HMRC tax awards of the week

Clearly this is THE week for tax awards - given my most recent blog posts.

HMRC have their own awards - now in the their second year, to recognise the contribution that business, professional and voluntary communities make in helping HMRC run the UK’s tax system.

This year's External Engagement Awards were presented last night at 11 Downing Street to:

* Sarah Gillett – UK Ambassador to Switzerland and Liechtenstein – for her pivotal role as part of the UK team negotiating with the Swiss Government to seek ways to increase tax transparency for UK taxpayers, including the recent tax agreement.

* Paddy Millard – retired Chief Executive Officer of Tax Help for Older People (TOP) – for supporting HMRC with specialist advice about customers on low incomes, in particular his work on security and disclosure constraints.

* Rebecca Benneyworth – a fellow contributing editor of mine at Accounting Web – for her work in supporting HMRC’s consultation exercise on the future relationship with the tax agent community.

* Mike Sufrin – recently retired Head of Tax at Rolls Royce – for his commitment in working with HMRC to improve clarity and customer focus in Large Business, in particular his significant contribution to the development and implementation of the Senior Accounting Officer and the Large Business Transformation programme.

I'm pleased for all of them, but especially for Rebecca and Mike who I have known for some time.

'Lack of Tax Trust' Award of the Week - The Public Accounts Committee

I was surprised and disappointed to note that the Public Accounts Committee felt it necessary to break with tradition when interviewing Anthony Inglese last week. (As reported by the BBC).

Mr Inglese has been Head Lawyer at the Office of Fair Trading in 1991; then Head Lawyer at the Ministry of Defence in 1995; and in 1997 he was appointed Deputy Treasury Solicitor. He joined HMRC in 2008 and is said to be their 'top lawyer'. He leads on Professionalism and Ethics for the Government Legal Service and is a member of the Bar Standards Board. He also gives training at the National School of Government.

Despite Mr Inglese's credentials the Public Accounts Committee, last week, asked him to swear an oath on a Bible to tell the truth. This is not standard practice. I understand that nobody had been asked to swear an oath by a parliamentary committee for more than a decade.

Why did the Committee feel the need to do so on this occasion? Does it reflect worse on them or on Mr Inglese? Perhaps it was the only way to get the Committee to believe the truth. I tend to think that everyone giving evidence before such committees should be placed under oath.

But for now, I am confused as to why they picked on a Revenue official when even James Murdoch hasn't been asked to swear an oath when appearing before a select committee. So, for their heavy-handed approach I give the Public Accounts Committee the Lack of Tax Trust award of the week.

Tax tease: How likely are you to be arrested for tax avoidance?

This week HMRC announced that five plumbers have been arrested for failing to pay the right amount of tax. A further 600 or so are under civil investigation by HM Revenue & Customs (HMRC) for failing to pay the right amount of tax. Some of those involved owe up to £150,000.

The arrests and investigations have taken place during HMRC's campaign titled the 'Plumbers Tax Safe Plan (PTSP)' . This invited plumbers, gas fitters, heating engineers and members of associated trades to get their tax affairs in order by the end of this month. But there was an earlier deadline of 31 May by when you had to notify HMRC you intended to 'fess up. The raids and arrests were of people who were known to be tax ‘ghosts’ - people who have not declared their earnings.

HMRC have announced that more raids are expected to take place over the coming weeks across the UK, including Yorkshire, Kent, Cambridgeshire, Tyne & Wear, Midlands and South Wales.

So how likely is it that you might be arrested for tax avoidance?

Simply stated it will NEVER happen. Not for tax AVOIDANCE anyway. But remember that the plumbers were not arrested for tax avoidance. What the plumbers did was to EVADE their tax obligations, and that's illegal. Which is why they have been arrested.

I have long argued that more publicity of this type of heavy-handed action by HMRC and the police would have a deterrent effect. I expect that it will encourage more people to come clean earlier. And hopefully more people will recognise the huge risk they take by conducting a business without telling HMRC what they are doing.

