Reply to: Changing the rules - again

[webberg]

good article and a chance to comment

Tax community slams retrospective tax law change | AccountingWEB

Well worth reading and responding to.

[BrilloPad]

So are they unaccountable because they choose to be?

Because MPs let them. As long as the money comes in, MPs do not care about suicides.

To bring HMRC to heel will require revolution.

[webberg]

So let me understand this...

At the moment, HMRC ...

I've got to say that whilst I have found your contributions to these forums to be accurate, interesting and even occasionally amusing, I would regard the above as viewing things through rose tinted glasses.

We can point to perhaps half a dozen cases recently where an HMRC officer tells as Tribunal - as part of their evidence - that so and so must have happened, because it always does. When put to proof however, there is none.

For me this latest attempt to "do as we please rather than as the law requires" is a get out of jail free card for HMRC who, struggling to "prove" anything, now want to blame the computer.

really?

You don't think that is HMRC making law and suiting themselves?

Really?

[DealorNoDeal]

To be honest, I'd trust HMRC's computer to do the right thing far more than I'd trust their compliance officers.

Give me the computer any day!

[Iliketax]

They could - arguably should - have built into the law AT THE TIME THIS PROCESS STARTED the legislation required to recognise that certain functions - important functions that have a real cost - were to be via machine. Perhaps that law should also have permitted challenge.

So let me understand this...

At the moment, HMRC sends you a letter asking you to complete a tax return. This is prepared by a computer.

If you claim you didn't get the letter you can, if you want to, go to a tax tribunal and say you didn't get a letter. The tax tribunal will then decide whether, on the balance of probability, you got the letter. HMRC will say that they have a pretty good computer and will show records to say it was sent to a particular address on a particular date. You can say that was not your address and that you moved three years ago and, by the way, you told HMRC your new address (and the tribunal will accept this or not).

Or you can say that the system must be wrong, the letter was not sent dispite the records saying it was. In that case, if they get their act together, HMRC can provide reliable evidence of their system and the tribunal will use this and your arguments to decide whether the letter was sent. Or HMRC can say that they have some sort of "understanding" with the FTT about this sort of thing and ask the tribunal not to worry its pretty little head about evidence and stuff like that. In which case the tribunal will have a little laugh and then say there is no robust evidence to show that the letter was sent.

I thought this proposed change was to do away with the need to show evidence of system every time. It doesn't stop people saying that they never received the notice to file. The proposal is just to prevent the need for HMRC to show every tribunal their evidence of system (not evidence of what the records of the system says in your case as that will still be needed). And without that, you can imagine a situation where everytime this issue comes up it will be raised (since it's worth the shot, HMRC may go off script?) and there will be a twenty minute discussion about what evidence there is that the system sends letters and updates records to say it has sent a letter.

The proposal also looks like it is limited to a few key systems too. These look like they are quite common ones that seem to be regularly used. It does not cover all systems. So it doesn't for example, include the opening of an enquiry.

As far democratic scrutiny etc, this is just a proposal at the moment. I'm not aware of any published draft legislation yet. When it is published then people will scrutinise it. People (Law Society, CIOT, ICAEW, anyone who fancies it etc) will brief MPs and MPs will be able to debate it, amend it, get rid of it or accept it. If enough of them accept it it becomes the law. If they want, they could change it to make it a prospective only, they can do so. Fine by me, I have no skin in this game.

[webberg]

We've taken this argument to MPs and they say one of the following:

We really don't believe that HMRC would lie to us.

We cannot challenge economic policy by saying HMRC is out of control.

So long as the money rolls in, we cannot complain.

HMRC are taking proper action against tax avoiders.


I'll be honest, after three years of that and getting nowhere we became convinced that we needed to spend our energy on our clients and we switched focus to litigation.

Even so, instances like this remind me of just how far an organisation that I was proud to have worked for, has fallen.

It seems that whoever is in charge of HMRC and their closest policy makers have left their morals and humanity behind them in an effort to ... what?

Satisfy some political policy or instruction? No. The MPs tell us that HMRC has to be fair and take reasonable care and are "compassionate".

Nope. Either the MPs are lying or HMRC is not understanding that they cannot "win" regardless of the cost. That is not how a civilised society wants its tax collectors to behave.

So are they unaccountable because they choose to be?

[lowpaidworker]

This announcement and the promise of legislation to back it, is unfortunately a symptom of a decline in HMRC in pretty much every way imaginable. We will see worse than this before Government wakes up to the fact that HMRC is dangerously out of control and unaccountable and has some sort of root and branch review of that department of Government.

Sadly for all of us, HMG chooses, via unquestioning MP's willing to believe the lies, to ignore the fact that their revenue gathering branch has lost all respect and is instead feared.

Taxation should be based on a covenant. We all want to live in a society that has standards and codes. We all accept that providing those standards costs money. We all accept that HMRC is a vehicle collecting that money. We are all entitled to believe that the rules HMG enacts to limit HMRC's ability to take your money are respected by all parties.

In my view, this sort of activity from HMRC is breaching that covenant.

This is HMRC saying that even though they got it wrong and either did not understand the law or worse - chose to ignore it - they can still operate without restriction.

This is HMRC saying that the protection they have from HMG is so strong that they are unaccountable.

We should therefore be terrified of this situation because seemingly the Judiciary is incapable of tempering this attitude (because HMRC will simply persuade the legislators to write laws reversing any case they lose) and the Executive is largely complicit.

