UK'S LARGEST INDEPENDENT TAX WEBSITE
Are you a member ?
|
Home > Tax News > Personal Taxes
Personal Taxes
HMRC’s High Net Worth Unit Brings in £1 Billion Print E-mail
Tax News - Personal Taxes
Written by HM Revenue & Customs   
Thursday, 17 July 2014 00:00

HM Revenue and Customs’ High Net Worth Unit – a specialist division which deals with the tax affairs of the UK’s wealthiest individuals – has brought in £1 billion in compliance yield.

The unit, which was set up in 2009, deals with the tax affairs of the 6,200 wealthiest individual customers of HMRC – those with a net worth of £20 million or more.

Customers are assigned a relationship manager who has detailed oversight and develops a close understanding of the tax risks among these wealthy individuals. 

This maximises voluntary compliance of the majority of customers and enables HMRC to effectively challenge those who do not play by the rules. The High Net Worth Unit ensures good customer engagement with a focus on influencing behaviour to improve voluntary compliance.  

The compliance figure was revealed by David Gauke, Financial Secretary to the Treasury, as he spoke at HMRC’s annual stakeholder conference.

David Gauke said: 

“HMRC vigorously polices the rules ensuring it collects the tax that is due, and takes tough action against the minority who seek to avoid their responsibilities. This approach is clearly working as HMRC’s High Net Worth Unit has delivered £1 billion in compliance yield. This is against targets totaling £894 million and is further evidence that the government’s investment of nearly £1 billion in HMRC to tackle avoidance, evasion and fraud is paying off.”

Since 2009 the compliance brought in by the High Net Worth Unit has increased year on year to £268 million in 2013-14, a 20 per cent increase on the year before.

High Net Worth Unit compliance yield:

Year

Yield

Target

2013-14

£268 million

£210 million

2012-13

£222 million

£200 million

2011-12

£200 million

£195 million

2010-11

£162 million

£153 million

2009-10

£85 million

£80 million

 
PAYE Tax Codes: HMRC Proposes to Give Itself a Breather – at Taxpayer’s Expense… Print E-mail
Tax News - Personal Taxes
Written by Lee Sharpe   
Friday, 11 July 2014 00:00

“Put yourself in the taxpayer’s shoes”, Adjudicator tells HMRC. Now, how do you feel if HMRC cuts your tax code and takes 30 days to tell you..?

Well, it never rains but it pours. Yesterday we were busy with the Adjudicator’s report but we did not overlook something that HMRC published a couple of days ago, innocuously entitled: “Maintaining Customer Service Levels in Peak Periods – Draft Legislation”

At this stage, you might suppose that this was about HMRC raising its game to ensure that the taxpayer was provided with an adequate level of service – which would be most welcome. Unfortunately, you’d be wrong. This draft legislation is not about maintaining (acceptable) service levels at all, but rather reducing the standard to a level which HMRC thinks it might be able to cope with.

Coding Notices are one of the key ingredients of PAYE: it is HMRC telling the employer how much / what rate of tax to apply to an employee’s salary, or pensioner’s pension. It is the only warning a taxpayer gets that his or her take home pay is about to change.

HMRC proposes no longer to send an updated Coding Notice to the employee or pensioner, where HMRC thinks it will not affect the taxpayer’s net salary or pension. While this seems fairly tame, and to an extent understandable, the chances seem quite high that this will result in someone getting far less income than they expected, without any explanation. PAYE and RTI are hardly error-free.

Perhaps more worryingly, in terms of the number of taxpayers likely to be adversely affected, is the proposal that HMRC will send a revised tax code to the employer or pension provider, and give itself up to 30 days to tell the taxpayer. Bearing in mind that the employer will probably be advised electronically, but the taxpayer will be notified by 2nd class post via HMRC’s facilities – which are already notoriously slow – it seems quite likely that this will stretch the time to 40 days.

Which means that there could easily be two monthly salary payments, or 5 weekly wage payments, before the employee has some explanation as to why his or her take home pay has fallen through the floor.

Why HMRC thinks that this will reduce telephone enquiries is a mystery. Practically speaking, an employee concerned with a reduction in take home pay is likely to ask his or her employer first. Employers only receive the tax code itself, rather than the full explanation sent to an employee, so they will normally be unable to help, even if they want to, or have the time.

