Tag Archives: hmrc

HMRC is broken

One of my concerns about the Liberal Democrats is that we resemble myself as student. We are rather better at spending money than working out where its coming from. Although we made some sensible tax proposals in our manifesto, we still ended relying upon the need to reduce tax avoidance and evasion and ‘resource HMRC accordingly’.

I have few problems with this position. Not least is the fact that every opposition party in my lifetime has argued it. Our record in coalition on avoidance was excellent; we forced through the General Anti Avoidance Rule (GAAR) which Labour had resisted. My perception is that this has reduced avoidance – certainly a lot of the tax boutiques that devised the more outrageous schemes have seen their businesses decline.

My real problem is that it is not just the complex stuff like arguing GAAR cases that HMRC has problems with and needs resourcing, but the basics. I currently work as a tax advisor dealing with the complexities of voluntary sector VAT, but previously worked in HMRC and its predecessor both in a local office and then for VAT Policy. I am still very much in contact with staff at all levels in HMRC. Unfortunately in a 40 year career I have never known HMRC in such a mess and as incapable of dealing with even the basics. I mainly cover VAT as its my area, but direct tax colleagues make similar points.

With VAT there are huge service failings. The public enquiry line takes hours to get through. I have clients waiting over a year for answers on basic VAT registration queries and as for complex questions such as approval for special VAT recovery methods, you can be talking 4 years – or never. In some cases the HMRC response to service delivery problems has been dramatic. New VAT registration forms causing a spike in calls to the registration helpline – answer: shut the helpline. In direct tax you should get your self assessment return in early but resource constraints mean the helpline only opens nearer the filing deadline. Is it really surprising that taxpayers make mistakes or take a lackadaisical approach to their tax compliance when they receive a service like this?

But the problem is not just administrative failure. There has been a reduction in the standard of technical knowledge at both an outfield and policy level.  Many officers do not understand the basics of the tax. This is clearly evidenced from some of the bizarre arguments that have got as far as the VAT Tribunal before being summarily dismissed. These are arguments that theoretically have gone through local reviews and HMRC Solicitors Office before reaching the Court.

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17 January 2023 – today’s press releases

  • ONS pay figures: Chancellors have fanned the flames of this cost of living crisis
  • Billions in taxes lost as HMRC moves staff to Brexit and Covid fraud

ONS pay figures: Chancellors have fanned the flames of this cost of living crisis

Responding to this morning’s latest ONS earnings and unemployment figures, Liberal Democrat Treasury spokesperson Sarah Olney said:

Successive Conservative Chancellors have fanned the flames of this cost of living crisis. Their deeply shameful tax hikes and failure to grow the economy has lead to Britain’s pay being squeezed despite unbearably high bills. It has been an economic clown show from this Conservative

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The Tories’ Decision on IR35 Reform Will Impact More People Than You Think

Unfortunately, despite the Lib Dem call for the IR35 reform to be scrapped, the Government has announced it will go ahead with the reform from April 2021.

Before I get onto the effects it will have on the Self-Employed, let us go over a little background. In the 2019 General Election, the Liberal Democrats were the first to address the IR35 reform, saying they would review it. Ed Davey said it would “undermine the flexibility of self-employed people”. They were followed by Labour, who pledged to halt the IR35 reforms, then went back on it, then changed their minds again. This is only one part of Labour’s confusing relationship with IR35 as it was the idea of Gordon Brown in the first place! The Conservatives, “the party of business”, worried contractors with their silence over the issue until Sajid Javid announced that if the Tories retained their Government, they would review the IR35 reform, it was more a last-minute vote grab than a policy.

Anyway, back to now, what effects will this reform have on self-employed? The aspect of the IR35 reforms with the biggest impact has been the responsibility of employment status being on the client/employer/agent rather than what was previously the responsibility of the contractor/employee to evidence.

