This is one of 3 consecutive posts inspired by last night's TV programme 'Taking on the taxman'. The first gave my take on most of the key elements of the programme. In the second I focused on the issue of bankruptcy orders.
In this post I address an issue only touched on last night. To my mind, however this should have been the main focus of the programme. I'm sure it's far more common and insidious than the relatively rare bankruptcy. (And in so saying I do not for one moment wish to dismiss the seriousness of such occasions).
A retired gentleman received a tax demand that his accountant said was not payable. Further demands appeared and still the accountant said no need to pay. The accountant evidently tried but was unable to persuade HMRC to sort out their systems. The taxpayer's wife was not interested in the accountant's advice. She wanted to pay the tax bills to make the demands stop.
This attitude to tax demands is, I am sure, very common. When I get a notice form HMRC I know it's computer generated. I know that a real person probably hasn't been involved - despite the personalised messages that often appear. I accept and understand that this is how organisations that deal with tens of millions of people have to operate. But I was a tax practitioner for 25 years.
Most people do not have such experience. And for every person who understands the system there are thousands who do not. Many of them will adopt the same approach as did the lady in the programme. "Let's just pay the tax and make the demands stop." This makes it quite likely that large amounts of tax that is not really payable still gets paid.
There will be no records of this as it is the tax demands that were wrong. This will not be apparent until and unless the taxpayer's affairs are reviewed by a specialist tax adviser who really understands the system and all of the relevant rules.
In the same vein I've heard plenty of people over the years suggesting that individuals in HMRC routinely play the 'threat' game when it comes to disputes. ie: "Pay up the tax we demand or pay even more in fees to argue the point, and you may not win." Perhaps this will happen less with the new appeals system that came into effect at the start of this month.
What do you think? Did you watch the programme? Please add your views and thoughts as comments on this posting - just click the 'comments' link directly below.
It was low grade junk, as is, regrettably, much media attention on the topic these days.
ReplyDeleteThere is undoubtedly much wrong with HMRC; we see it day in and day out but, no matter what, there will always be the odd poor sod who gets royally screwed by the system. That is, I think we have to accept, an unavoidable consequence of any public system with such a large reach.
What could, and should, is for there to be more pressure for the introduction of a duty of care to be imposed on the Revenue, as it has been with the police and other public bodies.
Whether this is a common law duty (my preference) or a statutory one (via the next Taxpayers' Charter) is open to argument but either would afford the handful of victims proper redress through damages for negligence and, by default, cause HMRC to change their policies which lead to inappropriate bankrupties etc.
In other areas of the law, such as wrongful imprisonment, it has long since been accepted that full compensation is properly chargeable out of the public purse. I see no reason why compensating people for errors by HMRC should not be viewed in the same way.
As has already been pointed out in another post here, compensation is little redress for the stress, financial and personal loss that wrongly imposed penalties or "punishment" meets out.
ReplyDeleteMistakes are made and there is seemingly no mechanism to investigate them effectively whilst in the meantime sensibly halting the insiduous march of the "HMRC threat machine".
But you are right, instead of meeting out such draconian knee jerk reaction Dave and his team should be seeking to alter the legislation they see as causing the legitimate tax avoidance in the first place - if for some reason they cannot then they and the press should cease from branding perfectly legitimate tax avoidance as something illegal or morally wrong.
Compensation, although welcome and a just result for the victim, is still not an adequate solution when the system is still open to repeating the error that caused the problem in the first place.
The delights of Sky plus have meant that I have only just got around to watching this programme in the last few days.
ReplyDeleteI think there are more than just an "odd poor sod" that end up in a mess through HMRC's inadequate systems and processes. The fact that when you call to speak to an "adviser" they are not allowed to use initiative or give the human touch to customers means that customer service is severeley lacking.
And the guy who said that they receive thankyou letters.....well