Friday 28 June 2013

HMRC Heads For The Clouds



As part of HMRC's strive to reduce its overheads, it will transfer its print and servers to a centralised storage solution provided by Skyscape and head for the "clouds".

Andrew Bull, director of delivery and operations in information services at HMRC, speaking at the Cloud World Forum held in London Olympia is quoted by Computing:
"We've got a lot of physical offices in the UK and each one of those has a print or file server, providing local print services. A lot of the time printers start acquiring other services as well - like being used for distribution purposes and file sharing. The file and printer servers were last refreshed in 2006 and they are now coming to the end of life, and the back-ups are becoming more problematic as the hardware fails."  
The issue of lost office hours due to file and print server failures also had a bearing on HMRC's decision to head for the clouds:
"We could see [the amount of failures] going up, even in proportion to other areas such as network connectivity.

One surprise was the amount of power consumed in local communications rooms, largely because of file and print servers. The tape drives overheating meant that we needed air conditioning, which is inefficient and costs a lot to run." 
HMRC is moving the servers to a centralised storage solution. It has put in a local infrastructure server but it is no longer mission critical, as if it fails, HMRC can still access the printers as it is connected directly to the Public Services Network (PSN).

In theory the savings in energy consumption alone will come to £750K per annum, plus there will be no need to transport back-up tapes offsite, enabling HMRC to save costs on a secure courier service and eliminating the risk of another datagate.

Well then, this all appears to be under control and is being well managed and implemented.

However, as per this quote from Barry Murphy technology partner at PwC, that I referred to in September 2012:
Getting the technology in place is just the first leg of the process.  The biggest challenge is the behavioural change that needs to follow.

Too often the failure of new systems is blamed on the technology when more often it’s because people haven’t adapted to them.”
We shall see!

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



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Thursday 27 June 2013

The Chancellor Talks Bollocks


Chancellor George Osborne delivered his spending review yesterday, and cut HMRC's budget by 5% for financial year 2015/16.

He is quoted by AccountancyAge:
"Despite the fact that this department will see a 5% reduction in its resource budget, we are committed to extra resources to tackle tax evasion.

The result is that we expect to raise over £1bn more in tax revenues from those who try and avoid paying their fair share."
I have to say I am a tad "confused" by the Chancellor's statement.

There is an overall cut of 5%, but a commitment to increase resources on tackling tax evasion, I presume this "increase" will be at the expense of other areas of HMRC's work?

On the subject of tax evasion, as I noted yesterday, serious tax evasion is actually declining; therefore is this "increase" in resource cost effective?

The Chancellor then seems to confuse evasion with avoidance, and claims that the cut/increase in resource (take your pick) will increase tax take from avoidance by around £1BN.

Anyone care to explain that to me?

I guarantee one thing, the cut in resource coupled with the ongoing pressure to increase tax take will lead to an increase in the administrative burden and costs on businesses and individual taxpayers as the government seeks to pass the cost of tax collection onto them.

Frankly it sounds like a load of bollocks to me.


Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Wednesday 26 June 2013

HMRC September 2014 Recruitment


HMRC looking for 120 graduates and 20 interns for September 2014.

If you’re thinking of applying for these programmes join HMRC on this HMRC Facebook page for a Q&A. 

Leave your question on their wall, and they will answer them on 2 July between 1600 – 1700 BST.

Applications will be open from 23 September 2013 until 29 November 2013.


Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Serious Tax Evasion Declines


It seems that despite the media and political narrative that tax evasion is rife, the number of cases of serious tax evasion (evasion in excess of £50K, or evasion that is worthy of prosecution) are at their lowest level in five years.

Those are the findings of a report commissioned by Pinsent Masons.

Between 1 April 2012 and 31 March 2013, local HMRC offices referred 2,888 suspected 'serious' cases to the central Evasion Referral Team, according to the figures. This was a substantial drop on the 3,456 cases identified the previous year, and the 4,506 cases identified in tax year 2010/11.
Phil Berwick, a partner at Pinsent Masons said:
"This decline in suspected tax evasion doesn't tally with the rhetoric from some quarters that the British economy is being undermined by a chronic under-collection of tax revenues.

HMRC has plenty of tools at its disposal to catch tax evaders which serves as a huge deterrent to those considering tax evasion.

International co-operation has been stepped up significantly as HMRC has striven to curb tax evasion.