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24 September 2019 – today’s press releases

Chancellor must answer for black hole in the country’s finances

Responding to news that part of Corporation Tax revenue has been double-counted by HMRC, revising down the take for 2018-2019 by more than £4bn, Liberal Democrat shadow Chancellor Ed Davey said:

Today’s data from HMRC reveals a concerning black hole in the country’s public finances. Since this Conservative Government took office, an astounding £12.86 billion was mistakenly accounted for in the exchequer’s books – money that was never actually there. This is a potentially dangerous oversight for which the Conservative Chancellor is responsible.

Moreover, this highlights the Government’s irresponsibility in slashing corporation tax

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Ed Davey’s speech in the Loan Charge debate: We will not stop until this is put right

Before the roof of the Commons chamber started leaking this week (something you couldn’t make up), Ed Davey managed to make his speech in the backbench business debate calling on the Government to stop pursuing people for the Loan Charge, a retrospective income tax enforcement of a  scheme that was legal at the time.

Here’s his speech in full including interventions.

I apologise to the right hon. Member for Haltemprice and Howden (Mr Davis) for being the chair of an all-party group that has produced such a reasonable report. We did it because we wanted to be constructive and to bring this House together. I want to draw attention to two points: first, the fact that this issue has brought the House together, and I will talk a little bit about that because it is in the power of this House to stop the Executive on this matter; and secondly, the nature of the retrospection, which is the issue that has caused me, as well as my constituents with such cases, to be so passionate about this issue.

First, on cross-party unity, I pay tribute to the hon. Member for Aberdeen South (Ross Thomson), a vice-chair, who opened the debate, and the hon. Member for Brentford and Isleworth (Ruth Cadbury) and all the other members of the all-party group, which represents six parties in this House. I thank all Members who spoke on Report of the Finance (No. 3) Bill, when we passed the amendment—quite unusually—because we had cross-party support from every side and political persuasion both between and within parties.

There is a reason why we got that support. It is because our constituents have come to us and we have seen the damage this is doing to their lives—real lives—but also because key principles of democracy are at stake: parliamentary sovereignty, if we can forget the Brexit debate for a minute, with respect to holding the Executive properly to account for the way they tax our constituents, and the rule of law. Those issues have brought this House together, and today we need to continue with that message and make it clear to the Minister and the Government that we are not going away until this is put right.

Stephen Lloyd

When my right hon. Friend opened, he spoke about cross-party support. As he knows, since I started early-day motion 1239, whenever it was—nine or 10 months ago—the cross-party support has been astonishing: 148 MPs from all parties, including many Conservative Members, have now supported it because they really do have concerns about the retrospectiveness and the fairness. Does my right hon. Friend agree that Parliament is really coming together and saying, “There is a real problem and a real challenge here. Treasury, please look at it”?

Ed Davey

I strongly agree with my hon. Friend and I thank him for the work he did in leading that EDM. The cross-party nature and depth of support should make the Minister think today. People have been looking at the way this House operates more closely than they usually do. They need to know that when this House comes together, the Government listen. It is our constitutional job to make the Government listen. When there is that level of support and they do not listen, that is an outrage to this House.

Jim Cunningham

I agree with the right hon. Gentleman: it is about time that the Government listened. Regardless of the issue, retrospective legislation can be a dangerous thing. In some instances it might be justifiable, but by and large and in principle, it is a very dangerous thing. The other point that has emerged from this debate is that those who encouraged people in their employment to get involved in such schemes should be the ones to pay up, not the victim. Does he not agree?

Ed Davey

I agree with the hon. Gentleman. Let me take his point on retrospection into the substance of my speech.

Everybody has paid tribute to the Minister and I join in that, but I urge him to look at the retrospection issue. The all-party group has spoken to tax professionals and has read a lot of material. There is a debate about whether aspects of this are retrospective or not, and about where the retrospection lies. One group has been hit by the loan charge where the retrospective nature has been proven beyond doubt: taxpayers who have had their tax returned to the Treasury with DOTAS added—sometimes even without DOTAS added—and who have come clean on everything they have been doing. HMRC has accepted that and has not opened an inquiry. Their cases have been closed and time has passed. Under section 9 of the Taxes Management Act 1970, we have been giving taxpayers in that situation total protection from HMRC coming back to them. That has been true for decades. Indeed, we have signed international conventions to say that that is the way individuals should be treated. Yet here we are, going back on that. To be clear to the Minister, all the tax professionals we talked to believe that for closed cases, that was a transgression. Indeed, I asked them if they could find any example on the statute book ever of a Government passing a law to override taxpayer protections and they could not.