An extreme example of this can be seen in Jesse Norman's response to questioning over the loan charge. It was put to him that people had committed suicide over the loan charge. He argues that it may be 3 or 4 rather than the 7 claimed - what! He also argues that the expected tax to be collected - a figure that has had NO PARLIAMENTARY SCRUTINY AND NO HMRC EXPLANATION worth the name or capable of objective audit - justifies the mental torment of the victims and their families. WHAT!

I'm not an advocate of revolution. I have always considered that ultimately the rule of law will prevail and that HMRC would be forced to obey the law.

My faith in that is badly damaged.

That statement above should make its was to APPG. Surely they can't just pass laws like this. Someone or some committee must have some sort of scrutiny. If we are saying this is MPs job but they don't understand it then they need to understand it. Someone should just explain it and what it will mean to pass this law.

Everyone and I mean everyone has to be accountable surely ?

[webberg]

This announcement and the promise of legislation to back it, is unfortunately a symptom of a decline in HMRC in pretty much every way imaginable. We will see worse than this before Government wakes up to the fact that HMRC is dangerously out of control and unaccountable and has some sort of root and branch review of that department of Government.

Sadly for all of us, HMG chooses, via unquestioning MP's willing to believe the lies, to ignore the fact that their revenue gathering branch has lost all respect and is instead feared.

Taxation should be based on a covenant. We all want to live in a society that has standards and codes. We all accept that providing those standards costs money. We all accept that HMRC is a vehicle collecting that money. We are all entitled to believe that the rules HMG enacts to limit HMRC's ability to take your money are respected by all parties.

In my view, this sort of activity from HMRC is breaching that covenant.

This is HMRC saying that even though they got it wrong and either did not understand the law or worse - chose to ignore it - they can still operate without restriction.

This is HMRC saying that the protection they have from HMG is so strong that they are unaccountable.

We should therefore be terrified of this situation because seemingly the Judiciary is incapable of tempering this attitude (because HMRC will simply persuade the legislators to write laws reversing any case they lose) and the Executive is largely complicit.

An extreme example of this can be seen in Jesse Norman's response to questioning over the loan charge. It was put to him that people had committed suicide over the loan charge. He argues that it may be 3 or 4 rather than the 7 claimed - what! He also argues that the expected tax to be collected - a figure that has had NO PARLIAMENTARY SCRUTINY AND NO HMRC EXPLANATION worth the name or capable of objective audit - justifies the mental torment of the victims and their families. WHAT!

I'm not an advocate of revolution. I have always considered that ultimately the rule of law will prevail and that HMRC would be forced to obey the law.

My faith in that is badly damaged.

[lowpaidworker]

I saw something about this new law posted by on twitter by Mr Gordon last night. Has this actually been made law or is this what is being put up in front of MPs

So I guess I mean can this be challenged.

For a humble person like me it says HMRC are suddenly realising they have been acting shall we say a little naughty. By passing this law is says you cannot take us or any of the senior HMRC people to court. If I were a little more pragmatic it says heck we could be in trouble here lets start protecting ourselves as we are in deep here.

[lowpaidworker]

Taxpayers and their advisers look at the law and if honest will attempt to follow the law. They can see only what the law says and how this is interpreted by the Courts.

The law clearly said that HMRC had to follow certain steps in order to properly open enquiries etc.

HMRC decided that some form of automation was required if they were to "do more with less".

They could - arguably should - have built into the law AT THE TIME THIS PROCESS STARTED the legislation required to recognise that certain functions - important functions that have a real cost - were to be via machine. Perhaps that law should also have permitted challenge.

They did not. They were arrogant enough to think that they could step outside the law and apply processes and decisions that were in the eyes of many, more about collecting money than being fair or obeying the laws that taxpayers and advisers were obliged to.

Then the Courts recognised that HMRC was operating outside the law and collecting money unlawfully.

HMRC response?

Retrospective law.

If one party is obeying the law and one is ignoring it, knowing that they can persuade Parliament to make retrospective changes, I'll be bold and say that to me and many advisers and almost all taxpayers, that is an unbalanced equation.

So much for democracy.

[webberg]

How so?

Taxpayers and their advisers look at the law and if honest will attempt to follow the law. They can see only what the law says and how this is interpreted by the Courts.

The law clearly said that HMRC had to follow certain steps in order to properly open enquiries etc.

HMRC decided that some form of automation was required if they were to "do more with less".

They could - arguably should - have built into the law AT THE TIME THIS PROCESS STARTED the legislation required to recognise that certain functions - important functions that have a real cost - were to be via machine. Perhaps that law should also have permitted challenge.

They did not. They were arrogant enough to think that they could step outside the law and apply processes and decisions that were in the eyes of many, more about collecting money than being fair or obeying the laws that taxpayers and advisers were obliged to.

Then the Courts recognised that HMRC was operating outside the law and collecting money unlawfully.

HMRC response?

Retrospective law.

If one party is obeying the law and one is ignoring it, knowing that they can persuade Parliament to make retrospective changes, I'll be bold and say that to me and many advisers and almost all taxpayers, that is an unbalanced equation.

[cojak]

"We have done nothing wrong in the past, we will do nothing wrong in the future."

I guess that this makes HMRC untouchable??

[BrilloPad]

In 2008 my MPs was one of those on the finance committee that approved BN66/S58. I went to see him. He had no idea what HMRC were putting in front of him.

Nothing changes. Still tail wagging the dog.

If you vote against HMRC changes(finance act) you vote down the government. So changing HMRC will need revolution.

[Iliketax]

The above however has so unbalanced the equation

How so?

[Paralytic]

This paragraph is beautifully ironic.

This measure will have effect both prospectively and retrospectively. There will be no adverse impacts on taxpayers.