Tax evaders are now realising that HMRC has a much greater ability to tackle evasion, even if individuals conceal their assets abroad.

Five years ago some individuals and businesses perhaps felt that evading tax was relatively easy. Now they can see that HMRC is much more proactive and better informed than in the past, increasingly they are deciding that tax evasion just isn't worth the risk."
Meanwhile the tax evasion hotline is booming.


Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Tuesday 25 June 2013

Homer Marriage Broker?


PAC, or rather a member of PAC, managed to get under Lin Homer's skin during yesterday's PAC meeting about tobacco smuggling.

Homer denied that Dave Hartnett's new firm (Deloitte) had played any significant role in major tax deals struck with private companies.

Margaret Hodge said there was a suggestion that Deloitte had been the "preferred facilitator" when deals were struck.

Homer (as per The Herald) said:
"Not to my knowledge and I don't see any evidence to suggest that they were playing either a preferred or significant role in our large disputes." 
The Conservative MP Richard Bacon tweaked Homer's nose by saying:
"What's really of interest is those occasions when you were buying advice from a firm such as Deloitte and the same firm was also selling its advice to a large taxpayer such as, to take one example, Vodafone.

If you were turning out to be the marriage broker who introduced the adviser to the company..."
To which Homer swiftly rebutted:
"That is an assertion that I do not accept, Mr Bacon."
A classic example of a problem arising from not just what is done, but what is seen/seems to be done (ie form over substance).

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Monday 24 June 2013

Starbucks Wars - Tax Is Voluntary


In an "interesting" move, designed to assuage its customers and mollify its critics, Starbucks has decreed that tax is in fact voluntary and has decided to pay some (£5M now and £5M later this year).

As per the BBC, a Starbucks spokesman said:
"We listened to our customers in December and so decided to forgo certain deductions which would make us liable to pay £10m in corporation tax this year and a further £10m in 2014."
Margaret Hodge has reportedly welcomed the initial payment.

Meanwhile, in other news, Starbucks will be closing unprofitable stores.

Presumably the increased tax revenue received by the Treasury from Starbucks will be used to pay for the job seekers' allowances of those made redundant by Starbucks?

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Friday 21 June 2013

Advice To Nigel Farage


Tax avoidance schemes are meant to save you money, not cost you more than you save in tax!

That being said, given that you have criticised offshore tax havens, I am a "tad surprised" that your tax avoidance scheme was based on an offshore "tax haven".

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Thursday 20 June 2013

HMRC To Name and Shame Banks


I see that there is the possibility that banks may be "named and shamed" by HMRC if they provide assistance for tax avoidance schemes.

The proposal is made in a consultation document published by HMRC aimed at strengthening the code of practice on taxation for banks.

The closing date for comments is 16 August 2013.

Under HMRC's proposals, banks will have no statutory right of appeal to prevent HMRC naming them in the public domain.

Pinsent Masons partner Ray McCann is quoted in Accountancy Age:
"HMRC wants to revise the code of practice so that they can in effect name and shame banks if they feel that bank has stepped out of line with HMRC's view of what is legitimate tax planning.

This is not the code that banks signed up to - it is definite tightening of the screw.

This gives HMRC the power to impose what will in effect be a sanction i.e. to name and shame banks in circumstances where the bank may not be in breach of any statutory requirement. Failing to allow an independent review process is a worrying precedent especially in the light of the commercial harm such action could involve. "
I wonder if "naming" a bank would really "shame" them; or would it simply advertise their tax schemes to a wider audience?

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Wednesday 19 June 2013

RTI Coding Problems



It seems that there are, not unreasonably given that it is a new system, some teething problems with RTI. Baker Tilly reports that many thousands of employees may have been issued with incorrect tax codes.

HMRC has advised affected employers to disregard incorrect PAYE codes issued after RTI reporting started.

"The problems

Many employees who normally have their tax code restricted for benefits in kind have been given full allowances, while others have been issued with a code BR (a flat basic rate, with no allowances) or code D0 (a flat 40% rate, with no allowances). Both will result in incorrect tax deductions.

The causes

Both issues have been caused by the RTI starter and leaver processes.

Missing benefits in kind restriction

All employers had to go through a process of aligning their employee records with HMRC’s system at the very start of their operation of RTI reporting. Large employers did this by making an Employer Alignment Submission (EAS) before they submitted their first Full Payment Submission (FPS). 

Smaller employers simply submitted their first FPS, which HMRC checked against its existing records of employees on that employer’s payroll.