There are two problems however:

1 - Those people who would like to come clean and are now scared off by news of the arrests. Don't be scared. If you come forward voluntarily there is next to no chance of being arrested*.

2 - Those people who are paid cash in hand by 'employers' who refuse to comply with their obligations as employers. They would also 'sack' anyone working for them who threatens to tell HMRC what's going on. In such cases it is clearly the 'employer' who is in the wrong. They may be prosecuted by the workers would never be arrested in such cases.

*Whether you are a plumber, a gas fitter, a life coach, an ebay trader, a restauranteur, a medical professional or indeed anyone who has been evading tax, or you know someone who has, TAKE PROPER ADVICE. The same goes for you if you run a business that is evading VAT.

I haven't picked any of those categories at random. They are all referenced in recent pronouncements by HMRC. I've written about some of them in previous blog posts - see below. Even if your situation has yet to be addressed by a specific HMRC campaign, the penalties will generally be less severe for taxpayers who come forward voluntarily to put their affairs in order with HMRC. And in such cases these penalties will NEVER include imprisonment.

Taking PROPER ADVICE means speaking with an experienced tax consultant with specialist experience of negotiating 'back duty' settlements with HMRC. (Back duty is an outdated but still useful term to focus attention). Few local accountants are able to do this sort of work unaided. Which is why I recommend the Tax Advice Network.

Related posts:

Life coaches, fitness coaches and tutors targeted by taxman
HMRC robots to catch out online traders
HMRC targets VAT cheats - or rather, it will do soon...
Last chance for tax cheats to get their tax affairs straight
Doesn't everyone try to avoid or evade taxes?

The Taxman's trouble of the week: The paper shortage

I was in two minds whether to post this here or on my accountancy and tax fun blog.

Believe it or not, but HMRC has run out of paper! This means that some self employed people who are due to pay tax on 31 July will not get their reminder statement until August.

Much the same thing happened in January 2008 - as HMRC admit in their FAQs about the current farce.

HMRC are saying that anyone who is affected will not be subject to interest on the late payment as long as the tax due is paid within 30 days of when the statement arrives. Some of the people affected by the paper shortage will already be planning to pay their tax as it's an annual liability. The amount due will typically also be clear from the statements issued earlier in the year by reference to the tax due on 31 January 2011.

If you do pay the tax late I suspect that the computer will automatically charge the interest that would otherwise be due. You will then need to call or write to the taxman to get the interest charge wiped from your record.

I was going to finish by hoping that HMRC will have enough notepaper to record the details of telephone conversations when taxpayers challenge the interest charges. But the records are probably all stored online now.

HMRC are not the ones making the PAYE 'errors'

Here we go again. Today the papers are again full of stories alleging errors made by HMRC related to the tax paid through the PAYE system.

It's only 9 months since the last series of stories started along similar lines. Then, as I explained here, it was the first time HMRC had been able to reconcile their figures for some time. They were using a new computer system. Things are settling down and they have now reconciled the figures for 2009/10 - Not that any of the news reports explain this important point.

HMRC can only reconcile information that they have in their records. This includes tax returns and the last ones filed were for the 2009/10 tax year that ended on 5 April 2010. It is quite an achievement for HMRC to have completed their reconciliations within less than 6 months of the filing deadline for those tax returns (31 January 2011). It's never been done that fast before.

Journalists like to suggest that HMRC are incompetent. Sometimes they are. But it's the PAYE tax system that needs to change and HMRC are working on this. With the system as it stands there will ALAWYS be a need for annual reconciliations and there will ALWAYS be some people who have overpaid and some who have underpaid tax through PAYE.

As I have explained previously the PAYE system cannot be relied upon to ensure that the right amount of tax is deducted from earnings and pensions across the year. And HMRC know this. That's why they are keen to introduce 'Real Time Information' (RTI) reporting. It won't solve all the problems with the system but it would reduce the number of reconciliations required each year. It's going to be tested next year with the intention of introducing it in 2014. It would be a mistake to rush it or to add to the burdens of small employers by obliging them to report RTI. As it stands the intention is to only make this compulsory for larger employers.

