Tag Archives: massaged figures

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.