Any employee records that were not on the employer’s first EAS or first FPS were treated by HMRC as having ceased employment at 5 April. This deleted the record of the benefits restriction to their tax code.

When these employees were subsequently paid for the first time under RTI, and payments appeared on a later FPS, they were incorrectly treated by HMRC as new starters, with no history, so a new code was issued automatically, with no restrictions.

Missing allowances

Some employees leave their job without employers knowing before they report what prove to be the final payments.  There is no RTI mechanism for flagging workers as leavers without making a new payment, which is unlikely to happen. Under the old regime, employers could submit a late P45, but that option does not exist under RTI.

So, as far as HMRC knows, the employee is still on the ‘old’ payroll with a personal allowance, and when the computer also finds the employee appearing on an FPS from a ‘new’ payroll on a different reference, it assumes the worker has two jobs and issues a BR or D0 code for the new job, rather than transferring the old code.

Something has also gone wrong with HMRC’s base data.  Some employers are reporting a large part of their workforce receiving BR or D0 codes, which is clearly not a result of unrecognised leavers.  Some tax codes are for former jobs, delivered together with a BR or D0 code for a current job. Tax is being overpaid by a lot of people as a result.

Employer actions

Where a new tax code is obviously wrong, and an employer or employee notices, the employee should be advised to contact HMRC. 

Of course, it may not be obvious that a code is wrong, so employees who normally receive P11Ds showing benefits should be warned to check carefully any new PAYE code issued, and any new BR or D0 codes should be queried unless they are expected."


Have any loyal readers encountered such problems?

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Tuesday 18 June 2013

The Tax Evasion Hotline


I see that the state has managed to turn us into a nation of sneaks, as economia reports that calls to HMRC’s tax evasion hotline reached 72,000 tip-offs last year (as per figures from Bloomsbury Professional).

Martin Casimir, managing director of Bloomsbury Professional, said:
The sheer volume of calls to the hotline is astounding. People are clearly keen to ensure that no-one cheats the tax system and that everybody pay their fair share of tax."
However, quantity does not always equal quality; as Mr Caimir went on to say:
HMRC is already on a stretched budget.

There’s a question mark over whether HMRC has the manpower to deal with all the complaints that it receives.
Additionally questions need to be raised over whether these calls actually identify genuine tax evasion, or are merely being used by people who are either confused about the difference between evasion and avoidance or who simply have a petty grudge against someone.

The National Audit Office has said that the tax evasion hotline is the least cost-effective method of detecting tax evaders, as it yields just twice the amount of money it costs to operate it.

Martin Casimir noted:
HMRC should be concerned about how few calls actually reveal a tax evasion case of note. Whilst people are now more sensitive to the possibilities of any tax irregularities, it can lead to people being over-keen and making calls that are misguided.

It’s a rarity that calls to HMRC reveal a large-scale evasion of tax. Many of the calls relate to tradesmen being asked to be paid cash-in-hand, for example. The loss of tax for HMRC is rather small.
Therefore we should ask is this the most effective use of HMRC's resources?

Calls to HMRC’s tax evasion hotline reached 72,000 tip-offs last year, according to figures from Bloomsbury Professional
The tax and accounting group has calculated that this equals roughly 300 calls a day to the service, which allows members of the public or businesses to tell HMRC about suspected cases of tax evasion.

Martin Casimir, managing director of Bloomsbury Professional, said, “The sheer volume of calls to the hotline is astounding. People are clearly keen to ensure that no-one cheats the tax system and that everybody pay their fair share of tax."
However, Caimir warned that the high levels of calls will not necessarily lead to more investigations, and more amounts of unpaid tax collected.

HMRC is already on a stretched budget,” he said. “There’s a question mark over whether HMRC has the manpower to deal with all the complaints that it receives.”

HMRC did not disclose figures to show how many of the calls it receives lead to investigations into tax evasion.

However, spending watchdog the National Audit Office has said that the tax evasion hotline is the least cost-effective method of detecting tax evaders, warning it yields just twice the amount of money it costs to operate it.

Martin Casimir concluded, “HMRC should be concerned about how few calls actually reveal a tax evasion case of note. Whilst people are now more sensitive to the possibilities of any tax irregularities, it can lead to people being over-keen and making calls that are misguided.”