So we will continue to have PAYE reconciliations each year - but hopefully these will affect fewer numbers of people each year. And yes, some HMRC staff will make some mistakes too. But the main problem is the PAYE system. As one tax official told me recently: It would be fine if taxpayers only ever had one job or pension at a time, only ever changed jobs at midnight on 5 April and never had any taxable benefits in kind. That, I do not think is ever going to happen!

Life coaches, fitness coaches and tutors targeted by taxman

Those who can, do, and those who can't, cheat on their taxes. This is the inference one could draw from HMRC's latest news release announcing the next subjects of a tax crackdown.

HMRC say that they are going to target those who provide private tuition and coaching. This addresses the risk posed by all professionals who, because of their field of expertise, are able to earn money from providing tuition and coaching – either as a main or a secondary income.

The sort of people in the firing line are stated to be those who provide private lessons, regardless of whether they have a teaching qualification, and could include, for example, fitness/dance/lifestyle coaches through to national curriculum subject tutors and others.

I would make the same observation as on my last blog post (re: HMRC robots to catch out online traders). To an extent this announcement is only likely to scare the target tax evaders so that they start to disclose their extra-curricular earnings. In this regard you have until 31 October 2011 to disclose earnings from 6 April 2010 to 5 April 2011 even if you had previously been hoping to keep them secret. If you have been failing to disclose sizeable amounts of income for some years you may want to take professional advice about how and when to tell the taxman. Do follow the links above to find a tax adviser who can help you.

HMRC robots to catch out online traders

It's more than two years since I reported on HMRC investigating posts on social media.

Now it seems that HMRC are using sophisticated web robots to track users of ebay and other online trading platforms. The objective is to trace people who are trading but not reporting their taxable profits to HMRC. This counts as tax evasion but don't worry if you only sell a few items as you are unlikely to be classed as trading so will not be liable to tax or targeted by this campaign.

In HMRC's latest news release they claim that:

"The “web robot”, used with the department’s 'Connect' computer system, also helps find people who are trading without telling HMRC.

'Connect' alerts HMRC to previously invisible tax evasion by matching a vast amount of HMRC and third-party data, enabling a fast and focused response to tax evasion. It shines a light onto previously hidden relationships, uncovering anomalies between such elements as bank interest, property income and lifestyle indicators before homing in on unexplained inconsistencies."

Do bear in mind that there are inbuilt delays in our tax system. The web robots may be doing one or both of the following:

1 - Looking back to track what happened in 2009/10 and then comparing this with what was disclosed on tax returns for that year;

2 - Looking at what has been happening since 6 April 2010 so that this data can be compared in due course with tax returns for 2010/11 and 2011/12 when these are eventually submitted.

On balance I suspect the news release is intended to scare taxpayers into future compliance. Anyone who may have been planning to omit reference to online trading activities since 6 April 2010 may now be persuaded to report them properly on their tax returns. The return for the period 6 April 2010 to 5 April 2011 needs to be submitted by 5 October 2011.

HMRC's agent strategy shows they HAVE been listening

The professional press has been full of knee jerk comments on the latest HMRC consultation document: “Establishing the future relationship between the Tax Agent community and HMRC”.

Like many commentators I welcome this document and agree that it foreshadows enormous changes in the relationship between accountants, tax advisers and HMRC.

I am also pleased to see that the document reflects much of the feedback submitted two years ago in response to an ill-judged and confused document: "Working with Tax Agents". This was far more adversarial and unhelpful than is the current effort.

I submitted a detailed response to that document on behalf of The Tax Advice Network. Although most of our tax advisers are members of one or more of the professional bodies, some are Qualified by Experience. This typically includes substantial training whilst working within HMRC or it's predecessors, the Inland Revenue or HM Customs and Excise. As such my comments were intended to offer an independent and more objective view than the professional bodies are able to do.

Looking back at my response I note it was very critical of the style, tone and content of the Working with Tax Agents document. I can also see that the new one addresses many, but not all, of the points I made. This proves that HMRC have been listening.

