fault, but that is by-the-by. Because of disallowed expenses, disallowed "not a related business" losses, I suddenly had a tax bill of 47K when expecting 20-ish K :( I had to borrow to the hilt ('coz I didn't have all the 20K either!).

Consecutively with these shenanigans, I lost a major part of my income. So... I had paid the taxman but I had racked up payments of over 1,000 a month on loans :( 25K of which was on credit cards because loan co's reckoned I had reached my crises.. card rates got hiked and hiked(bastards).

So I had Self Employed income of circa 2K/month before deductions to share out... Guess who lost out :)

The arithmetic was easy then - tax man charged 3-4% + £300 annual fines. Some Card co's were charging me 25%+ some of this time.

If the taxman had had this power in the years following that 47K payment, I would have been dead in the water. There was literally no choice but not to pay the due tax at the due time. I had no intention of not paying, just needed for him to wait a few years...So I made him wait for 4 years :).

In my defence EVERY spare penny went to those Card companies, starting with the highest interest one, the others I "cycled" - literally paying minimums, transferring to any card offering discount/ free periods/lower interest (if I could get them - my credit rating was destroyed by this process) until could get to them.

Consequently, I'm quite proud of myself :) I had other debts too, but this disaster concentrated my mind on getting debt free! Excluding the mortgage, I was close to 100K down 7 years ago, today it is just normal business O/D and that would be virtually gone if we hadn't been flooded at Christmas.

P.S. If anyone wants to know how to beat a bad credit card debt/loan crisis - that IS the way - Concentrate on one at a time, be absolutely merciless with the other debts, duck dive them as much as possible until it's their turn, and be absolutely merciless with yourself and sacrifice your "unnecessary" possessions to ebay, e.g. I don't really miss such things as my Beatles White album - Original No. 518. and it was £300 paid off :)

P.P.S Not paying the taxman already would not work so well - the fines and interest are now horrendous (£1,600/yr + Additional Tax + Interest).

Sackerson said...

I like Dearieme's idea (11:21) - would the European Arrest Warrant come in useful here? You know, go ex-pat and then ask the local court to drag some representative of HMRC off to a small-town jail in Greece?

Blue Eyes said...

We are back into pasty tax territory.

Apparently the pasty tax was on a long wish-list of "reforms" given each year to the Chancellor of the day. The pasty tax had been on the list for many years because it was an anomaly, but Chancellors were mostly astute enough to realise the potential political pitfalls of putting VAT on pasties.

No doubt the Revenue has been itching to get control over our bank accounts since about 1803.

I was accused by the Revenue of avoiding tax on a particular employer-provided "benefit". The inspectors pointed me to Section 239493212A which stated that what I had received was taxable. What they didn't point out was that Section 239493212B provided an exemption for people in my situation. The inspectors knew perfectly well that I fell into the exempted category, but effectively tried it on.

No, I don't think I want the government to have direct access to my bank account.

Elby the Beserk said...

I'm trying to think of an agency of the state that is not chronically dysfunctional.

Nope. Anybody?

Anonymous said...

HMRC computer systems are "interesting" in the Chinese curse sense. Every employer in the land had to be ready for RTI (when the Revenue are informed every time an employer pays a PAYE employee) back in October, so that Universal Credit could be paid. Seven months later - no UC.

I'm starting to wonder if it'll be implemented at all before the next election. Particularly as it'll potentially add another half million to the dole queue.

Currently a self employed person can claim a low income and lots of credits and benefits. See your local self-employed Roma Big Issue seller.

Under UC self-employed people will be assumed to be earning minimum wage for a 40-hour week. Most of them aren't.

K said...

Re HMRC computers, how about the fact that it's now all online but they still haven't updated their site so you have to pay for third party software to submit your forms?

Every year I reckon I could probably make a small open source script to submit e.g. partnership returns, setup a tip jar, and probably make a couple hundred a year in donations.

Problem is that the HMRC API isn't public and I bet it's a huge hassle to get the docs from them. My last tax enquiry took 16 weeks despite their claim to reply to all enquiries within 4.

Elby the Beserk said...

I went through all my correspondences with HMRC recently, to get shot of redundant old stuff.

9 out of 10 letters from them commenced

"We apologised for the delay in replying to your ...."

hovis said...

Timbo: O/T:
Be aware that if the cards were personal and the initial agreement/contract was signed before April 2007, it is likely that it is unenforcable in the courts. (Subject as I understand it being barred by statute of limitations.) You might ask the co's involved supply the orginal valid contract, as allowed by the CCA (1974). It may be the case that they are invalid ab initio. Which could allow the possibility of some form of reclaim. Alternatively thats too many ifs an buts and you prefer to enjoy being in a better place. Just saying.

Nick Drew said...

Timbo - you are a survivor ! come hell, HMRC, or indeed high water ...

BE - similar lamentable ivory-tower process, no doubt, but a wee bit more at stake than with the pasties ... (or gay marriage)

andrew said...

I'm trying to think of an agency of the state that is not chronically dysfunctional.

Nope. Anybody?

- The parks department in Clevedon.

Timbo614 said...

@ Hovis.

I pay my debts, card co. or no. I borrowed it knowing full well the consequences. I paid it back.

Credit rating is fine and dandy again now.

Non-dysfunctional Gubbmint dept.... err not offhand no.

dustybloke said...

The big problem with this is that if HMRC makes a "mistake" you have no redress whatsoever.

If they get you thrown out of your house or your business folds, tough shit.

And funnily enough, they do make mistakes. Rather a lot.

I do a bit of pro bono work locally. What about the employee, whole income taxed under PAYE who gets a Beamer as a company car, then a tax bill for £20k. Because someone at HMRC put in the cost of the car as his taxable benefit. Or more recently the old lady, aged 83 who overpaid tax of £5k in they year her husband died, who was told she'd have to register online as self employed to reclaim it. Or thee newly retired teacher whose only income was her £9k a year pension which was taxed at 40%.

As I posted at the DT, if this was a two-way thing, with Citizens' Committes to take money from over-claiming MPs then argue about it later, that would be a different matter. But could you imagine the scorn with which such proposals would be treated?

But it wouldn't be so different...

Avoid - you know it makes sense said...

Got the T-shirt. My "customer experience" was a demand for 30K which reached the "we'll send round the bailiffs" stage. After 2 years the Adjucator ruled HMRC owed me 6K. Stress, health and having to deal with the "screw you" attitude - my savings are now elsewhere.


Avoid - you know it makes sense said...

Got the T-shirt. My "customer experience" was a demand for 30K which reached the "we'll send round the bailiffs" stage. After 2 years the Adjucator ruled HMRC owed me 6K. Stress, health and having to deal with the "screw you" attitude - my savings are now elsewhere.