Tag Archives: HMRC

The Invention of Lying

By Phil Manley

“A few years ago the comedian & actor Ricky Gervais made a film named the “Invention of Lying”. In short, it displayed what can happen if only one person on earth had the ability to lie. As you would expect, he became a God to the rest of the world because everything he said was accepted as truthful.

Whilst this film was made as a light-hearted way to spend a few hours it had a strong element of truthfulness to it.

Lying seems to have become deeply ingrained in British culture. We accept it as the norm and no questions are ever asked even in the face of a stone-cold lie. It has since become so ingrained the entire country, led by a man who has been caught out lying numerous times, is heading towards independence from the EU in a bizarre situation which nobody now wants to admit to ever being part of (really – I don’t think I know a single person who admits to voting for Brexit).

Our morals have become so confused on the matter being truthful, honest and sincere, that it is deemed unacceptable to accuse somebody of lying* no matter what the evidence. It is considered worse to do so than the actual act itself!

The most outrageous example of this is that MPs cannot accuse one another in Parliament of lying. This, quite frankly, is utter madness. The official line is that this would be ‘ungentlemanly conduct’. Pardon me? So more ungentlemanly than say Melvyn Stride or Jesse Norman (the previous and current Financial Secretary to the Treasury) stating absolute lies to Parliament regarding the Loan Charge legislation, thereby in fact directly causing deaths via their penal policy; I have personally seen a relevant suicide note. Ah yes, God forbid we call them out on such matters, after all that would be “ungentlemanly”. I know they have lied, they know they have lied and I suspect realistically everybody reading this knows they have lied – yet let’s all pretend otherwise. Welcome to 2019 and the dystopian United Kingdom of the present day.

HMRC are a civil service department that exists for the sole purpose of collecting tax. They do not have the last word or any judicial authority on tax law. They certainly do not have the last word (or indeed any word) on common law despite what their latest CLSO2 settlement ‘opportunity’ claims (on a side note – has the word ‘opportunity’ ever been so badly misused?).

They have, over the past 18 months misrepresented the truth and, plainly speaking, lied in an abhorrent manner and likely caused, what I believe to be the following:

1. They have fooled even themselves by such constant lying and are now in a state of desperation. Best described in the following quote:

Above all, don’t lie to yourself. The man who lies to himself and listens to his own lie comes to a point that he cannot distinguish the truth within him, or around him, and so loses all respect for himself and for others. And having no respect he ceases to love.”

Fyodor Dostoevsky, The Brothers Karamazov

Or

2. They know they are lying and yet foolheartedly continue in a thirst for money/meeting targets (which by the way is foolish as I will explain below).

Either way, it’s wrong and I consider it appallingly disgusting that to call them out on such is to open oneself up to accusations of being ‘unprofessional’ or more comically ‘ungentlemanly’. Well to be frank and to cover future arguments on the matter I shall state now, you can, as Mr Ian Brown once sang, ‘kiss me where the sun doesn’t shine’ as I have clients and friends dying due to your lies.

If you think that I am wrong, feel free to sue me. Unfortunately, you will not succeed as you well know. Indeed, I much hope and encourage you to do so as this presents me with a chance to put your lies at the front of a court, which we both know you are desperate does not happen.

So where do we go from here? Well, let us perhaps head to the Chartered Institute of Taxation, the CIOT. This is the regulating institute of the entire taxation profession….but wait a minute -…there is a major problem!

CIOT

I recognise that CIOT cannot be blamed for the behaviour of its members. On that basis we shall not discuss its previous board member who was charged with some extremely disturbing sexual offenses including paedophilia. It does however have to take responsibility for actions it takes once information is known, such as:

  • One of the first ever DOTAS registered schemes being devised by a man, which the CIOT later chose as suitable to become its president. So erm, to confirm, HMRC always said these schemes didn’t work? Slightly bizarre therefore that CIOT didn’t seem to know this fact?*

*To be fair to CIOT, this is also a complete lie by HMRC as they clearly did not ‘always say these schemes did not work’ otherwise we would not even be here today, nor would they have taken on contractors themselves via loan schemes over the years now affected by the LC.

  • The penultimate president considers it ‘an amusing anecdote’ to speak publicly about how he once fooled a judge into issuing an s20 notice as he needed it for his application to the commissioners to complete his HMRC inspector’s training.

In other words ‘potentially perpetrated alleged fraud on a taxpayer by lying to a special commissioner in hope it would financially benefit him personally’. Now, I am certainly not saying he is guilty of this act but it seems to me that, the person who was – until earlier this year – the head of CIOT and indeed utilised as the ‘independent’ voice by the Treasury select committee in their review into the Loan Charge responsible for destroying lives, should probably clarify whether this situation did in reality occur and if so, why he considers it acceptable. Otherwise, the allegation that most of his entire professional career will have been built upon an act of fraud will continue tarnishing his professional standing and reputation. In addition, it will also largely devalue any evidence given by him to the Treasury Select Committee. Before any of the twitter friends of his speak up claiming “you can blame anyone but its not his fault” You can stick it in the same place as Mr Brown suggests you kiss for all I care so save your keyboard warrioring for another time or agree to come and meet in person to discuss on camera.