“It’s a rarity that calls to HMRC reveal a large-scale evasion of tax. Many of the calls relate to tradesmen being asked to be paid cash-in-hand, for example. The loss of tax for HMRC is rather small.”
- See more at: http://economia.icaew.com/news/june2013/tax-evasion-hotline-soars-to-72000-calls#sthash.BpBcyE4W.dpuf
Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Monday 17 June 2013

Guide To First Tier Tax Tribunals


AccountingWeb have published a useful guide on what to expect in a First Tier Tax Tribunal (FTTT) based partly on members’ experiences, and partly on notes on some of the basic practicalities extracted with the permission of publisher Claritax from tax barrister Keith Gordon’s book, Tax Chamber Hearings: A User’s Guide 2013.

FTTT were set up in 2009 to replace the four separate tax tribunals (Special and General Commissioners, VAT and Duties and Section 706 Tribunals), the tax chamber deals with direct and indirect tax-related decisions made by HMRC, including:
  • Income tax
  • Corporation tax
  • Capital gains tax (CGT)
  • National insurance
  • Stamp duty land tax (SDLT)
Appeals can be made by individuals, organisations, single tax payers or multi-national companies.

AccountingWeb's guide can be read via this link.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Friday 14 June 2013

Wise Words


As I intimated yesterday:
"The PAC, politicians and governments should not be surprised when the tax outcome is part of an international business’s decision on where to structure and locate activities,” said ICAS Director of Taxation Elspeth Orcharton. 

“It’s a truism worth repeating: legislators legislate. It is governments who create tax law, and who compete for inward investment by large international businesses, sometimes by reducing tax rates, sometimes by providing specific exemptions or reliefs from tax.  

“The PAC, politicians and governments should not be surprised when the tax outcome is part of an international business’s decision on where to structure and locate activities."
Source ICAS.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

The Joy of Software



Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Thursday 13 June 2013

Google Viewed Through a PRISM


Hot on the heels of revelations about PRISM, and the alleged roles played by various social media companies and the like in aiding the NSA to monitor communications, it seems that Google (the company that doesn't want to be evil) has yet another PR battle to fight.

The Public Accounts Committee (PAC) has stated that HMRC should "fully investigate" Google, after information from whistleblowers "undermined" the firm's defence of its tax arrangements (wherein Google claims that advertising sales take place in low-tax Ireland, not the UK).

Seemingly ex-employees of Google have claimed that UK-based staff are engaged in selling.

PAC also gave HMRC a kick, and said that it was "extraordinary" that HMRC did not challenge Google over "the complete mismatch between the company's supposed structure and the substance of its activities".

That might be all very well in hindsight, if the allegations from the ex employees are true. However, unless HMRC had good cause at the time to believe that Google's accounts and explanations were a sham they had no reason to conduct what would amount to a quasi fraud investigation.

Here are PAC's conclusions and recommendations:
"1.  The UK is a key market for Google but the enormous profit derived is out of reach of the UK's tax system. Google generated US $18 billion revenue from the UK between 2006 and 2011. Information on the UK profits derived from this revenue is not available but the company paid the equivalent of just US $16 million of UK corporation taxes in the same period. Google defends its tax position by claiming that its sales of advertising space to UK clients take place in Ireland—an argument which we find deeply unconvincing on the basis of evidence that, despite sales being billed from Ireland, most sales revenue is generated by staff in the UK. It is quite clear to us that sales to UK clients are the primary purpose, responsibility and result of its UK operation, and that the processing of sales through Google Ireland has no purpose other than to avoid UK corporation tax. This elaborate corporate construct has damaged Google's reputation in the UK and undermined confidence in the effectiveness of HMRC. 

Recommendation: Public confidence in Google will only be restored when it establishes a corporate structure that ensures Google pays tax where it generates profit. This should be addressed as a matter of urgency by Google and other companies with a similar corporate structure—the Committee will continue to pursue this issue over the course of the Parliament.
 
2.  HMRC has not been sufficiently challenging of multinationals' manifestly artificial tax structures. We accept that HMRC is limited by resources but it is extraordinary that it has not been more challenging of Google's corporate arrangements given the overwhelming disparity between where profit is generated and where tax is paid. Inconsistencies between the form of the company's structure and the substance of its activities only came to light through the efforts of investigative journalists and whistleblowers. Any common sense reading of HMRC's own guidance and tests suggests HMRC should vigorously question Google's claim that it is acting lawfully. In contrast to evidence given to us previously, Google has also conceded that its engineers in the UK are contributing to product development and creating economic value in the UK We note that HMRC has never challenged an internet-based company in the Courts on the question of its permanent establishment. 