That said two specific points I made seem to have disappeared off the radar. I asked that HMRC:

• establish a Tax Adviser Review BodY (TARBY) to receive and consider reports from HMRC about tax agents whose performance may be unacceptable; and
• simplify the procedure for taxpayers to recover wasted costs when HMRC procedures and mistakes lead to increased fees from their tax agents.
  

HMRC say they will be undertaking a separate consultation over the summer re 'dishonest tax agents'. Perhaps we will then get a TARBY after all!

HMRC study shows majority of SMEs are tax compliant

My blog title is of course the converse of the FT report that: Business tax study says 35% would be dodgers. Apparently:

"More than one in three small businesses would understate their profits if they thought they could get away with it, according to official research." (The report was mentioned in Treasury select committee evidence (Q436-Q438) but does not seem to be available online)

The article goes on to quote the concerns of many in the business world re the consequences of HMRC believing that a third of small businesses are "attitudinally non-compliant" (ie: keen to cheat on their taxes).

I have a different perspective. To the extent that any genuine conclusions can be drawn from this research (which I doubt) - surely it's good news. Previously everyone assumed that HMRC started from the presumption that all or most small business owners were keen to fiddle their taxes. Now it seems that the converse is true. HMRC's research shows that two-thirds are honest, upstanding, Revenue fearing, tax compliant citizens. HMRC seem to agree. They are quoted in the FT article as stating that:

“Our research shows that 93 per cent of SMEs do not evade tax. We want to support the majority of honest businesses by reducing their administrative burdens and creating a more level playing field.”

If that's right this should all mean a change in Revenue attitudes FOR THE BETTER.

What do YOU think?

15 Arrests prompted by 250 strong team of HMRC investigators

If I hadn't seen the official press release on HMRC's website I wouldn't have believed it. Despite all the ongoing cut backs HMRC can afford to allocate around 250 investigators to a single long-running enquiry - codenamed Operation Enigma.

Last week 15 arrests were made when the HMRC team were assisted by officers from a number of police forces, in carrying out over 20 property searches in Rochdale, Manchester, Bradford, Southport and Nottingham as part of the enquiry.

The HMRC investigators were from HMRC’s criminal investigation team. Little further information has been provided as the investigation is continuing.

We might not like HMRC's ability to enquire into our tax affairs but who would pay tax if there was no such threat or penalty for failing to do so. I'm pleased to note that it's not just the little guys being targeted. It's great to hear that HMRC do still have the resources to tackle the threat of widespread tax evasion. Although the press release references money-laundering and the proceeds of crime, HMRC's involvement suggests that the crime is tax evasion.

HMRC targets VAT cheats - or rather, it will do soon...

At last HMRC have decided to take advice BEFORE they announce a new plan to crack down on tax evasion.

Previous campaigns have targeted offshore investments, medical professionals, the restaurant trade and people working in the plumbing industry. In the latter case though, anyone could take the opportunity to 'come clean' under the terms offered by HMRC.

The latest initiative will focus on those individuals and businesses who are trading above the VAT threshold (£73,000) but who have not yet registered for VAT. It is likely to start "late summer".

This time around HMRC's initial announcement is simply that they are holding talks with interested parties. These will include the accountancy and tax professional bodies which have all been critical of elements of previous initiatives behind the scenes. This is implicitly accepted in HMRC's press release which states that:

“Our aim is to get as much input as possible into our future campaigns so that the views and experience of people and organisations outside the department play a fuller part in what we design for customers."

In due course, this VAT related campaign is likely to offer taxpayers simple, straightforward opportunities to put their records in order on favourable terms. As previously noted on this blog though the focus is on capping the penalties payable. All tax and interest on late paid tax is always collected.

After the 'amnesty' period HMRC activity will focus on the non-compliant who choose not to take up the opportunity. HMRC typically use new technology and legislation to gather and analyse data, from internal and external sources, to identify people who should come forward. This has provided thousands more investigations, now being worked through, including a number of criminal investigations.

If you regularly report turnover figures just below the threshold - watch out! You may genuinely manage your business to avoid the need to register for VAT, but HMRC will not know this. They suspect that plenty of people falsely report lower than true turnover figures and are pocketing the VAT they are charging illegally as they're not registered for VAT.