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Vince: I’m not stepping down (but…)

Vince was on the Today programme this morning mainly to talk about the revelations that HMRC advise against giving honours to tax avoiding celebrities – something that he thought was right in principle.

However, he was also asked about his ideas for reforming the party and, specifically, how much longer he would be leader.

I’m not stepping down. I’m making a speech next week putting forward some reforms to the way the party functions.

So far, so good.

But then he was asked a direct question about whether he would be fighting the next election.

Yes, if there is one in the near future.

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Let’s all defer our tax liability for a year, shall we?

So we have another instance of a large corporation deciding how much tax it’s going to pay. Why does the Government let companies like Facebook, Starbucks, Amazon and Google get away with this?

It’s another example of where being rich and powerful gets you special treatment. The BBC reported:

After heavy criticism that it was avoiding tax, the BBC can reveal that profits from the majority of Facebook’s advertising revenue initiated in Britain will now be taxed in the UK.

It will no longer route sales through Ireland for its largest advertisers.

That includes major businesses such as Tesco, Sainsbury’s, consumer goods firm Unilever and advertising giant WPP.

Smaller business sales where advertising is booked online – with little or no Facebook staff intervention – will still be routed through Ireland, which will remain the company’s international headquarters.

I am told the change will mean that Facebook will account for substantially more revenue in the UK and will therefore pay a higher level of corporation tax on the profits it makes here.

Corporation tax is levied at 20% on the profits a business makes.

The changes will be put in place in April and Facebook’s first, higher, tax bill, will be paid in 2017.

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Stuff that you might find useful…

Here at Liberal Democrat Voice, we are always thinking of new things to bring to our readers. Opinion, news, ideas, our editorial team and volunteer authors bring all this to you and more. However, there is plenty of information out there that campaigners, and anyone who takes an interest, might find useful. So, here’s a miscellany of announcements you might have missed;

HM Revenue & Customs (HMRC) have recently announced a new telephone helpline for the recently bereaved, 0845 300 0627, open 8 a.m. to 8 p.m., Monday to Friday, and 8 …

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Opinion: A Mansion Tax to replace higher rate tax?

Mansion tax is not Land Value Tax, but it is a place to start down the road to shifting a significant part of the tax base from income to wealth.

There seems little argument that mansion tax would be a more effective method of taxing non-resident Non-Doms who acquired over 60% of the properties valued at over £2m in recent times.

The inequalities in wealth in the UK far outstrip inequalities in income. The top 10% of households own more wealth than the rest put together: 0.3 per cent of Britain’s population owns 69 per cent of its land.

The HMRC report …

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Is there a Liberal Democrat stance on HM Revenue & Customs?

The news that the Public Accounts Committee of the House of Commons has condemned the way in which HM Revenue & Customs staff have handled their dealings with the United Kingdom’s largest corporate taxpayers is merely the latest of a series of PR disasters for a Government department that now raises nearly £500 billion for the public purse annually.

Accusations that Vodafone was allowed to avoid more than £1 billion in tax, and that Goldman Sachs was erroneously allowed to pay an enquiry settlement without interest amounting to £10 million, are alleged to be just the tip of the iceberg, with …

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Opinion: low-paying companies should contribute to the welfare pot

In these straitened times it is very tempting to look at trying to reduce the benefits bill. A lot of attention is focussed on benefits paid to people who – for whatever reason – are out of work. However, I think we should also look at the benefits paid to people in work and whether it is right that they should be claiming benefits at all.

Fear not, this is not a proposal likely to be supported by the Daily Telegraph. It is more about attacking the principle of low pay. The coalition government – thanks to …

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