Do I expect to receive an answer to this quite straightforward query? Of course not, it will be met with denial, anger and potentially threats. Yet, all it needs is a yes or no. Articulated answers about how times have changed – apparently “this was 20 years ago” – or how it was meant to be a joke. We simply wish to know whether this occurred or not. It really shouldn’t be that difficult. I would add though, before any hasty responses appear, that two witnesses attending the event suggest the context within which this had been presented was indeed NOT a joke at all and a quite sincere affair.

The pointless quest of HMRC

As mentioned above, we are at a stage that all HMRC are now doing is destroying families around the world. This may sound like an exaggeration but let us consider the following:

  • They have only achieved 2,000 (according to latest stats I believe) settlements thus far
  • Only 1,000 of these are in the past 12 months.
  • They need another 43,000 (minimum) to make this exercise worthwhile.

Now why is that CLOS2 has been such a disaster? Is it due to the unfairness of HMRC ignoring the very basic protections of TMA1970 enquiry windows to enforce this unproven debt?

Is it perhaps because of the lie that people had ‘three years notice’ of the LC applying (a large proportion of taxpayers within the LC cohort appear not even to have received any initial LC communication)?

Is it because loans are not taxable and the concept of what is ‘fair’ in the minds of HMRC is irrelevant to the concept of applying the law?

Well yes, it is probably a mixture of all of those but, in my opinion, the most telling reason why nobody is coming forward to settle is because they simply cannot, because the money in practice does not exist in the pockets of those HMRC are attacking.

HMRC can shout, scream, threaten and abuse. They can write letters, make angry calls, even send around DMB field officers or bailiffs. It makes no difference as the money is not there. It simply does not exist.

Now HMRC have a problem as they have stated they will not make anybody bankrupt or force them to lose their main home. Well if those claims are true let’ s ask them some VERY basic questions. I am estimating the chances of an honest reply to be less than 2%.

  1. Will HMRC sell the ‘debt’ onto others who may then force home sales/bankruptcy?
  2. If HMRC state that the answer to (1) is “no”. Then what is the point of all of this as you will not receive money which doesn’t exist and therefore achieve nothing more than breaking up families due to the anguish/divorces and suicides that we now know are occurring?

The end game

So, then – what now? Well clearly HMRC have a massive problem. They need to become a faceless department before the LC is dropped otherwise certain individuals face corporate manslaughter charges. Early indications suggest that individuals would happily crowd-fund legal campaigns along those lines with the likes of Philip Hammond, Mel Stride, ‘Sir’ Jonathan, Mary Aiston, Phil Gilbert in the direct firing line. Hence off go Melvyn and Jon to jobs that hardly a single person considers them worthy. I don’t really care. All I ask for is that no more people must suffer. We are not asking for special favours, we are not asking for anything other than the law is applied as it stands.

Therefore, for the sake of humanity and loan charge victims sanity, please no retrospection, no ignoring of taxpayer protection and most of all please, for the sake of human life, no more lies. The alternative is far too dire – and you cannot say they have not been warned!

Loan charge goes global

Given the recent media tsunami on the plight of Loan charge victims, it is not a surprise that we have now also seen the emergence of a “Global Loan Charge Alliance”, more details here: globalloanchargealliance.info

And, as the saga continues, the dissenting voices globally are rising. The Tory Loan Charge scandal has been noted in the United States, Australia, New Zealand, Singapore and Asia. Even the United Nations have expressed their explicit concern, already mid-2018, about the UK’s move towards aggressive and contrived retrospective legislation.

So, even internationally, there’s now a recognition of the dystopian 2019 United Kingdom in general and the Loan charge poster boy in particular. Luckily, there’s also a much greater global drive now to stopping this as other countries and governments around the globe recognise the long-lasting damage of the UK government’s and HMRC’s lies are doing to the general public’s trust in government.

The consequence of course is dire: as trust erodes further, incidents of civil disobedience increase. Whether it’s the yellow vests protest in France or UK citizens choice of last resort in fighting the loan charge: bankruptcy, or worst of all – taking their own lives.

Once the trust is gone, there’s nothing left and obedient citizens will turn against their government and institutions such as HMRC. Ultimately, this is the stuff for revolutions and once you’ve got literally nothing to lose, everything becomes an upside. Many feel the flames of “RetroHell” as they refer to the Loan charge and are increasingly expressing their anger, frustration and devastation.

All of this of course, could be avoided with one fell-swoop by following the All-Party Parliamentary group’s recommendation to pause the Loan charge proceeding and establish an independent, judge-led inquiry. The now Prime Minster Boris Johnson promised something along those lines at one of the hustings in Carlisle . And, with Parliament’s recess until early September and some of the cut off reporting deadlines by the end of August, the time is NOW, RIGHT NOW, to implement this pause and review. Of course, this will require a Prime Minister who is true to his own words and a government intelligent and courageous enough to see where they have gone wrong.

Otherwise, it will be exposed as more lies. And become an international example of how governments betray their electorate. It could end very quickly or very badly. Which one is it going to be?”

Phil Manley is a tax advisor and former HMRC inspector.
He has been in charge of the implementation of APN processes.

