"Be Thankful I Don't Take It All"

"Prime Minister, the Treasury does not work out what it needs and then think how to raise the money. It pitches for as much as it can get away with and then thinks how to spend it." 

Sir Humphrey, Yes Prime Minister.

That the government views the private purse as a magic money tree is an old age problem - one aptly illustrated by the rather bitter but not inaccurate Beatles' song, Taxman.

And it's a problem that becomes ever acute when under planned new measures in the latest budget. HMRC will have an automatic power to take money from a bank account when the holder has failed to act on four formal warnings requiring payment. Currently such actions can only be done with the permission of a magistrate or judge.

TBF senior still has an ongoing complaint with his local MP on this matter. With this in mind we note that the Telegraph today on its front page has another example of HMRC mistakes that expose deep flaws behind this proposal:

The number of people being investigated by the taxman has doubled in one year, raising concerns that people who have made innocent mistakes are being targeted by the Government.

HM Revenue & Customs made inquiries about the tax affairs of 237,215 people last year, compared with about 119,000 in 2011-12, figures obtained by The Daily Telegraph show.

The number of self-employed people investigated has quadrupled in that time while annual prosecutions have risen sevenfold in three years.

The figures are evidence of the attempts HMRC is taking to minimise the estimated £35 billion of tax lost every year.

Experts have warned that people who have made simple errors when filling out self-assessment tax returns are “an easy target” for HMRC.

Not unsurprisingly HMRC will go after the "low hanging fruit". They are more unlikely to resist and lack the means of fighting back successfully:

Mark Giddens, a partner at the accountancy firm UHY Hacker Young, said HMRC was focused on collecting tax from “soft targets” such as “teachers, doctors..." These taxpayers were more likely to settle without dispute, he said.

As Bill Cosby noted "the government comes for the regular people first".

Other mistakes are not uncommon and HMRC even loses our data. Naturally despite overwhelming objections, we still get the "reassuring" dulcet tones of the Treasury on transmit only:

"Although the vast majority do this, there is still a minority that chooses not to pay, despite being able. The proposed powers will give HMRC another tool to collect tax debt owed. The current consultation includes a range of safeguards to ensure the power is tightly targeted.”

"A range of safeguards". Not that would amount to a tin of beans of course. Who decides how to implement the safeguards? Well HMRC... However those in government tend to enthusiastically support such measures as they rarely experience the downsides of their actions because they have the money and the means to immune themselves from the consequences at the coalface that the rest of us have to endure.

And as the experiences of Complete Bastard fighting with South Gloucestershire Council over council tax very clearly shows not even the law is a defence - especially when it consists of willful corruption by the Police, Councils and Bailiffs in the cause of forcing people to hand over money which the state believes is theirs regardless. He quite rightly notes in conclusion:

Put simply, this is a government at war with its people.

Of course we as a people can rebel...and demand a better way of running our own country.

The Budget And HMRC (2)

Following on from TBF senior's complaint to his MP regarding the proposals in the budget of giving HMRC the ability to take money directly from our bank accounts in the event of a tax dispute, he has had a reply from his MP Andrew Jones and from David Gauke - the current Exchequer Secretary to the Treasury.

Unsurprisingly the responses have not been reassuring. Andrew Jones' letter can be found below (click to enlarge all images throughout):

Andrew Jones acknowledges that the response from the Treasury does not address TBF senior's original concerns; "I recognise that you have made other points which may not be covered by Mr Gauke’s reply". However he reassures us that we can rest in comfort that he does “meet regularly with the Treasury Ministers and will ensure they are aware of the further comments you have made”. That's ok then...

Mr Gauke's response is quite frankly disturbing. What is obvious from the response is that the Tories believe that the money "is the government's" - we have to prove otherwise. And we have to prove it with very much lower funds backing us should we have a dispute.

Never mind that tax avoidance is perfectly legal, and in large part a consequence of the 'wonderful' Single Market. Never mind that the lower limit of £1,000 of tax owed is a limit which is miniscule – thus it is clearly not a measure that is aimed at those deliberately evading large amounts of tax but normal people and small businesses.

