BN66 - Time to fight back (Chapter 3)

[silver_lining]

counsel

just as an aside.... our representation looks interesting

QUALIFICATIONS AND APPOINTMENTS
Received a B.A. (First Class) in Jurisprudence (1981) and a BCL (1982) from Hertford College, Oxford. Acted as one of the Treasury counsel from 1991 to 2000, having served as a member of what is now the "A" Panel of Treasury Counsel from 1995 until taking silk in 2000. Appointed a Recorder in 2001 and in May 2008 he was appointed a Deputy High Court Judge in the Queen's Bench Division including the Administrative Court. In December 2008, appointed as a member of the Boundary Commission for England with effect from 12 January 2009. He had been appointed as an Assistant Boundary Commissioner in 2000 and had conducted an inquiry into, and reported on, the East London Parliamentary constituencies in 2001-2. He also sits as an arbitrator.....

interesting background... just wonder where his focus will be, busy QC with a lot on, a lot of advocacy roles...

wonder if he figures later on...... should a hearing be granted...

might phone to see his hourly rate.... as I was left short changed by 4p at the corner shop last week !

[onyx]

JR Application Refused

I think it's important not to feel disheartened after reading the contents of the newsletter. We've all come a long way and still have a long way to go regardless of the latest events. Remember when the act was given Royal Assent - that wasn't the end for us, even if it at first felt like it was. Plus the vote that went against us to include the retrospective element. Remember how many people on this forum at that point in time last year said it was curtains and time to pay up? Several months later here we are buying up CTDs and appealing our CNs (which have still been rather slow in being processed).

Put another way, this is a cat and mouse game and had we been granted the JR and then progressed onto the ECHR, HMRC would have been planning their "response" a bit like a game of chess. So however this turns out in the end, it is far from over. We have to maintain a balanced perspective and keep the faith but have a plan b in our back pockets too, just as HMRC will have in theirs.

A big thank you to everyone for supporting the forum, de-lurking and especially the handful that go above and beyond the call of duty (you know who you are).

[BrilloPad]

I think it's important not to feel disheartened after reading the contents of the newsletter. We've all come a long way and still have a long way to go regardless of the latest events. Remember when the act was given Royal Assent - that wasn't the end for us, even if it at first felt like it was. Plus the vote that went against us to include the retrospective element. Remember how many people on this forum at that point in time last year said it was curtains and time to pay up? Several months later here we are buying up CTDs and appealing our CNs (which have still been rather slow in being processed).

Put another way, this is a cat and mouse game and had we been granted the JR and then progressed onto the ECHR, HMRC would have been planning their "response" a bit like a game of chess. So however this turns out in the end, it is far from over. We have to maintain a balanced perspective and keep the faith but have a plan b in our back pockets too, just as HMRC will have in theirs.

A big thank you to everyone for supporting the forum, de-lurking and especially the handful that go above and beyond the call of duty (you know who you are).

A very good post : and I would like to emphazise the thanks to those who have de-lurked. If anyone else is reading then please register and tell us a bit about yourself. The more we have the stronger we will be.

[SantaClaus]

If there is evidence; now was not the time to sit on it. Not sure why enough amunition was not exposed at this stage to at least ensure the JR was heard..... but alas there is a second bite (and a 3rd if required: "If the judge refuses permission, the claimant is entitled to seek (within seven days) that the matter be reconsidered at an oral hearing (under CPR 54.12). If at the oral hearing the judge again refuses permission, the claimant will have a right to apply for permission to appeal to the Court of Appeal against that refusal pursuant to CPR 52.15") at the cherry and I sincerely hope MP have learnt lessions and will go to any lengths to secure the hearing.

Regarding, brown envelopes etc. lets not forget that there is significant amounts of money riding on this and that the Administrative Courts are merely another branch of Gov/ Parliament... putting all this together coupled with current economic climate, the maths is not difficult and 'lord' only knows what dialogue is going on behind closed doors which can potentially influence decision........

There's always the ECHR if the UK Courts won't see sense. Another scheme provider (not sure I am allowed to name) has gone straight to the ECHR bypassing the JR process.

Interesting this stuff about brown envelopes, especially when so many peers could face jail for cash for questions

[Toocan]

Just getting warmed up

This was always going to be a really difficult hurdle for MP to overcome via a written JR submission.

HMRC introduced this legislation to Parliament using the word “Clarify”. This was always an outrageous abrogation of meaning of the word “Clarify”. However, I don’t think anyone on the committee went back to the minutes of the 1987 meeting to check. The slight of hand that HMRC are (so far) getting away with could be approximated thus:

1987: Parliament brings in a tax on cottages in Cornwall that are owned by British people.