An interesting quote from the new chancellor – 2019 Edition

https://publications.parliament.uk/pa/cm201011/cmhansrd/cm100712/debtext/100712-0002.htm

12th July 2010, Column 688

Sajid Javid (Bromsgrove) (Con): “May I say that there seems to be a big confusion between tax evasion and tax avoidance? The hon. Gentleman keeps referring to “avoidance and evasion” and treating them in almost exactly the same way. Clearly one of them, avoidance, is entirely legitimate-it is a basic human instinct for someone to try to hold on to more of their own money, which they have earned through their hard work-whereas the other, evasion, is an illegal activity. Would he not do well to focus on what might be the issue, rather than trying to confuse it? “

Yes it appears HMRC DOES have something to hide within their settlement statistics

Only 2,000 settlements have been agreed in the time since HMRC Chief Executive Jon Thomson wrote to MPs 27 June 2018.

By Gordon Berry

I wrote an article a few days ago asking if HMRC were hiding something within the statistics being presented to the Commons Treasury Committee, the Lords Economics Affairs Committee, Parliament, Agents, the media and taxpayers at large

As I indicated, once we were beyond 5th April 2019, and that deadline had passed, I submitted a Freedom of information request to ask HMRC some simple questions on the statistics that had so far been presented. I asked:

  1. How many individuals (not corporates) registered for settlement? – Is it much changed from 26,500 and what of the other 23,500 are they invisible to HMRC?
  2. How many calculations have been issued by HMRC to individuals (not corporates)? Are HMRC struggling to issue calculations due to their own inabilities?
  3. What is the average of those calculations issued to individuals (not corporates)? – because I was damn sure it wasn’t going to be £13,000
  4. Of those issued to individuals, how many signed settlement agreement offers have actually been returned to HMRC? because my experience was that many were struggling to reach agreement and finality
  5. What is the average value of offers at question 4 above? how does it compare to the average value of calculations issued, in other words would the statistics bear out my suspicion that the only people settling those who had the smallest settlement offers and were therefore able to afford it.

As you can read from above, this was a straightforward request and should have presented no difficulties to HMRC:

Here is the answer I received: FOI (Freedom of Information) request

HMRC replied that they held the information and agreed it was in the public interest , but that they were not going to honour the FOI request because they reserved the right to publish it in their annual report as they claim they had always planned.

So then, one week before Parliament goes to recess, HMRC publish their annual report and accounts. There is much I could say about the annual report, but let’s stick with the current focus.

Did HMRC answer the questions that I asked, as they said they would?

No.

For the most part, they simply did not did not release the information I requested. More worrying, the information that they did provide probably even more explosive:

What did HMRC reveal

At page 31 of the annual report and accounts HMRC reveal something quite startling

“Before the loan charge came into effect, we wrote to more than 40,000 people who we believed may be affected, inviting them to settle their tax affairs. Since then, we have agreed around 7,000 settlements, worth more than £1.5 billion”

That means that they have agreed just 7,000 settlements in over three years and assuming that the information supplied is accurate at 31 March 2019, have approximately five months to resolve 12,000 settlements.

That means that HMRC have managed to finalise only 2.000 settlements since approximately this time last year because the letter from Jon Thomson to MPs said “Since 2016 we have agreed settlements with over 5,000 individuals and employers,”

This is just preposterous.

Then at page 103

“More than 28,000 scheme users expressed an interest in settling their tax affairs, with over 19,000* returning their settlement packs under the published settlement terms.

We continue to agree settlements for this population. Between Budget 2016 and 31 March 2019, around 7,000 settlements were agreed, bringing in over £1.5 billion for the Exchequer.

* This figure follows an end of year reconciliation and is an update from the previous number published in the government’s Section 95 report.”

So there we have it:

  • 28,000 expressed an interest in settling
  • 19,000 returned settlement packs
  • 7,000 settlements have been agreed
  • From a target of between 40,000 and 50,000

A disaster for HMRC. No wonder the new Financial Secretary to the Treasury seemed irritated last week before the Lords Economic Affairs Committee when he complained of a negative campaign against HMRC!

It would be entirely reasonable to ask what action is been taken regarding the other 22,000 individuals within the target group who have not ‘expressed an interest in settlement’.

Are HMRC aware of the identity of those individuals?

If so, what action are they taking. Or do those individuals slip through the gap?

Mary Aiston OBE assured the House of Commons Treasury Committee in January 2019

“Our past experience with settlement opportunities is that around 75% of those people will come back and settle. There is a lot more work to do. We always expected that there would be a peak of people coming in February and March”

The language HMRC use is always revealing by what it doesn’t say

“Before the loan charge came into effect, we wrote to more than 40,000 people who we believed may be affected, inviting them to settle their tax affairs.”

Yes, they wrote to many just before the 5th April 2019, though some appear to have received their first communication from HMRC after 5th April 2019, not exactly three years notice.

Also “we believe may be affected”, what are we to take from that?

My previous article said, “….we are minded of tax barrister Keith Gordon’s earlier comments in his evidence about not trusting anything that HMRC say .”

What did HMRC not reveal

It is interesting that HMRC made no attempt to reveal the details I requested in my FOI request when I asked:

  • What is the average of those calculations issued to individuals (not corporates)? –

because I was damn sure it wasn’t going to be £13,000

  • What is the average value of offers at question 4 above? – how does it compare to the average value of calculations issued, in other words would the statistics bear out my suspicion that the only people settling those who had the smallest settlement offers and were therefore able to afford it.

