Tag Archives: Lies Lies Lies

HMRC tries another scam

unnamed

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.

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.

How often does your Government lie to you?

From the  Journals of Robert Maas

I’m ashamed to admit it but I voted Conservative at the last general election.  Fortunately most of my neighbours voted Labour so my vote didn’t matter.  But I’m still embarrassed to have done so.  Why?  Because I am becoming increasingly tired of the Conservative government lying to me all the time.  That may be a bit of an exaggeration as I do not have the breadth of knowledge to gauge that in non-tax matters.  But I do know that they do so when it comes to tax.  Lying may be a bit strong too.  It may be that the government believe that once Margaret Thatcher abolished most of the grammar schools in the early 1970s, the standards of State education have plummeted to such an extent that the citizenry cannot cope with the truth.  But I was a grammar school kid.  The State educated me fairly well, so I don’t need protecting from facts.

This article has been prompted by an HMRC Technical note on what they call “disguised remuneration avoidance schemes.  Let me make clear immediately that I have no problem with HMRC tackling tax avoidance schemes.  I am delighted when they do so – albeit that my understanding of what is a tax avoidance scheme seems somewhat different to HMRC’s.  HMRC tell me that “the government’s view is that these schemes don’t work”.  The government is of course entitled to its view.  It is also entitled to bring in legislation to reinforce its view.  But what the document is largely talking about is Employment Benefit Trusts (EBTs).  Whilst I do not wholly discount the possibility of the Cabinet agenda having included a discussion on whether or not EBTs “work”, I am a bit horrified if that is what happened, as there are enough strategic issues for the government to worry about without the collective Ministerial talent being diverted to considering the efficacy of historic tax arrangements.  Of course I fully accept that David Gauke, who has ministerial responsibility for HMRC, may have himself immersed himself in the tax legislation and the detailed documentation of thousands of EBTs and formed his own conclusion that EBTs do not work.  But even if he did so, his considered opinion is just that; it is his view, not that of the government.  As a solicitor, he is capable of doing so, although whether such industry is a sensible use of his ministerial time and the high salary us taxpayers pay for his services is another question.  But I think it is more likely to be HMRC’s view than the government’s.  I would also make the point that, as far as I am aware, although HMRC have won a number of cases before the Courts and Tribunals, none of these have been on the basis that EBTs do not work, but rather than in those particular cases what actually happened did not reflect what the parties had intended.  Accordingly HMRC’s view – or the government’s view if that is in fact the case – is not universally shared.

But it is not simply that view that concerns me

The document goes on to say, “the package of changes announced by the Chancellor at Budget 2016 will ensure that those who have used or continue to use a disguised remuneration tax avoidance scheme will pay tax and NIC on that remuneration as Parliament intended”.

Parliament in fact enacted legislation against disguised remuneration (which includes some payments by EBTs) in 2011, but only in relation to transactions undertaken after 8 December 2010. That suggests that Parliament has no view on disguised remuneration before that date. Yet the Budget announcements are mainly directed at pre 8 December 2010 EBTs, so it is wrong to pretend that those changes are in any way aimed at what Parliament intended.

So, if I am not a fan of EBT loan arrangements, and some, at least, of them, like that in Murray Group, do not avoid tax at all, why should I care if HMRC and/or the government lie to me and the rest of the citizenry in order to seek to persuade us that the Chancellor is right to attack such arrangements entered into pre 2011? Well, apart from the fact that I don’t like being lied to full stop, it is because the lies are to hide the fact that the Chancellor intends to introduce retrospective legislation to tax now (or rather in 2019) the loans that were made by EBTs before 2011. Parliament is normally violently opposed to retrospective legislation. It accordingly seems that by pretending that Parliament was opposed to such loans pre 2011, the Chancellor thinks that they will not realise how clearly retrospective his proposed legislation is. What the Chancellor is really saying is that if a person received a loan from an EBT before 8 December 2010, he should either voluntarily pay tax on the capital amount, even though it is probably not taxable at all under current laws, or he should repay the loan before 5 April 2019, and if he chooses to ignore both of these options and insist on exercising his legal rights under the loan agreement, then Parliament will introduce a new law to tax him in 2019 on money he received in a non-taxable form in 2001 or 2009, or even 1979. That is retrospection with a vengeance!

80% of cases are won by HMRC?

From C3 :

(… ) “The claim of an 80% pinocchiosuccess rate in all tax avoidance cases has been the bedrock upon which HMRC has justified the need for the introduction of APNs and FNs. However, after looking closely at the cases which form this percentage we must conclude that this justification is tragically flawed with a distinct lack of correlation between the arrangements in which the vast number of taxpayers have participated and those cases which progressed to the tribunal stage in the selective period that HMRC used as their statistical base”

Read the full article here

Gauke performs magic trick, transforms 847 responses into 20 (and lies to Parliament in the process?)

gke
From Finance Bill Committee transcript , 17th June 2014:

David Gauke: “The consultation on the draft legislation earlier this year generated over 20 responses”  

From “Tackling marketed tax avoidance , Summary of Responses”, March 2014:

HMRC: “HMRC received 847 responses to the consultation

A breakdown of the capacities in which respondents made their comments is below: 

• 12 from representative bodies
• 29 from consultants
• 245 from accountancy firms
• 5 from law firms
• 547 from individuals
• 9 from other businesses “

Yes…. 847 is technically “over 20″…
Okay……

Did the Minister deliberately mislead the Parliament to force his retrospective legislation through?

You be the judge…

(In fact, is this any different to when HRMC misled Parliament into passing S58 in 2008 ?Jane Kennedy later confirmed in writing that “she was told by HMRC that only a very small number of people would be affected, and certainly not the thousands that have been impacted“.

It’s this kind of “inaccuracy” that will cost average people everything, yet cost MPs and civil servants nothing. Demand accountability from your representatives! )

gauke