Tag Archives: vat

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.