It is just as interesting that HMRC chose not to reveal the average settlement value in the calculations issued by HMRC (we do not know how many) nor the average value of the 7,000 settlements returned and agreed with HMRC.

Remember that I explained in my earlier article that Ruth Stanier OBE had told Lord Forsyth in her letter of 5th November 2018 that the average settlement for individuals was £23,000. Then Mary Aiston OBE surprised us in January 2019 when she claimed in evidence presented to the House of Commons Treasury Committee, that “…we think that a typical settlement that an individual is facing is somewhere in the order of £13,000..”

Why HMRC needed a change to the Loan Charge on 22nd November 2017

I think it is worth re-clarifying why HMRC needed to make a change to the Loan Charge legislation on 22nd November 2017.

The Loan Charge itself was devised prior to March 2016, well before the decision of the Supreme Court was announced on July 2017. HMRC could not have known what the outcome would be or indeed whether it would even go to the Supreme Court. The Loan Charge was meant to be their insurance policy. It was mean to catch all, corporates and individuals, employer and employee.

However, the ultimate decision of the Supreme Court gave HMRC an inconvenient victory. It did mean that they could get to those companies who were still trading who had undertaken an EBT, by issuing a follower notice. HMRC went on to do the same with EFRBS and indeed even issued Follower Notices in one specific case where the judge had ruled that the facts were different and Rangers decision did not apply.

What was inconvenient was that it meant that HMRC could not get to individuals such as Contractors or those employees or Directors where the company had ceased trading, perhaps due to the retirement of the owners, possibly many years prior.

HMRC have repeatedly said that they expect the yield from employers will account for 75% of the £3.2bn. The Treasury Minister repeated that claim last week. Logically that means only 25% or £0.8bn will come from the 40,000 to 50,000 individuals.

All this heartache, debate, bankruptcy and suicide because HMRC were not satisfied with the 75% of £3.2bn and sought instead to get around the decision of the Supreme Court, the highest court in the land, just so that they could get to individuals.

In fact, it has been indicated to us on more than one occasion, that there is a desire for punishment of tax avoiders within HMRC. It looks as if this may be correct.

Interestingly, in evidence given in court, a senior inspector involved in contractor tax enquiries indicated that HMRC were not so concerned about the amount of tax (because it was small) but the numbers of individuals who participated. This tends to support the desire for punishment – for many, the punishment continues daily and it’s all down to one thing, the implementation of the loan charge and bypassing existing legislative powers available to HMRC.

What now?

The fact seems to be that Parliament voted through the Finance Bill and only Parliament can undo the mess. All tax and legal experts tell me that there is no legal mechanism to stop the loan charge now that we have passed the relevant deadlines.

I suggest that where there is the political will then the law can always find a way. If there have only been 7,000 settlements agreed up to this point, then it would be easier to revise the 7,000 than continue to pursue the other 43,000. By all means have the Loan Charge to stop any future schemes, but make it prospective from 5th April 2019 and remove the retrospective element now.

Does HMRC have something to hide in relation to their settlement statistics?

By Gordon Berry

“Am I the only person to have noticed that HMRC has not issued any updates in relation to their settlement statistics for many months?

Since 27 March 2019, we’ve not heard anything. Does that not seem strange to you?

Well it certainly seems strange and concerning to me, particularly in the context of apparently conflicting and misleading information given to the Treasury Committee and Lords Economic Committee by senior HMRC officials.

For that reason, I decided to file a Freedom of Information Request to find out the correct up-to-date figures. After all, as a taxpayer I am entitled to these. Or so I thought.

Once we were beyond 5th April 2019, and that deadline had passed,  I submitted a Freedom of information request to ask HMRC some simple questions on the statistics:

  1. How many individuals (not corporates) registered for settlement?
  2. How many calculations have been issued by HMRC to individuals (not corporates)?
  3. What is the average of those calculations issued to individuals (not corporates)?
  4. Of those issued to individuals , how many signed settlement agreement offers have actually been returned to HMRC?
  5. What is the average value of offers at question 4 above?

As you can read from above, this is fairly straightforward and should present no difficulties:

Here is the answer I received: FOI (Freedom of Information) request

So basically, the answer is that they don’t want to release the information because they intend to issue it and put their own spin on it at a later date, possibly in their annual report – however, can we trust them to provide the information that I asked for?

I think the overwhelming answer is NO. Based on everything that’s happened so far with regard to settlement statistics. It’s either incompetence or deliberate misinformation – or combination of the two.

After all, HMRC is still largely using the same information and statistics which they quoted to the Lords economic committee in October 2018. 

Let’s just look at the evidence and why there is reason to be concerned about the statistics provided by HMRC:

WHAT HAS HMRC PROMISED?

At the Lords Economics Affairs sub-committee hearing in October 2018 HMRC’s  Ruth Stanier OBE gave oral evidence on the number of people who had already settled with HMRC with regard to what is now labelled DR Loan Schemes and a breakdown of who has suffered the charge. Ms Stanier was asked to follow this up in writing which she did on 31 October 2018 confirming that:

  •  To date, over 24,000 scheme users have registered”.
  • She also made a commitment to Lord Forsyth that HMRC ”are prioritising issuing settlement calculations to give clarity to those who gave us (HMRC) the information by 30th September 2018.” “We have committed to respond by 30th November 2018”

This all sounds very encouraging – until, that is, we look at the situation as at today’s date. Why’s that?