Should HMRC's right to make random inspections be abolished?

The legitimacy of HMRC's powers were called into question last night during the annual CTA Address, given by the Rt Hon Sir Paul Kennedy, Interception of Communications Commissioner.

Speaking on the subject of 'Powers...Between Citizen and State' he suggested that the professional bodies campaign for the abolition of HMRC's right to make random inspections. He indicated that he thought that this right is neither reasonable nor propotionate.

Sir Paul considers that the risk of random checks by HMRC is unlikely to act as an effective deterrent. He likened the concept to breathalysers and said that the risk of being breathalysed seems to have little effect on those who continue to drink and drive.

I'm not sure I agree on either point. Many people have clearly moderated their drinking or choose not to 'drink and drive' due to the risk of getting caught. (NB: I think the risk of causing accidents should be the primary motivation, but I'm not sure this is always the case).

As the public become aware of the full extent of these powers I think the threat of random checks could be a powerful motivator. BUT I'm not sure that the worst offenders will operate any differently - other than perhaps to make it even more difficult for HMRC to find their ill-gotten gains in the event of a random search!

On the question of the reasonableness of their powers I have long accepted that HMRC need onerous powers to prevent deliberate defaulters from exploiting the system. Senior officials always assert that HMRC will only use extreme powers in extreme situations. The worry, evidenced by some of the questions last night, is that some of these powers are capable of exploitation and that not everyone in HMRC can be trusted to exercise the necessary restraint.

Of course all HMRC powers should be reasonable and propotionate. Before the newest powers were given statutory force there was much debate over their extent. HMRC powers were subject to more discussion documents and meetings between HMRC and the profession than on any other matter I can remember for some time. I suspect that some of the professionals closely involved felt that their concerns were not given an adequate hearing or reflected in the new laws.

The legislation introducing HMRC’s new powers to make 'compliance checks' powers was contained in the Finance Act 2008. Most of the new powers came into force just two years ago on 1 April 2009. There's a useful summary in HMRC's FAQs re 'New compliance checks'.

NB: A quick internet search for 'HMRC powers' reveals that HMRC's website on this broad subject still contains guidance that dates back to the merger of the Inland Revenue and HM Customs & Excise in 2005.

HMRC turn the Spotlight on the newest EBT related tax avoidance schemes

Employee Benefit Trusts (EBTs) have long been used for tax avoidance purposes. They have evolved over the years as advisers tried to avoid the impact of tax cases and changes to the tax rules.

HMRC have clearly got fed up of playing catch-up and last December the Government announced onerous new rules to tax "disguised remuneration". In addition to EBTs, the rules would also impact Employer Financed Retirement Benefit Schemes (EFRBS).

Some commentators suggest that the proposed rules are draconian. This may be right. But in most cases those who would be caught are only those who persist in their attempts to frustrate the rules that would tax income when it is earned. Don't want to get caught by the new rules? Avoid fancy and artificial payment arrangements. Pay the tax otherwise due on what would be your income but for the fancy scheme.

Following a consultation on the draft new rules HMRC published a list of Frequently Asked Questions on February 21. These confirm that the new rules are intended to apply to arrangements

"involving a third party to reward employees and directors which seek to avoid, defer or reduce income tax and national insurance contributions",

and to arrangements that are

"used as a tax-advantaged way to save for retirement, using an employer-financed retirement benefit scheme as an alternative to, or to top up, savings in a registered pension scheme."

In advance of the new rules coming into effect, some newer avoidance schemes have been promoted. These are designed to shelter funds in current EBT schemes from the effect of the proposed legislation. These new schemes rely on the availability of credit for loan repayments made before 6 April 2012.

HMRC have wasted no time in adding such schemes to the Spotlights page of their website.

In HMRC's view, while these convoluted arrangements seek to weave a way through the legal changes, they do not succeed. Even if they did HMRC would still challenge them as delivering remuneration which should have been subject to PAYE from first principles.