If the change in code results in only a small change in take-home pay, then perhaps it will be acceptable to an employee to wait 30-40 days. But if the change means the employee cannot pay his or her mortgage, then they might not be able to wait that long.

While HMRC may say that it will all come out in the wash at the end of the year, this is no consolation to someone who suddenly finds they cannot pay their rent.

While the explanatory memorandum emphasises this will not change an employee’s “right of appeal” against a tax code, HMRC seems incapable of grasping that the damage will already have been done. Given that PAYE regime allows HMRC to delve into a taxpayer’s pocket using estimated figures and on a provisional basis, it is clearly essential that a taxpayer be allowed the earliest available opportunity to dispute HMRC’s calculations.

But this draft legislation aims to do away with this perceived inconvenience for HMRC, so that it can say that it is meeting new, lower standards. Would it have been beyond their wit to ensure that they gave themselves that extra time only when it meant that they code was increased, so that it only applied when the taxpayer would end up better off..?

 
The Adjudicator’s Office 2014 Annual Report Published Print E-mail
Tax News - Personal Taxes
Written by HM Revenue & Customs   
Thursday, 10 July 2014 00:00

Judy Clements OBE, The Adjudicator for complaints about HM Revenue & Customs (HMRC), the Valuation Office Agency (VOA) and The Insolvency Service (The IS), publishes her 2013-14 Annual Report today. This is the 21st report since the formation of the office in May 1993.               

Judy Clements writes “I am very pleased to present my Annual Report for the year 1 April 2013 to 31 March 2014.  This is the sixth report I have presented about our work, and the 21st in the history of the Adjudicator’s Office.”

2013-14 was a very demanding and busy year for The Adjudicator and her office.

She goes on to say “This was the legacy from the exceptional workload received in 2012-13, from HM Revenue & Customs (HMRC) customers. In response we embarked on a Two-Year Recovery Plan that will take us through to March 2015.

My goal is always to provide the high standards of service our customers have the right to expect, and this has been at the heart of our work resulting in a new record in the 21 year history of the office for cases closed in a single year. We successfully resolved 2,350 complaints in the first year of our Recovery Plan.”  

A large number of the taxation cases reviewed related to PAYE and were considered under the provisions of HMRC’s Extra Statutory Concession A19 (ESC A19). The majority of Tax Credit complaints received by The Adjudicator are about HMRC’s refusal to write off overpayments.

The Adjudicator comments “The statistics from the work of my office are a stark reminder there is no place for complacency, particularly when this year 90% of HMRC customer complaints have been upheld…… We have successfully mediated 55% of cases received this year. I hope to see a significant reduction in mediated cases next year if all three departments continue to develop effective use of discretion and empower their front line staff to resolve issues at first point of contact, so customers feel the complaints process is timely and adds value.”

The Adjudicator has continued to build strong relationships with HMRC, the VOA and The IS and all have been receptive to her feedback for service improvement. The number of complaints referred to The Adjudicator by customers of the Valuation Office Agency and The Insolvency Service remained stable and total numbers were low.

Notes

1.    The Adjudicator’s Office was set up in 1993, to look into complaints about the Inland Revenue (including the Valuation Agency). HM Customs and Excise and the Contributions Agency joined in 1995. From April 2003 the office took on complaints about The Insolvency Service. In April 2005 the Inland Revenue and HM Customs and Excise merged to form HM Revenue & Customs (HMRC).

2.    Judy Clements OBE replaced the late Dame Barbara Mills DBE QC as Adjudicator in April 2009. She acts as an impartial referee when people are not satisfied with the way the departments have dealt with their complaint. She looks at complaints about handling issues, such as mistakes, delay, staff attitude, and quality of advice. She does not consider complaints about the law, or where an independent tribunal already exists for settling disagreements. Her recommendations are independent and her services are free to complainants.

3.    This report covers the period 1 April 2013 to 31 March 2014 and is available free of charge from the Adjudicator’s Office, PO Box 10280 Nottingham NG2 9PF. Telephone 0300 057 1111. It is also available electronically at www.adjudicatorsoffice.gov.uk

4.    Further information about the office (including leaflets on how to complain) can also be obtained from the above address or website.