WHAT HAS HMRC DELIVERED?

Well, we know for a fact that as of today despite HMRC promise to their Lordships, HMRC have still not issued calculations to people who registered before 30th September 2018. In fact, based on information that we have, people who registered for settlement in the first quarter of 2018 have still not heard or seen anything!.

This is not in dispute and many thousands of concerned taxpayers are rightly apoplectic with worry over the continued uncertainty.

As if this was not sufficient cause for concern, there are many more issues about which to be concerned.

In the same submission to the Lords Economic Committee, Ms Stanier OBE went on to say that

“Budget & Autumn Statements 2016 documents show the expected yield from this measure to be £3.2bn by 2020-21, with 75% of that yield coming from employers. Our records show that, of those who have settled their case so far, around a quarter are from employers, and they account for 90% of the recorded yield”.

We were already familiar with this reference to £3.2bn yield from the original HMRC ‘impact assessment’ in 2016 and our suspicions were immediately raised.

I will go on to explain why.

That same impact assessment from 2016 had indicated that around 40,000 individuals might be involved.

Our suspicions were raised because we could see that the statistics are not much different from the statistics given in the letter from HMRC Chief executive Jon Thomson (subsequently knighted in January 2019) in his letter to the MP of June 2018.

In that letter Mr Thomson states  “Since 2016, we have agreed settlement with over 5,000 individuals and employers, raising over £500 million for the Exchequer. A further 20,000 people have contacted us to register an interest in settling.” That is the same letter in which Mr Thomson HMRC CEO says “The Loan Charge has also supported our efforts to settle DR cases without the need to litigate.”

Lord Forsyth asked Ms Stanier, in his letter of 1st November 2018, for a better understanding of the distribution of the 5,000 who had settled at that point. Ms Stanier responded on 5th November 2018 with a table indicating that:

There had been 5,000 settlements as at November 2018
Around 25% were from employers and 75% from employees
Around 90% of the yield came from employers and 10% of the yield came from employees.

Let’s just try to look at this information objectively:

  • It struck us that the most likely scenario was that those individuals who had settled by that point were likely those who had relatively small amounts to settle and therefore could manage to do so.
  • The idea that the average settlement for individuals was £23,000 seemed to confirm our belief that those who had settled were likely those with settlements at the smallest end of the scale
  • We would have expected that the average was probably closer to £100,000 and that for most people settlement was going to be at best a struggle and for many, nigh on impossible
  • We also noted that saying that 75% of the yield came from employers was only part of the story as those employers had a right of restitution against the employees, so whatever way you cut it, the employee will be liable for the tax on what they received

HMRC’s WORKED EXAMPLE

In a further letter dated 19th November 2018 Ms Stanier gave, in evidence to their Lordships  a worked example of a “typical settlement where the tax due is over £30,000”.

Ms Stanier’s ‘typical example’ is rather surprising in that the individual apparently had average loans of only £33,400 every year for four years and somehow that  individual then had sufficient funds to pay the settlement of £44,736.87 within 30 days (so no forward interest).

That just doesn’t smell to us like a ‘typical example’! Were HMRC prepared to mislead their Lordships?

What came next was equally as surprising.In oral evidence given to the House of Commons Treasury Committee on 30th January 2019 the HMRC witnesses of Jim Harra and Mary Aiston made some surprising statements. Remember HMRC initially set a deadline for people to ‘come forward’ of 31 May 2018, which they then revised to asking people to email HMRC by 30th September 2018 to register an interest in settlement and they were instructed to provide some specific information. Ms Stanier had promised the Lords that HMRC would then respond with calculations by 30th November 2018.

HMRC EVIDENCE TO THE COMMONS TREASURY COMMITTEE

Jim Harra referred in his evidence to 50,000 open cases and accused the taxpayers of not making full disclosure, whilst also claiming to have opened enquiries in most cases.

He said

We believe that the proposition we have put forward (he means the Loan Charge) is a reasonable and fair way of bringing disguised remuneration avoidance to an end and resolving the open cases in a way that is quick and efficient for everyone concerned.”

I think when Mr Harra says for everyone concerned, he actually means for everyone at HMRC. Mr Harra is the second permanent Secretary and Tax assurance Commissioner, so he perfectly well knows that that was not what parliament laid down in legislation as being fair to the taxpayer.

It’s Mary Aiston’s comments on 30th January 2019 on the statistics that is of most interest here, she said

We have settled about 6,000 cases bringing in about £1 billion worth of tax.” There are about 50,000 people. There are a lot more to go. In terms of getting calculations to people, we have issued 9,000 (Ms Stanier said in November over 24,000 registered and we will issue all calculations by 30th November 2018) and 7,000 of those are still to come back.”.

Ms Aiston also says “We think that the typical settlement that an individual is facing is somewhere in the order of £13,000.”. What! Well its transpired later under questioning I think from Baroness Kramer, that the new figure given by HMRC of a ‘typical settlement’ of £13,000 was actually the median figure and not the mean. Why would HMRC use the median figure?