But as a 'solution' we instead get confirmation that the Tories are attempting to turn the entire tax system on its head - "we're guilty unless we can prove otherwise"

Anyone who believes that their tax avoidance scheme works will still be able to pursue their claim in the courts. And, if they win, HMRC will repay the tax with interest. However, HMRC’s success in avoidance litigation shows that only a small minority of avoidance schemes are upheld in the courts. This means that it is fair that tax should sit with the Exchequer rather than the taxpayer during a dispute into tax avoidance.

Gauke says: "it is fair...". Who says it's fair? Certainty not us the taxpayer. Has Gauke ever attempted to fight HMRC as a small business owner...? I guess not. And of course HMRC never makes mistakes.

Needless to say TBF senior is not letting this go - belligerent persistence runs in the family.

The Budget And HMRC

With all the silliness on and immediately after 19th March surrounding the recent Budget and measures regarding Bingo and Beer duty it was tempting to ignore it - very much like Parliament will largely do contrary to their primary duty of scrutinising it.

However one particular measure – tucked away – demonstrated more than anything the absolute need for the Harrogate Demands:

Buried deep in the Budget document, there's a pretty significant HMRC power grab.

If officials decide you owe them money, they now have the ability to take it directly out your bank account. No insolvency proceedings, asset freezes or debt collection agencies. Just the government taking out whatever it thinks it's owed.

Anyone who has dealt with HMRC as part of a SME will read that and quake in their boots. With this in mind I post a copy of an email sent by TBF senior (an independent financial advisor of many decades) to his local MP in response - it articulates many of the deep concerns and frustrations regarding this measure:

The Chancellor’s recent Budget introduced radical pension reforms, a welcome help for savers and encouragement for businesses.  George Osborne continued his theme of ensuring that everyone pays their fair share of taxes.  It's one of the small proposals under the “Debt Recovery” section of the Budget that gives me serious concern.

It is proposed that new powers are given to HMRC so that they are able to access Bank Accounts of people who, allegedly, refuse to pay their taxes.  On the face of it this seems reasonable as people should pay their fair share of tax but this power is a fundamental change in the principle of British Justice.  In the UK, the courts decide the law and who is guilty.  If this power is passed to HMRC then they decide the tax that is due, determine that the person has consistently refused to pay and will then be given the power to raid their Bank Account.  In other words HMRC becomes the Judge, Jury and Executioner.

We have been told that there will be safeguards and this new power will only be used where HMRC have tried to contact the Tax Payer on a number of occasions and receive no response.  It appears that HMRC will decide whether or not these safeguards have been met and regrettably, their reputation for mistakes is well known.  There may be a simple and valid reason why a person has not responded such as they are in Hospital, they have moved house, they may have a mild form of Dementia or indeed HMRC may have the wrong records.

The lower limit of £1,000 of tax owed is miniscule for this draconian measure.  It will affect somebody who may have just had a company car, a change in respect of Child Credit or purely a miscalculation by HMRC in previous tax years.  This is not a measure that is aimed at the person who is deliberately evading large amounts of tax, it is targeting normal people and small businesses.

We are told that HMRC will leave a minimum of £5,000 across Bank Accounts and if this is also going to apply to small businesses, this could be purely the amount that is needed to pay their staff at the end of the month.

My understanding is that the Enterprise Act 2002 abolished preferential status for Crown debts from 15 September 2003.  This proposed measure could circumvent this by allowing HMRC to recover their debt in preference to the other Creditors by taking taxes from the individual’s account prior to insolvency.

HMRC already have powers to recover unpaid debts.  Why are they not encouraged to use them rather than giving them further power?  We are told that Tax Authorities in other countries such as the US and France already have this power.  This is no reason whatsoever for us to follow suit.  After all we live in Britain, not France or the US.

If we give this power to HMRC then what next?  There are many people that do not pay their Council Tax and therefore shouldn’t Local Authorities be given the power to take this money from their Bank Accounts.  After all we all have to pay for people that don’t pay their Council Tax.   How about Motor Insurance Companies.  We all pay additional premiums for people that do not pay for car insurance, so should they be given the power to deduct car insurance premiums from our Bank Accounts.  I am sure that MP’s from all sides of the House would be up in arms if this was proposed.