2008: Parliament “clarifies” the 1987 law to make it clear that the tax introduced always included hotels in Mongolia that had ever been visited by British people.

Bizarre? Yes.
How long can they get away with this? Maybe a couple of weeks, certainly less time than it takes to get to ECHR.

In deciding whether there is a case for a judicial review, a judge will only look at what it presented to him. By that, I mean that the judge it unlikely to delve deeply into the facts of the case. (there would be little point in a hearing otherwise). HMRC will have submitted their defence along the “Clarification” lines and, frankly, this is an intensely technical subject.

If there is evidence; now was not the time to sit on it. Not sure why enough amunition was not exposed at this stage to at least ensure the JR was heard.....

I take paragraph “2” of the first page of Montpelier’s letter to mean that no information was offered to the judge that HMRC had accepted the use of the scheme by others, made deals with others etc. Anyone who is in this position should get in touch with Montpelier as this will demonstrate that even HMRC know that this is not a “Clarification”.

Regarding, brown envelopes etc. lets not forget that there is significant amounts of money riding on this and that the Administrative Courts are merely another branch of Gov/ Parliament... putting all this together coupled with current economic climate, the maths is not difficult and 'lord' only knows what dialogue is going on behind closed doors which can potentially influence decision........

The money that is riding on this is money that HMRC have not collected. Until the closure notices were issued, there was no “total” of how much extra they could collect. This is not a refund tax paid situation.

It is worth noting that the retrospection used in 1987 was ONLY intended to stop those who had already paid tax from claiming it back, not to stop those who had so arrange their affairs and claimed the exemption from availing of that exemption.

The courts, in the past, have been independent of Parliament and the government. It would not be in their interest to subjugate themselves in the manner suggested. If they did, ultimately the ECHR would strike out their judgement.

This is barely the start of this process. There is a lot more to come:

An oral appeal to the High Court
Possibly, an appear to the Appeals Court
Judicial Review hearing
Judgement
Appeal if necessary
Appeal to the House of Lords

European Court of Human Rights
Appeals, Judgements, and Appeals there

Then, whatever the outcome of the above (assuming “the bully” isn’t tired by then) there will be the commissioner stage: Hearings at Special Commissioners – one for every scheme users of HMRC are being difficult about it. Evidence of all the protocols and procedures that HMRC have broken. And on and on…

HMRC would do well to remember that we’re British, and we don’t suffer injustice for long.

[bombaycat]

I think it's important not to feel disheartened after reading the contents of the newsletter...

Here, here!! This thing requires a lot of stamina and moral fibre - I'm sure we have it if we keep supporting each other, we have to counter the tactics of slow attrition with our own steadfast refusal to be bullied into submission. Remember that with any struggle the winner only wins when the loser submits - the decision is actually made by the losing side - let's not go there yet.

Having said that the snow today has defeated me getting from east anglia to london - luckily don't start new job until next week - would have been cold and a bit dodgy on the old bike!

[BrilloPad]

There's always the ECHR if the UK Courts won't see sense. Another scheme provided (not sure I am allowed to name) has gone straight to the ECHR bypassing the JR process.

Interesting this stuff about brown envelopes, especially when so many peers could face jail for cash for questions

Best not to name though I can sure most can guess. Interesting though that for ECHR you get 6 months to put it in so its quite recent news. I wonder when they will get a hearing?

In the UK it is supposed to be 3 months to be heard but we now know it often takes 6-9 months.....

[Toocan]

HMRC are responsible for 50% of all FRAUD in government departments.

Could this by why they don’t answer the phone?

According to a report in last weekend's Observer, nine staff at HMRC have been dismissed with criminal convictions for embezzling the department of a record £2.3 million pounds in the last year. This was revealed following a request under the Freedom of Information act, which also confirmed a further five staff (Who? Mr Who?) are still under internal investigation. New evidence shows fraud at the department has risen by a third over the past year.

Newly appointed HMRC financial secretary Stephen Timms has yet to issue a statement over the staff dismissals, one of which relates to false expenses claims of over £220,000 for “holidays.”

Conservative shadow exchequer secretary David Gauke demanded a full departmental investigation, but a spokesperson for HMRC’s Law Enforcement department said the party’s stance was “alarmist,” attributing the problem to “a few bad eggs”.

The spokesperson went on to say that at least in one instance the fraud involved a senior member of staff but that undisclosed preventative measures had since been put in place.