Something doesn’t smell right. We were minded of tax barrister Keith Gordon’s earlier comments in his evidence about not trusting anything that HMRC say. Are HMRC seeking to misdirect the MP members of the House of Commons Treasury Committee?

Throughout all of this, The Financial Secretary to the Treasury Mel Stride was repeatedly using the same statistics as HMRC. Also HM Treasury were publishing the same and responding to newspaper articles with similar statistics.

Jim Harra used these practiced lines in his letter of 24th January 2019 (misdated as 2018) to the Chair Nicky Morgan when he said “The overall policy is estimated to raise £3.2 billion, 75% of the estimated amount is expected from employers.”, but he avoided the real questions from Nicky Morgan which was about how much of the Loan Charge would come from employees.

Why haven’t HMRC issued more up to date statistics?

Surely if their programme to force people into settlement was working then they would be happy to shout about the success rate?

MPs START TO TAKE NOTICE

We had by this time started to communicate our suspicions in regard to these practiced lines from HMRC in regard to statistics and MPs were starting to take notice;

Our point is that the Loan Charge is only needed by HMRC to allow them to get to employees. So if HMRC total figure is £3.2bn and HMRC estimate that only 25% is to come from employees, then all this heartache and debacle is for the sake of collecting £0.8bn or less

So this whole carry-on, HMRC retrospective charge, HMRC making a change to the legislation on 22nd November 2017 to get around the decision of the Supreme Court, suicides and mental health impact, was all for the sake of £0.8bn.

Indeed Keith Gordon has pointed out to me that the £3.2bn refers to the whole policy of settlement over the last 5 years so actually the figure is probably less than £0.8bn. Interestingly HMRC have also refused attempts to clarify what they mean by ‘employers’.

Many on social media and indeed many MPs apparently read this as Promoters, but we think it means those corporates who did full EBTs and it may also include those who did the Director variant of contractor schemes.

HM TREASURY’S (WHITEWASH) REPORT – MARCH 2019

Then on 26th March 2019 HM Treasury published its report.  Surely this would have more up to date statistics

Yes it did!

It said:

  • The policy was estimated to yield £3.2 billion over 5 years (unchanged)
  • HMRC has agreed around 6,000 settlements worth over £1 billion (unchanged)
  • 26,692 scheme users have registered an interest to settle (pretty specific and barely changed)
  • Of these 20,004 have returned their settlement pack
  • HMRC has issued settlement calculations to 15,649 users

Out of HMRC original estimates of 40,000 to 50,000 who need to ‘come forward’ this sounds to us like an unmitigated disaster.

The Loan Charge was due to come into charge at 5th April 2019 but still only 15,692 calculations have been issued. Plus only 6,000 settlements agreed! That is the same figure as that given on 30 January 2019 when evidence was given to the House of Commons Treasury Committee and almost unchanged from Jon Thomson’s letter to an MP which was dated 28th June 2018

JUST WHAT IS THE TRUE POSITION?

Of course, the truth is we just don’t really know!

However, as an eternal optimist, taking a leaf out of HMRC’s book,  I decided that I wanted to put this ‘beyond doubt’ and I waited until after 5th April to submit a FOI request to HMRC and establish the up to date statistics which I outlined at the beginning of this email.

As you know, from the reply I received, my request failed miserably.

Against the questions I put, you’ll see that I have highlighted the reasons why we need this information:

  1. How many individuals (not corporates) registered for settlement? – Is it much changed from 26,500 and what of the other 23,500 are they invisible to HMRC?
  2. How many calculations have been issued by HMRC to individuals (not corporates)? Are HMRC struggling to issue calculations due to their own inabilities?
  3. What is the average of those calculations issued to individuals (not corporates)? – because I was damn sure it wasn’t going to be £13,000
  4. Of those issued to individuals , how many signed settlement agreement offers have actually been returned to HMRC? because my experience was that many were struggling to reach agreement and finality
  5. What is the average value of offers at question 4 above? how does it compare to the average value of calculations issued, in other words would the statistics bear out my suspicion that the only people settling those who had the smallest settlement offers and were therefore able to afford it.

HMRC replied that they held the information and agreed it was in the public interest but that they were not going to honour the FOI request because they reserved the right to publish it in their annual report as they say they had always planned, which of course gives them the opportunity to put their slant on it. The  HMRC annual report is likely to be published this month just before Parliament goes to recess.

Now, just to rub salt into the wounds, last week the new Financial secretary to the Treasury Jesse Norman responded abruptly to questions in parliament arguing about protecting the tax base, then this week the Financial secretary to the Treasury Jesse Norman said  in response to a written question in Parliament

The Government estimates that up to 50,000 individuals will be affected by the 2019 loan charge. Since the DR loan charge was announced, HMRC have already agreed around 6,000 settlements with employers and individuals worth over £1 billion”.

Norman said in evidence to the Lords this week that the current figure is 7,000 settlements bringing in £1.5bn

So back to the same old soundbites then!

I think it’s entirely reasonable to pose the following questions:

Why would HMRC wish to withhold this information and only publish it just before Parliament goes to recess?

What does it show?

Does it not support HMRC’s stance?