Recommendation: HMRC needs to be much more effective in challenging the artificial corporate structures created by multinationals with no other purpose than to avoid tax. HMRC should now fully investigate Google in the light of the evidence provided by whistleblowers.
 
3.  International tax rules are complicated and have not kept pace with the way businesses operate globally and through the internet. While we are concerned about HMRC's effectiveness in tackling tax avoidance, we also acknowledge that it has to operate within the constraints of complicated UK tax laws and international tax treaties. As we have reported before, it is far too easy for companies to exploit the rules and set up structures in low-tax jurisdictions, rather than pay tax where they actually conduct their business and sell their goods and services. We are also particularly concerned about the out-of-date tax frameworks covering international internet based commerce which rely on a fully automated process. We expect the UK government to take a leading role in modernising international tax law and welcome the government's emphasis on tackling aggressive tax avoidance under the UK's presidency of the G8. 

Recommendation: HMRC and HM Treasury should push for an international commitment to improve tax transparency, including by developing specific proposals to improve the quality and credibility of public information about companies' tax affairs, and use that to information to collect a fair share of tax from profits generated in each country. This data should include full information from companies' based in tax havens.
 
4.  The reputation of the big accountancy firms in the UK has suffered from their substantial role in advising their clients on corporate structures and tax planning which serve only to help them avoid UK taxes. In becoming more involved in constructing complex tax arrangements for their clients, the big accountancy firms are increasingly seen as being part of the problem of corporate tax avoidance, rather than the solution. In providing tax advice and reaching audit judgements on their clients' UK operations and structures, the big accountancy firms need to focus on the substance of the enterprise, rather than on artificial structures which serve only to avoid tax. The worldwide concerns about artificial tax arrangements will not go away and the big accountancy firms have the opportunity to play a leading role in promoting and enabling transparency in their clients' tax structures and payments. 

Recommendations: We expect the big accountancy firms to recognise that the public mood on tax avoidance has changed. They should provide responsible advice to ensure that corporate arrangements reflect the substance of transactions and operations in the UK and enable their clients to be more transparent about where they make profits and pay tax.
 
The professional bodies of the accountancy profession should emphasise the importance to accountancy firms of behaving responsibly in selling tax advice to clients, and in reaching audit judgements on the substance of their clients' UK operations and structures."
As per the BBC PAC said the only way for Google to repair its damaged reputation was for it to pay "its fair share of tax in the country where it earns the profits from the business it conducts".

There's that phrase "fair share" again!

Politicians create the laws and tax structure that companies and HMRC have to operate in. "Fairness" is an emotive word that has no bearing in the world of debits and credits. Where the politicians deem that something is "unfair" (a bit rich coming from a body of people who themselves make use of accountants and tax structures to reduce their tax burden) then they need to look to the laws themselves, not the companies or HMRC that have to operate within the tax/legal framework created by the politicians.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Wednesday 12 June 2013

PAYE Returns For 2102/13 Not Submitted


HMRC have flagged that a "very small proportion" of employers, using products from an unnamed software supplier, have received penalty warning notices from HMRC because their P35 Employer Annual Returns for 2012/13 have not been received.

The penalty notice will be cancelled if the employers meet certain criteria, and submit their P35 by 25 June.

Have any loyal readers received such a penalty notice, or been affected by this issue?

Here is the full text of the HMRC news release:
"We are aware that a very small proportion of employers - using products from one software provider - have received penalty warning notices from HMRC because they have not submitted their P35 Employer Annual Return by 19 May 2013 for the year 2012-13.

This issue impacts employers who:
  • use the product of one particular software provider
  • were not in the RTI pilot
  • completed their 2012-13 end-of-year returns after 6 April 2013
  • used 2012-13 PAYE Real Time Information software to complete their end-of-year returns (forms P14 and P35)
  • sent an Employer Payment Summary to HMRC instead of a P35 end-of-year return
A penalty warning notice has been issued because HMRC has not received a P35 from those employers. 

This issue does not affect employers who took part in the RTI pilot. 

The software provider will email customers affected by this issue over the next few days with specific guidance on how to file their P14/P35 for 2012-13.

We are working with the software provider to identify all the employers who are affected by this issue. We appreciate that employers are still getting used to operating PAYE in real time and that mistakes may occur. 