We have seen powers introduced in the past for what appears to be the right reasons but is subsequently used for other purposes. For example the Regulation of Investigatory Powers Act 2000 being used to catch people putting out their wheelie bins too early!  It might well be that the current Government is bringing in these new powers with every good intention but there is no guarantee that future Governments may not decide to use this power to implement further draconian measures.

As one of your Constituents, I urge you to oppose this new measure.  We do not want to have to wait until there is a public outcry over people who have suffered under these draconian measures.  There will inevitably be an inquiry with the usual infuriating reply that “lessons will be learned”.  For once, let us learn from our history lessons.  It is with some irony that with the 800 anniversary of the signing of the Magna Carta due next year, George Osborne is proposing that we give HMRC the power to determine the tax that is due and deduct it direct from Tax Payers without any recourse to an independent Arbitrator; a very dangerous step.

Of course both of us are under no illusions that any objections will make any difference, especially given the sycophantic nature to Cameron of his local MP. Yet again it demonstrates how broken our so-called Parliamentary democracy has become - at the next election there will really be only two contestants: the political class and the people. Oh how we wish for Demand number 5:

5. No taxation or spending without consent: no tax, charge or levy shall be imposed, nor any public spending authorised, nor any sum borrowed by any national or local government except with the express approval the majority of the people, renewed annually on presentation of a budget which shall first have been approved by their respective legislatures;

HMRC

I can only agree with Trooper Thompson's comments here regarding Harry Redknapp's trial yesterday:

Now, check out this quote from the same article:

Chris Martin, from Her Majesty's Revenue and Customs (HMRC), said outside Southwark Crown Court that the taxman had 'no regrets' about pursuing the case.

He said: 'We accept the verdicts of the jury but I would like to remind those who are evading tax by using offshore tax havens that it always makes sense to come to talk to us before we come to talk to you.'

How creepy is that?

As someone who runs a small business and had run-ins myself with HMRC - indeed they've resumed proceedings against me again last weekend after 8 months of 'silence', for money I have proved I don't owe - the above quote neatly illustrates the impunity and arrogance with which they act. Despite a jury's verdict they make it clear they don't agree with it and that's it's wrong.

Unfortunately the malaise of unaccountability runs deep within our country.

Taxing

Some lather has been generated today regarding this Telegraph report (my emphasis throughout):

HM Revenue and Customs could take direct control of every worker’s monthly pay cheque under plans to overhaul the error-prone income tax system.

Outrageous! All wages in the country will be paid to the government and then we receive a net salary based on whatever the government decides we should be allowed? Rightly disgraceful if true, but...

...note the operative word; 'could'. That's not the same as will.

And:

Instead of employers deducting income tax then paying gross salaries to employees, the gross monthly payment would go to an HMRC-run tax “calculator”, which would then pass the net salary to the worker.

The reform would mean the end of traditional monthly payslips, because employers would no longer be able to tell workers how much tax they had paid each month.

Ah 'would' if true...

The tax authorities are consulting accountants, lawyers and businesses on the plans to reform the pay-as-you-earn (PAYE) system.

Ah consultation, so not yet law then...

The potential shake-up has emerged after HMRC confirmed that inaccurate data means millions of people will be made to pay back underpaid tax, and millions more will get rebates.

Ah 'potential'...

To make PAYE more accurate, Treasury ministers have suggested that employers should provide HMRC with monthly updates on workers’ salary payments and other financial details.

Ah 'suggested'...

Such “real time information” could then be used as the basis of a new “centralised deductions” system that would give HMRC an unprecedented role in workers’ monthly salary payments.

Ah 'could'...

Ministers have asked tax experts to give their responses on the proposed new system later this month.

Ah 'proposed'...

Treasury sources said ministers had made no decision on overhauling PAYE, but insisted the Coalition is determined to make the system more accurate.

Ah 'had made no decision'...

So in effect it's all could, might and maybes. How strange that such a controversial proposal, which would be political suicide if ever introduced, is released at the same time as HMRC admits a cock-up.

Spinning? Media manipulation? I've never suggested that for one minute.