Subject to parliamentary approval, the new legislation will be effective from 6 April 2011 and some aspects of the proposed new law will apply from 9 December 2010. These changes are designed to prevent the avoidance of PAYE and national insurance contributions on employment income.

Individuals considering entering into such income tax avoidance arrangements should be aware that HMRC will pursue people who seek to avoid tax on monies they earn, through the courts where necessary.

But, hey, if you want to risk such activity go ahead. Some promoters no doubt will sugest that (part of) the financial cost of such legal cases can be covered by tax risk insurance. That is of course just one of the issues to consider. Each to their own.

Related posts:

• NO. The Revenue do NOT approve Disclosed tax schemes
• Tax planning to be wary of
• Were you wasting time advocating this tax scheme?
• Naive promoters of tax avoidance schemes
• Tax avoidance is a card game - the metaphors multiply

HMRC impact assessment is a disgrace

If you knew the taxman was going to come round to your office to check your business records, how much do you think it would cost you?

The taxman has made up some numbers that it is hard to take seriously. They suggest that the only costs to small businesses will typically be related to the "up to" 4 hours that each 'business record check' will take. HMRC have then placed a value of £11.70 per hour on all the accounts and wages clerks, book-keepers, other financial clerks and sole traders who will be involved in each 4 hour meeting.

These numbers are contained in HMRC's Impact Assessment of Business Records Checks. It was published in December alongside the consultation document on the subject of 'Business record Checks'. The deadline for responses was 28 February which is why the Institute of Chartered Accountants in Scotland (ICAS) view has now been made public.

HMRC's estimate is that each half a day, will cost a business £54. ICAS has re-costed an average visit using “realistic” estimates of business disruption and adviser’s time - coming up with a total of more than £560 per visit.

ICAS' revised estimate of £562 for each HMRC visit is as follows:

• 1 hour preparatory meeting between the business (£50 per hour) and its accountant (£75 per hour) = £125
• 3½ hours spent by the business (£50 per hour) and its accountant (£75 per hour) in dealing with HMRC visit = £437

I think this is still woefully short of the real cost to most small businesses. Don't you?

One of the problems with HMRC's impact assessment is that it only reflects estimated figures for the smallest of small businesses and assumes they do not have an accountant. Perhaps this is deliberate and HMRC do not intend to visit businesses that already have someone, like an accountant, to check their business records. If this were the case though the impact assessment should make it clear. It's not an assumption that accountants are making.

I don't check every HMRC impact assessment and missed this one when it was published in December. The last one I looked at related to Mr Darling's plan to reduce the rate of VAT to 15% for 13 months. That too was woefully inaccurate. I blogged about it here.

Last chance for tax cheats to get their tax affairs straight

Last week HMRC published a statement about how they are going to manage deliberate defaulters by a new programme of special rules. The intention is that anyone who is identified as a deliberate tax defaulter will will have their tax affairs closely scrutinised - not just when they are caught but for the next five years too.

This week HMRC announced the Plumbers Tax Safe Plan (PTSP) - which I mentioned in an earlier blog post. This Plan contains a very useful facility. ANYONE can ask to get their tax affairs straight - and benefit from the same offer of a 20% cap on the penalties that will be charged. This should mean you can avoid being subject to ongoing scrutiny for the following five years.

Previous tax disclosure facilities have been criticised as they were specific to people in certain situations or businesses. This time round though the paperwork is very clear and HMRC says:

Customers who voluntarily come forward and put right their tax position can expect very similar terms to those on offer through PTSP. If you do not come forward and HMRC later find that you owe additional tax, you may face higher penalties or even criminal investigation.

I doubt that there will ever be a better time to take specialist advice to help you bring your tax affairs in order. Anyone who wants to use the PTSP to come clean on past tax arrears must register for the scheme by 31 May and will need to pay any back taxes plus interest and penalties by 31 August.

The maximum penalty under this scheme, of 20%, will be reserved for cases where more serious and “deliberate” irregularities have occurred. In such circumstances, the taxman will seek back tax over 20 years. This is why it is so important to work with experienced tax specialists who have plenty of experience of negotiating settlements with HMRC in respect of previously undeclared taxable income.