The exact details of the various fraud cases remains unknown, however David Gauke said that coupled with the missing data scandal, it amounts to a damning, double blow for confidence in the department
“HMRC have access to huge amounts of very confidential information and the potential to misuse this is huge,” he said. “The fact that fraud in the department has risen 30% in the last year and they are saying we are alarmist doesn’t suggest they are taking this seriously enough.”

Forensic accounting specialist David Winch called for perspective on the matter.
“The increased number of prosecutions may be a reflection of increased dishonesty by employees, but could equally well be a reflection of better detection of irregularities,” he said.

Nevertheless, Winch also pointed out that HMRC is reluctant to give the convictions of its own staff the same publicity as when it prosecutes members of the public. A glance at the website shows this to be the case.
HMRC employs over 80,000 people and was recently found responsible for over 50% of fraud across the 24 government departments.

[Toocan]

Must try harder: Treasury’s damning evaluation on Dave Hartnett and co

Credit to Accounting Web for the following (and my previous) post:

This week saw the publication of the Treasury Committee’s report into administration and expenditure of the government’s departments, and the panel had no kind words to say about the matter.

Trouble at the top

To recap, chief executive Paul Gray “resigned” over the data loss scandal in November 2007. In reality, the department put him on gardening leave, with a full salary, until he reached early retirement age (the CEO picked up a "lump sum payment at date of leaving of £137,591 and monthly payments totalling £49,292 until attaining the age of 60 on 2 August 2008”, HMRC admitted to the Treasury, an arrangement that Dave Hartnett described to the committee as “nothing special”).

Stuart Cruickshank, the chief financial officer, is now officially considered to have left his post in March that year. This is at odds with the date reported by the media, which believed Cruickshank’s departure to be in January 2008. But then, if Gray’s leaving is a bit of a foggy matter, Cruickshank’s exit was “even less clear”, the committee found.

According to Hartnett, Cruickshank “had not had not indicated clearly when he wanted to go and we believed firmly at that time that we needed a chief finance officer who was absolutely committed to HMRC, not one who was planning another career, having indicated clearly he wanted to go”.

The committee had trouble figuring out why, if Cruickshank left voluntarily for a career in the private sector, HMRC had to enter into a negotiated settlement that saw him pick up a £88,125 cash payment as well as £22,000 of benefits in kind, for loss of office. Pushed for some sort of meaningful answer, HMRC said the pay-out was vital to provide continuity of management. Yet the fact they replaced him (and not immediately, either) with a temporary contractor, Philip Moore, rather defeats that argument.

The committee said they found HMRC’s explanations “wholly inadequate”, and that they were “further unconvinced” that Cruickshank’s golden goodbye “represents good value for the taxpayer”. Good to see that somebody, somewhere in the corridors of power has noticed what’s been going on at C-level inside HMRC. Whether anything will come of it remains to be seen.

Equally, the committee was rather displeased that a time of massive uncertainty amongst HMRC’s workforce, the department took 12 months to replace its chief executive. To recap, Hartnett became acting chief executive and chairman once Gray left the post; Mike Clasper became chairman on 1 August last year and Leslie Strathie was appointed chief executive two months later. Hartnett, smooth operator that he is, invented a new position for himself as “permanent secretary for tax”. And as Clasper admitted, the trio have still to appoint a new head of HR and a new head of finance.

When asked exactly what was the point of the new three musketeers structure, Clasper said “I will lead the board… Strathie will have all of the top team reporting to her… Hartnett will take a role right across the department.”

If this doesn’t make much sense to you, it didn’t to the committee either.

“We believe that having a 'permanent secretary for tax' alongside the chief executive and chairman of HMRC may obscure clear lines of accountability,” it said. “We recommend that HMRC publish and widely circulate clear information on the respective responsibilities of its senior management team, including responsibility for data management.”

Might be an idea, mightn’t it? That said, Cerberus thinks that the tax triumvirate will have to scratch their heads pretty hard if they are to come up with any convincing reasons other than self-advancement, political intrigue and levitating levels of self-confidence.

Trouble at the bottom

The Treasury also picked up on the department’s apocalyptic morale problems. While HMRC have stopped publicising the results of their staff survey, even the NAO noticed last July that morale “remains at low ebb”. That last survey that HMRC bothered to publicise showed that 70% of staff disagreed with the statement "change is managed well in this department" with a further 78% saying they thought the Department was changing for the worse.

“We have made some mistakes, over time, in introducing some techniques which improve processing”, Hartnett graciously conceded. “We need people to have a sense of direction. We are in the process of doing that.”