You would think HMRC would be keen to broadcast the success of their processes to “bear down on tax avoidance” –  is it the case that the up to date statistics do not support earlier statistics given to the Lords, the Commons Treasury Committee, Parliament, MPs, newspapers and the public?

We don’t know but we are minded of tax barrister Keith Gordon’s earlier comments in his evidence about not trusting anything that HMRC say.

Would the civil servants at HMRC really mislead people on the statistics as part of a campaign to drive through the Loan Charge in spite of such public outcry and cross party protestations from MPs via the APPG and debates and questions in parliament? Will the HMRC report ultimately shed true light on these questions?

I think we already know in our heart of hearts what the answers are to the questions I pose above. Is it right to be concerned?

You bet it is.

Watch this space.”

Contractors’ ordeal and HMRC retrospection get discussed on BBC’s Money Box

BBC Radio 4’s Money Box with Paul Lewis, 18/03/2017

A couple remarks to Paul Lewis:
* The contractor has paid the correct amount of tax in the first place, as defined by the law as it stood at the time.
* The contractor did not merely buy into a set-up “he thought was legal”, the set-up was legal under the law as it stood at the time.

This is precisely the reason why HMRC / Treasury don’t want anyone to look too closely at the specifics, and are introducing 20-year retrospective law, in what can only be desceribed as the biggest smash & grab of this century.

There was a number of other inexactitudes in the programme, but I guess there’s only so much you can convey in a programme like this.

Still, let’s remember that for one self-employed getting a few minutes of airtime, there are tens of thousands others silently slaughtered by HMRC, for only two reasons: satisfying Gauke’s personal lust for self-employed blood (did a contractor steal his girlfriend many moons ago? we’ll never know the real reasons, but a vendetta it sure is), and brushing under the rug over a decade of incompetence, inaction and inconvenient truths.

Private Eye nails it again

From Private Eye No. 1433, 9 December – 22 December 2016, page 6 News:

Infernal Revenue

“Last week’s report from parliament’s public accounts committee on HM Revenue & Customs read like a compendium of old Eye stories.

From the disastrous Concentrix tax credits affair (a “complete failure”, with “many claimants being wrongly accused of fraudulent claims” and causing “unnecessary hardship and suffering”) to misleading claims about success investigating tax dodging, the MPs’ message was unrelentingly critical.

But on one point they were wrong. “HMRC’s senior management cannot afford to be complacent about the catastrophic collapse in customer service in 2014/15 and the first half of 2015/16,” said committee chair Meg Hillier MP. The trouble is they can afford to be complacent. The price of failure is simply gratitude from government for mercilessly implementing cuts without care for the consequences.

The HMRC chief executive who presided over the Concentrix and other customer service “catastrophes”, Lin Homer, bagged a damehood earlier this year. Meanwhile, the non-executive chairman of the HMRC board since 2012, Ian Barlow, remains at the head of the boardroom table. Even the minister responsible for the tax system throughout the years that gave the country these disasters, David Gauke, was recently promoted to the cabinet as chief secretary to the Treasury. A similar performance elsewhere would have meant political oblivion. But HMRC’s cock-ups tend to hit lower-income families whose plight can be safely ignored, giving plenty of room for complancency.

HMRC tries another scam

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Another day, another HMRC “nudge” tactic.

This time, it is an “invitation” for the taxpayer to deliberately misclassify / misdeclare loans as income, for HMRC’s benefit, using a law that doesn’t actually exist as a threat.
There is no statute or case law in existence to back this “invitation”.
In other words: it is manipulation at its finest on HMRC’s part.

In essence, they are encouraging the recipient to file an innacurate return… then in the same paragraph, inform that there are penalties for innacurate returns. 
Even Kafka wouldn’t have made it up.
Note also the neat “I want to help you” faux-friendly tone (did Behavioural Insights Ltd. come up with this?)

It’s little wonder that people fall for “HMRC” scams every day, when actual HMRC correpondance is so blatantly manipulative and deceiving. How this can go out on official letterhead without anyone blushing is beyond us – but hey, we’re not from the Stalin-esque “the end justifies the means” school of thought…

Thanks to the reader who sent us this gem, and shame on you, Harra, Granger, Troup, & the other scammers who authorised this. Soon you will find yourselves so entangled in lies, breaches of procedure, and contradictions of your own making that neither the PAC nor the Judiciary will be fooled anymore. And when the pendulum swings, it will swing faster than you can say “maximizing the amout of tax collected“.

If you are a contractor or recipient of APN(s) and have been offered a dubious “offer you can’t refuse” from HMRC, please get in touch via our contact form.

Some brutal truths about IR35.

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As 90% of contractors at the UKHO resign over IR35, a contractor shares his thoughts…

“There are many reasons IR35 was a shockingly bad piece of legislation. From a personal perspective here is my take on it:

Being inside IR35 basically says that you are really an employee of your end client and trying to disguise the fact. This would be much worse than being an employee for the following reasons:

VAT liability – I asked Her Majesty’s Customs and Excise if I could I deregister for VAT if I was inside IR35. Their reply was that I would still have to charge VAT and that were my company not to do so they would ultimately come after me as a director for criminal fraud. As most of my clients were Financial Institutions who could not claim back VAT, the full amount charged was paid 100% to the treasury. NO EMPLOYEE WOULD BE EXPECTED TO CHARGE OR COLLECT VAT. Nor would they be crimally liable if it were not charged.