Anybody with extra income or gains to disclose, whether in the plumbing industry or not, should seriously consider coming forward now. Those who do not and who are subsequently found out will be liable to penalties of between 35% and 100% of the tax evaded. And may well be subject to increased scrutiny for the next five years. The rules are changing. Tax cheats - whether local tradespeople, property owners, entrepreneurs or anyone else are all in the same boat. Make sure yours has a paddle - or even a motor!

Tax amnesty for Plumbers is a good thing but it's not an amnesty

You'll see lots of reference to this so-called tax amnesty' for plumbers over the next few days.

HMRC says:

The Plumbers Tax Safe Plan (PTSP) is designed for people working within the plumbing industry who have not told HM Revenue & Customs (HMRC) about all their income in the past and who now want to get back on track. It is intended to cover people who work (or worked) in the plumbing, heating or gas installation trades and this includes anyone who installs and repairs pipes and fixtures for water, drainage or gas systems in a building.

This is part of HMRC's plan to catch up with everyone who has been doing cash in hand work and who wants to get straight with the taxman. There is NO TAX AMNESTY though.

Everyone who 'fesses up' will be required to pay all of the taxes they had hoped to avoid, plus interest on the late paid tax and a penalty. The 'Plan' simply means that the penalty will be limited - in most cases to 20% of the late paid tax.

As HMRC says:

It's basically a 'fresh start'. If you decide to take advantage of PTSP, you can stop worrying about what might have happened had HMRC found out that you'd not been telling them about all of your income. It's a chance to start getting things right from now on, whilst knowing exactly how much it's going to cost to sort out things for the past.

The guidance around the Plan is quite complex and many people will benefit from professional help especially if their confession covers many tax years.

Taxman teaser - Why Chief Exec of HMRC needs a personal aide

The FT reports that Dame Lesley Strathie, ultimate boss of HMRC, has appointed Carol Bristow – a director-level tax expert – as her personal aide.

The FT questions whether there is any justification for the Chief Exec of HMRC having such a high level personal aide "(Not even Sir Gus O’Donnell, the cabinet secretary, has such a senior personal assistant.)"

The answer I supect comes back to the governance structure of HMRC and the way some people expect the person at the top to be able to speak knowledgeably on any subject related to operational matters. In practice however, the role of Lesley Strathie, Chief Executive and Permanent Secretary does not require her to understand all aspects of our tax system. And few people are able to do this anyway.

I would have expected Dave Hartnett, "the senior tax professional in HMRC", to be the one called to appear before Select Committees, not the Chief Exec. I suspect that the mistake being made is that of the MPs. The appointment of Carol Bristow may simply reflect Dame Lesley's desire to ensure that she is best placed to provide MPs with informed answers to their enquiries.

It would of course be better if the MPs could be persuaded that they should be talking to Dave Hartnett rather than Dame Lesley. BUT for them it's easier to appear to be 'in charge' if they quiz and challenge someone who they know does not have a full command of key tax matters under discussion. I'd bet they don't want to call Dave Hartnett as he would expose the Select Committee's lack of understanding of the tax system.

What do you think?

Twitter doesn't have to be taxing

The taxman joined twitter just before xmas and I'd encourage fellow tweeters, whether taxpayers or accountants, to follow twitter.com/hmrcgovuk (and by all means follow @TheTaxBuzz too!)

HMRC's twitter policy statement says that if you follow this account, you can expect 1-2 tweets a day covering information about HMRC and tax, including news, publications, web content, consultations, speeches and publicity campaigns.

Todate the emphasis has been on the forthcoming self assessment online tax return filing deadline but the taxman's tweets have also contained useful tips re the VAT flat rate scheme, payroll and corporation tax changes.

HMRC also point out that they will never advise anyone of tax refunds through twitter or discuss personal issues through the twitter account. They also note that if you follow @HMRCgovuk, they will NOT automatically follow you back.