Employers who receive a penalty notice and meet the specific criteria above should follow the guidance provided by their software provider and should submit their P35 return within the next 14 days (by 25 June 2013).

HMRC will cancel the penalty warning letter in this specific scenario where the employer submits their P35 by 25 June 2013. 

Penalties will still apply to any employer in these circumstances who does not submit a P35 by this date.

Employers affected by this specific issue do not need to contact HMRC either via phone or in writing."

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Tuesday 11 June 2013

Media Pressure


It is regrettable to see that HMRC, in some ways, can act in the same manner as a dodgy private company that seeks to avoid compensating an irate customer; only when enough pressure is applied (often via the media) will the compensation be forthcoming.

Such seems to be the case of Don and Valerie Woodhams who both faced demands for underpaid tax, yet only had one of the demands written off after the intervention of the media (in the case Money Mail).
"Mr Woodhams was sent a £1,200 bill for underpaid tax in 2011/12.

He had received pension income since 2005. HMRC had sent Mr Woodhams a tax code relating to the pensions he drew from the same insurance company. He checked it out and couldn’t see anything untoward.

But the taxman had previously always sent two separate codes for these pensions, and this meant the insurer now applied one code to both payouts.

Amazingly, HMRC says Mr Woodhams should have realised this error himself and declined his application for a special concession from them.

Mr Woodhams says: ‘HMRC has a bullying and defensive culture. The special concession is a cheats’ charter and a get-out-of-jail card for the taxman.

‘I’m convinced that thousands of honest taxpayers are misled and bullied into paying more income tax than they should.’

Mrs Woodhams was wrongly sent duplicate tax-free personal allowances. She has now had the demand she received for £1,600 written off by HMRC."
The link to the Money Mail article mentions other examples of HMRC only relenting after the intervention of the media.

To my humble opinion this is puzzling, either the tax demand is valid (these are after all relatively "simple" personal tax calculations, not the complex calculations of a multi national) and should stand or it isn't; in which case it should not require the intervention of the media to correct the error.


Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Monday 10 June 2013

RTI Roll out Delays


It seems that approximately 600,000 PAYE schemes have not yet switched to Real Time Information (RTI) as such, according to Snowdropkcs, a large number of employers who are behind on their roll out date are set to be contacted by HMRC imminently.

The roll out of RTI is being staggered and while some of the businesses that have not yet adopted it are not required to do so before October, HRMC believes that many of the non-compliment firms are businesses that were required to make the switch over from the beginning of this current tax year.

A spokesman for HMRC is quoted:
"At the end of June, we will be writing to the small minority of employers whom we expected to start, but haven't yet done so. We will confirm the final numbers before the end of June."
Additionally pilot employers that did not submit a return by May 19th could be subject to a PAYE end of year penalty.

Comments and feedback from SME's that are experiencing problems/delays with RTI implementation are very welcome.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Friday 7 June 2013

HMRC's Customer Service Improves Measurably


HMRC has made measurable improvements in its customer services, since the implementation of a joint initiative with accountancy institutes and other stakeholders.

That's the message from HMRC, sorry for using the "C" word in the above!

Lin Homer (Chairman of the Joint Initiative Steering Group) is quoted in the Joint Initiative on HMRC Service Delivery update:
"I’m really pleased with the improvements we’re putting in train through working in partnership with representatives from professional bodies and charitable organisations on this joint initiative. We’ve collectively resolved some important practical issues and both agents and HMRC staff have benefited from hearing, first hand, about each other’s experiences during visits and workshops."
The scheme was set up following a 2011 recommendation made by the Treasury Select Committee.

AC Mole partner and chair of the ICAEW tax faculty' technical committee, Paul Aplin is quoted by AccountancyAge:
"The initiative is now accumulating a list of real "wins" on service delivery. Tens of thousands of employers avoided penalties last year and will do again this year as a direct result of the work on P35 processes and the extra investment in call centre resource is again a direct result of the discussions we have had through the Initiative.

Perhaps the most important thing though is what underlies the specific items on the list and that is very real engagement on service issues at the highest levels of HMRC."
Errm.....that "extra investment in call centre resource" was but a smoke and mirrors operation redirecting resources from elsewhere. I fail to understand why the ICAEW has fallen for that!

