Taking on the taxman

HMRC is such an easy target. And last night's TV programme 'Taking on the taxman' hit the spot. The real life stories were sad reflections of mistakes that have had a devastating impact on the individuals concerned.

This is one of 3 consecutive posts inspired by last night's TV programme 'Taking on the taxman'. In the second post I focus on the issue of bankruptcy orders. And in the third post I gave my take on a key issue only touched on last night.

For now here's my take on key elements of the programme:

Dave Hartnett CB, Permanent Secretary for Tax
Dave Hartnett, who was wheeled out to defend and explain HMRC's position did the best he could do. He refused to discuss specific cases and sought to point out that like any large organisation HMRC will sometimes make mistakes. I know Dave from my days as Chairman of the ICAEW Tax Faculty and I've seen him deal expertly and convincingly with challenging questions on many occasions. As such I am sure that his edited contributions to last night's programme were just that - edited.

Equally I'm sure that despite his denials the recent and prospective staff cuts in HMRC are having a detrimental impact on HMRC service standards.

The bankruptcy orders
I've extracted this element of my notes to create a separate blog post here.

The insider
We were given an insight into poor HMRC practices, pressures of over work and the evident impact of drastic staff cuts. I remain unconvinced that these make sense or that anyone on the inside seriously expects to be able to maintain (at best) or improve 'customer' service at this time - more's the pity. And in this regard I sympathise with HMRC as the staff cuts are being forced upon them and they have to defend them and cope. Not easy.

Tax charged on a redundancy payment
The programme made a big thing about how one taxpayer had expected his £29k (coincidentally just shy of the £30k limit?) termination payment would be tax free - as was indeed eventually agreed by the taxman. But, as were told, he had already invested the gross sum in a new business when he received an initial demand for £8k tax plus interest and an £8k penalty. This suggested to me that either his tax return was incorrect or that his employer had not supplied the 'right' information.

HMRC asserted that the termination payment “was taxable as additional wages.” This is a frequent argument and all too often proves to be correct - for reasons I explained in an earlier posting - 'No £30k exemption from tax when you leave a job'.

So was this taxpayer a victim of an out of control tax gathering department? Or a victim of a tax system that is complex and rules that appear inconsistent to the uninitiated? I prefer the latter explanation but that doesn't make for good d TV in a programme so evidently out to bash the taxman rather than the system. .

Tax avoidance
I didn't follow the juxtaposition of the other stories about HMRC mistakes with Vince Cable explaining that there are too many 'tax avoiders' round. This section of the programme also quoted the figure of £25bn tax lost "through perfectly legal tax avoidance". Hmmm. I think we've been here before.

What do you think? Did you watch the programme? Please add your views and thoughts as comments on this posting - just click the 'comments' link directly below.