The committee were obviously none too eager to take this for granted. Efforts by senior management at HMRC to address the issue will now see continued monitoring by the committee, which is still currently seeking an explanation of how exactly the department plans to go about it.

Ongoing office closures, and specifically the way in which HMRC have been managing those closures, cannot have helped. Clasper continued to insist he had “considerable evidence” that smaller offices did not deliver value for money. Why then, the committee wondered, had such evidence not been supplied to anyone outside HMRC’s senior management? The Public and Commercial Services Union, which represents many HMRC staff, had been asking to see these cost savings for months. Perhaps the Treasury’s recommendation that these figures be publicised will pressure the errant department into the limelight, but stronger words might be needed first.

Data security continued to be a sticking point. The department had only implemented 13 of Kieran Poynter’s 45 recommendations by June last year. Incidentally, do you remember the junior civil servant who was speculatively blamed for the whole mess by front-bench politicians and HMRC directors alike? Well, despite being castigated in the national press by his own employer, and unfairly threatened with a host of disciplinary procedures, and whisked away to a hotel so he couldn’t talk to the press, Cerberus hears that the 25 year-old is still working happily away in privacy. Quite why he would continue to labour for an organisation that has treated him so badly is beyond
Cerberus, but good luck to the chap.

Fraud is a rising concern too, having previously been flagged up by the Comptroller and Auditor General. AccountingWeb and others have already reported on disclosed fraud levels at HMRC, and the department’s lacklustre response (see here). Mary Aiston, director of governance and security at HMRC, said the department was pursuing its missing millions with “the full rigour of the law”, and that “quite a big programme” of prevention was in place, but unsurprisingly the committee did not see fit to take these claims at face value.

“We are extremely concerned by the level of fraud within HMRC,” the panel said. “We will continue to monitor the steps taken to improve controls, and to assist us in this we recommend a disclosure of immediate past known fraud levels to provide a benchmark.

How long, if ever, it takes HMRC to get round to this remains to be seen.

Trouble all over

The committee may have taken a hard look at management and workforce, but long-term HMRC watchers will know this still leaves them with plenty of other material to work with.

One sticking point was the automatic £100 penalty for paper submissions after 31 October, when taxpayers filing online had until 31 January. Wasn’t this unfair on citizens who didn’t have access to the internet, such as the elderly?

“We are heavily engaged with the representative bodies for more vulnerable people and we have picked up no intelligence yet of any significant concern that people are not able to cope,” Hartnett suggested.

This didn’t cut much ice with the committee either, which demanded that demographic analysis of those facing the £100 penalty should be made publicly available – and if that analysis had not yet been undertaken (heaven forbid) – that the government commission it “as a matter of urgency”.

The committee also found that HMRC’s PFI contractors had been delivering substandard outputs, notably in the areas of IT and building maintenance. In terms of health and safety, the accident rate at HMRC offices went up 30% last year, although Hartnett said this figure was “not material”. He also hinted that previous management was partially to blame for being insufficiently demanding. The committee asked for contractor performance to be set against agreed targets and published within the department’s annual reports, but we shall see.

IT remains a nightmare. A tech error saw £12.5 million of child benefits not sent out last year, with a further 80,000 children not receiving the payments due to them. The 31 January online filing crash was also brought up. Hartnett claimed to have been having some heated discussions with contractors about compensation, but, as the committee pointed out, compensation considerations should have been nailed into the contract when PFI was brought aboard.

The Treasury team also looked at the number of “open” tax cases. An “open” tax cases occurs when the computer system can’t cope and human, clerical intervention is required. The number of “open” tax cases at the HMRC’s year end? A whopping 16.2 million, a figure well in excess of the generous 10.5 million target the department set itself.

“People change their jobs more often these days,” was Clasper’s explanation. A new IT system was sorely needed. But that IT system is already one year overdue, and whose fault is that?

All in all, even though it was couched in genteel committee-speak, the Treasury had a bucket load of criticism to dish out about the way the 100,000-strong department is being run. It remains to be seen whether anybody has the political will, or ability, to tame the beast, but if this ineptness continues HMRC will be sleepwalking into privatisation once the Etonians get in.

[poppy01]

HMRC would do well to remember that we’re British, and we don’t suffer injustice for long.

Thanks for this and other posts like it. I am by nature a pessimist and took the weekend news very badly, but this has given me heart.

If we keep the faith and stick together I'm sure natural justice will prevail. I don't believe the country I love and grew up in will allow this to happen. I also think HMRC would do well to realise just how bloody minded the British can be. (I include KiwinLondon in that). We are not going to stiffed like this.

Once again thanks to all my anonymous friends.