Anyhoo, the next steps as per HMRC are:
"The principle of working 'outside in' and not 'inside out' continues to underpin the project. Work is currently focusing on driving further improvements in post and call handling, and looking at how to define agreed service standards in these areas. Attention is also turning to getting things right first time and to the quality of HMRC’s responses to customers’ queries."
Sorry for being thick, but what does "working outside in" mean?


Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Thursday 6 June 2013

The Joy of Tax Avoidance


How gemusing, I see that the Labour Party has helped John Mills, its biggest financial backer, avoid tax worth up to £1.5M on its largest donation so far this year.

As per the Telegraph Mills gave the party shares in his shopping channel company, JML, valued at £1.65 million in January. Mills said that the donation was made in shares rather than cash so the tax on the deal would be significantly reduced.

Describing the donation as “tax efficient”, he said the form of the donation was agreed with figures in Labour’s fund-raising team.

Mills said that if he had given £1.65 million from his own income he would have had to pay nearly half of that sum to the taxman. 
 

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Armed Forces Tax Relief For Cleaning Uniforms


The Ministry of Defence has told BBC Breakfast that from next year soldiers will get help to pay for the cost of cleaning their uniforms.

People in other professions which involve wearing a uniform were already eligible for tax relief.

About bloody time!

View the video here.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Wednesday 5 June 2013

Don't Phone HMRC


As per John Andrews:
" Might be helpful to tell people not to phone re tax credits this week as you don't have staff and helpline says ring next week..."

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

IT Matters - System Hack?


My commiserations to a loyal reader who wrote to me the other day, regarding a refund made to her by HMRC which ended up being sent to the wrong person/account.

She has given me permission to publish her email to me, and asks if anyone else had similar experiences?
"...Self-employed, so have fluctuating income. HMRC makes demands for up-front payment for which I don't have funds in my HMRC account, therefore charges interest on any shortfall. In spite of request for respite, this is declined. So, now have to have significant funds in account.

Return from business trip abroad to find letter from HMRC to tell me that my claim for repayment is being refunded to the tune of £5,000 (just the sum in the account), only the person and account to whom it is "refunded" is not me or mine.

Horrified, ring HMRC who are now to investigate.

I am now in a state of panic as:
a) HMRC demand I keep money with them
b) HMRC appears to have been hacked, or it's some sort of inside job
c) HMRC has my bank details
d) HMRC may continue to expect me to keep money with them...

oh yes, and e), f), g) etc. I cannot expect interest on the sum they have taken from me, they have every security detail I own, I will be expected to pay up on time for fear of penalty, HMRC appears to have wide-open security itself etc.

Am writing to Margaret Hodge MP and my own MP, but I am one very furious taxpayer."
There has, subsequent to the above email, been a development:
"Things moved along a little yesterday and I discovered that the bogus “refund” had been revoked/recalled, suggesting that it has been held up in their system.  That’s good news if it means it hasn’t gone to the hackers, but it is still deeply disturbing that HMRC has it on record that my account was logged into on 24 May when I know I have not logged into it for months. "
Comments and views welcome, as always.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Tuesday 4 June 2013

RTI Fix Delayed


In April I noted that HMRC had "temporarily" stopped employers and their payroll agents from switching their pay cycles to lessen the administrative burden of RTI.

In new guidance published HMRC stated at the time:
There has been a recent increase in the number of employers and agents requesting the registration of PAYE schemes as annual.

Please note that, at the moment, HM Revenue & Customs (HMRC) are unable process requests from employers to:
  • move to paying annually and register as an annual scheme
  • change their payment frequency.
HMRC are working to rectify this position and will publish a further 'What's New' message to announce when this is ready.”
Fast forward to June, and it appears that the "rectification" of this problem has been delayed. The ICAEW Tax Faculty reports that the "fix" is now expected to be implemented in July.

In the meantime, it will not be possible to register schemes as annual and employers and payroll agents will need to submit nil EPS in respect of the months in which no-one is paid.

Views and comments from the frontline, as always, are very welcome.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Monday 3 June 2013

RTI Fudge


It seems that there has been a wee glitch with RTI, CityAM reports that up to 40,000 people have had their income tax payment "fudged" by Real Time Information (RTI).

Apparently a number of individual employees, mainly from SME's, have been allocated an incorrect tax code resulting in them overpaying their tax.

A spokesman from HMRC is quoted:
We are aware of a problem affecting a very small number of employers and a small proportion of their employees.

We are urgently working with the employers to solve this.” 
I welcome thoughts and comments as to the possible causes of this error.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"