During my work for clients my company had to carry Professional Indemnity Insurance. This was almost always written into the client contact. If I was working on financial trading systems, often the premiums for this would be excessive. My company had to also provide Public Liability Insurance. NO EMPLOYEE WOULD BE ASKED TO PROVIDE PROFESSIONAL INSURANCES TO INDEMNIFY THEIR EMPLOYER.

My responsibilities as a company director meant I was responsible for filing Company Accounts and Returns. The clients I worked with would not hire me unless I traded through a Limited Company. NOT ONE EMPLOYEE WOULD BE ASKED TO FILE COMPANY RETURNS, LET ALONE PAY FOR THEM OR BE RESPONSIBLE FOR THEM.

The ultimate injustice was that if I truly was an employee as the Inland Revenue were asserting. they would ask me to pay the Employer National Insurance. NO EMPLOYEE PAYS EMPLOYERS’ NATIONAL INSURANCE. I would also be responsible for the payment of PAYE income tax and Employees National Insurance. NO EMPLOYEE IS RESPONSIBLE FOR PAYING PAYE INCOME TAX AND EMPLOYEES NATIONAL INSURANCE, as this is normally deducted by the employer.

Along with this I would have no employment rights, paid holiday or paid sick leave. AN EMPLOYEE HAS ALL THESE LEGAL RIGHTS.

I personally have no problem paying employee levels of tax. What I object to is paying both employee AND employer taxes. Especially when I have no employee rights and a stack of employer obligations.

Considering all of the above, it is unsurprising wonder that the introduction of IR35 directly caused the “contractor scheme” boom of the early 2000’s…

Have a tax credit and an APN in dispute? Beware this new tactic.

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Have a tax credit and an APN in dispute? Be careful of this new tactic.

Dotas Scandal has received several reports of HMRC using now tax credits to cover outstanding APNs:

“Today i ran into a new situation. Every year i submit my tax return and go through the usual first payment on account, second payment on account. HMRC force you to pay your tax 100% over the amount you submit on your tax return and that normally sits as a tax credit.

I recently submitted my tax return, well actually way before i got letter, for 2015/16. I had a tax credit on my account, which offset against my current tax return would have meant I would not have had to pay any tax for 2015/16.

The letter today stated in simple terms that HMRC had swiped the tax credit and that under Finance Act 2008, they can do this. So basically: “tough luck, we’re not going to offset your tax credit against your latest tax return, we’re going to apply that tax credit to your APN and by the way you now still owe us £XXXXX”.

I am not even sure whether you can still pay current tax obligations. HMRC now seem to say whatever money they get they can apply in whichever way they want.”

It is no secret that HMRC are several £Bn short on their APN collection promises to Parliament, and getting desperate to extract monies by all means necessary.
As the APN well is drying up, expect more accounting tricks and unorthodox “collection” methods to be deployed. Plan accordingly.

HMRC’s creative APN accounting: making a rod for their own backs?

liar

With hardly anyone noticing, the “HMRC wins 80% of avoidance casesalready dubious line we have been hammered with for the past couple years has now discreetly been changed into “HMRC wins almost 90% of tax avoidance cases”. This can be seen in this press release from earlier this month

Why HMRC would do this, and why now? No, it’s not merely for PR purposes.

A commenter on this AccountingWeb thread proposes an explanation

“There is a reason why HMRC have recently changed their objectives to “maximise revenues”, the Government needs your cash. What might a poorly led company try to do in such circumstances, accelerate receipts perhaps? Book income that isn’t actually income perhaps? Did I mention that the whole of government accounts record APN receipts as income even though they are an accelerated payment on account towards something that is still to be tested in Court to decide whether there is actually any tax due?  Equal and opposite debtor and creditor anyone? However the government accounts record all but a 10% provision as income.
Did you notice that HMRC had recently started claiming to win 90% and not just 80% of tax avoidance cases that go to Court. I wonder which came first, the decision to only provide for 10% in the accounts or the analysis of cases that justified a 90% success rate. HMRC have though finally got around to disclosing the cases that they used to get their 80% or 90% results and a number of very professional commentators have asked why the list includes cases that aren’t actually tax avoidance and doesn’t include some which HMRC lost and which any reasonable person would assume should be on the list.
Next thing you know they will be trying to change the past with proposed retrospective legislation….oh wait a minute.
If you haven’t previously read George Orwell’s book 1984 you might want to pick up a copy.”

So there you have it: it’s “creative accounting” (so creative, in fact, that it would make even the Enron guys blush) destined to allow HMRC to once more mislead Parliament by affirming that they have collected “X billions of tax”, when all they have collected is retrospective payments on account of amounts that may or may not be due, to be determined at a later time.

Rumor has it that the law of diminishing returns has hit HMRC hard in their operation of the APN regime, HMRC having great trouble “collecting” from individuals, who 1/ simply  don’t have the money 2/ insist on exercising their legal rights and have initiated Judicial Reviews (how dare they!).

So what’s HMRC to do? why, requalify 10% of the amounts already collected from “payment on account” to “tax collected” to make it looks like the money is still flowing in…when in realitythe well’s hopelessly dry.

And hope that Parliament doesn’t question the figures.