There is one flaw in the HMRC twitter strategy - and it's one that is commonly made by twitter novices. Most followers will not read every tweet that appears in their twitter stream. This means that anyone, like the taxman, who tweets just once or twice a day will be lucky if many of their tweets are seen by all their followers.

I applaud this official move by the taxman onto twitter - it doesn't have to be taxing!

(I've shared many other twitter tips and advice on my personal blog - www.BookMarkLee.co.uk/twitter )

Does the taxman value the tax agent or not?

Back in September HMRC announced that they would stop sending copies of certain forms to tax agents (accountants and tax advisers). We were told that:

"HMRC is sorry if these changes are unwelcome but has tried to look for savings in areas where there will be minimal impact on customers."

The professional bodies complained through the usual channels. ICAS, for example, stated that:

"some of these cost-cutting measures are misguided, and is particularly concerned that they have been introduced with immediate effect and without prior consultation."

They also suggested that all communications from HMRC should be marked on the outside of the envelope with wording such as ‘If you have a tax agent, please pass this to them immediately’, but it is not yet clear whether this will be done.

A related discussion on the ICAEW Tax Faculty news website revealed the anger and frustration at HMRC's unilateral action here. It's expected to lead to extra work for tax agents, extra hassle and confusion for their clients and EXTRA WORK for HMRC dealing with requests for copy paperwork that was previously sent out automatically. A counter-productive and apparently ill-thought out move it would seem.

But this change was not an isolated one. Recently Taxation magazine ran a related article entitled: Eroding the Adviser. In it, Alex Byrne lamented HMRC’s recent practice of copying clients into letters to the agent. Such an approach undermines the adviser and causes problems of which HMRC again seem unaware.

Regular readers of this blog and my articles in the professional press will know I offer balanced and independent views. I am not an ardent Revenue basher. Indeed, I frequently find myself defending their actions and trying to explain why media criticism is misguided. I know too that often the professional bodies will be engaged in quiet diplomacy. They perceive this is more likely to secure positive changes than public tub-thumping. I suspect that's what is happening at the moment.

In the meantime, what's your view? Do you think HMRC is showing that they value the role of the tax agent, or not?

Panorama on Tax - Make your mind up guys!

Last night's Panorama on tax was a mishmash that attempted to cover too many disparate topics. And in so doing missed it's key focus.

The title: "Tax: Are you one of the six million" was a clumsy and insulting allusion given that this is not a number referenced previously in the media or HMRC re the PAYE debacle that was topical a couple of months back. As I explained at the time: The PAYE tax system is now working as it should...

Panorama started by referencing the PAYE issues and suggested:
- Bad HMRC - they are incompetent and are sacking too many staff too quickly [NB: on instructions issued by Gordon Brown]
- Bad HMRC - all those PAYE errors and the vast number of people who have not paid exactly the right amount of tax through the PAYE system
- Bad HMRC - refusing to apologise initially for the broken PAYE system and all the notices of under and overpayments
- Bad HMRC for issuing demands for underpaid tax and worrying innocent taxpayers
- Bad HMRC - for not answering the phone quickly when 18,000 people a day were calling them
- Bad HMRC - as "there has to be a better way of paying tax"

But what's this?
- Good HMRC - for sorting out and resolving all the cases raised during the programme and agreeing no tax outstanding in each case; and for apologising to each of the taxpayers concerned.

So - what was the conclusion? Should all the underpaid tax be collected despite the upset and worry caused when HMRC pursue unexpected tax debts? Or should it be written off? Most of the programme implied the former but Jeremy Vine's final comments implied a contrary view. He noted HMRC were insisting that there will not be widespread write-offs. He then quoted an insider who told the BBC that:

"With so many underpayment cases in the system, it is inevitable that many of them simply will not be processed"

Given the main thrust of the programme you'd think that would be a good outcome. But no. Whatever HMRC do it's wrong in Panorama's view. Jeremy Vine's closing comments were clearly critical as regards HMRC writing off such underpayments:

"With the country facing massive budget cuts, that's millions of pounds of lost revenue that could be put to good use"

I'll post separate comments re other elements of the programme.

What did you think of it? (Available on BBC iplayer until 15 November)