5.    Statistics for the year to 31 March 2014 are below.

Statistics 2013-14(2012-13 in brackets)

 

HM Revenue

& Customs

Valuation Office Agency

The Insolvency Service

Total

Complaints taken on for investigation

1087 (2574)

27 (23)

17 (15)

1131 (2612)

Investigation cases completed

2311 (1354)

23 (11)

16 (14)

2350 (1379)

Number upheld either partially or wholly

 

2073 (818)

5 (1)

6 (2)

2084 (821)

 

In 2013-14, The Adjudicator recommended HMRC pay a total of £246,094 in compensation to complainants for worry and distress and poor complaint handling (£81,309 in 2012-13). She also asked HMRC to reimburse £180,615 for direct costs (£207,108 in 2012-13).  The Adjudicator recommended that HMRC give up tax amounting to £1,899,780 (£210,138 in 2012-13) and that HMRC write off £2,042,769 in overpaid Tax Credits (£695,476 in 2012-13).

The Adjudicator recommended the VOA pay a total of £325 in compensation and £14,291 direct costs (previously no compensation or direct costs for 2012-13). The Adjudicator recommended The Insolvency Service pay £500 in compensation and £42,287 direct costs (£75 compensation and £1 direct costs in 2012-13). No recommendation was made for liability to be given up for either of these departments.

 
Adjudicator Upholds Record Number of Complaints about HMRC in 2013/14 Print E-mail
Tax News - Personal Taxes
Written by Lee Sharpe   
Thursday, 10 July 2014 00:00

It seems TW’s not alone in being unhappy with HMRC at the moment: the Adjudicator has upheld 9 out of 10 complaints about HMRC in 2013/14.

HMRC has published a press release on the Adjudicator’s 2013/14 report – although it has not yet made it to HMRC’s website.

The report states that, in its busiest year ever for HMRC complaints, it has upheld 90% of them in favour of the taxpayer – up from 60% in the previous year. So, not only a record number of complaints dealt with, but a record number of complaints upheld. HMRC has also had to repay about £2million in tax - almost ten times the amount in 2012/13.

Unsurprisingly, the majority of cases were in relation to PAYE and Extra-Statutory Concession A19, whereby HMRC is supposed to give up tax when it fails to act on information it has received to collect tax in a timely fashion.

TW’s Mark McLaughlin had this to say:

“We at TaxationWeb – and numerous colleagues in the profession – have long been saying that HMRC has for several years been trying to marginalise claims under ESC A19.

It seems that this has come home to roost. The message from the Adjudicator’s Office seems quite clear: HMRC has – systematically, based on these numbers – wrongly applied ESC A19 to the detriment of taxpayers. It is extremely worrying to think that many thousands more honest taxpayers  will simply have accepted HMRC’s word, or had their claims turned down in the so-called “three tiers of refusal” which passed for its internal review procedure.

Reform is required – and not the “simplification” they tried to introduce a year or so ago, which was a thinly-veiled attempt to water down the rules in their favour.

Perhaps, most importantly, someone at HMRC needs to take responsibility and to say “sorry” for delivering such an astonishingly poor service to the taxpayer. While HMRC may try to argue that this is a very small percentage of the volume of cases it deals with, it is almost certainly a very small percentage of the many more people that have had their claims unfairly rejected. And let’s not forget, HMRC was supposed to apply this concession without having to be asked in the first place.”

 
Industrial Buildings Allowance Claim Fails at Upper Tribunal Print E-mail
Tax News - Personal Taxes
Written by Lee Sharpe   
Tuesday, 03 June 2014 00:00

HMRC has publicised that it has been vindicated at both the First Tier and now the Upper Tier Tribunals, in refusing Industrial Buildings Allowance (IBAs). (Next Distribution Ltd. & Others v HMRC [2014] UKUT 0227 (TCC))

While IBAs were abolished some years ago, at a time when the relief was available the retailer Next (under Next and Paige Groups respectively) had attempted to claim some £19million in expenditure on two premises it used for logistics - the taxpayer claimed that the buildings were involved in subjecting goods to a process, that the goods were stored there preparatory to the goods’ being subjected to a process (breaking down bulk shipping consignments into smaller parcels) and/or were being used to store goods on their arrival to the UK from overseas.

The tribunal held that, while the buildings were (of course) used to store goods, the goods themselves were not subjected to sufficient a process , etc., and that the goods had “arrived” to the UK long before they ended up in the taxpayer’s warehouses, which was many miles inland from delivery. The case was long in the reporting and there is much detail. Many readers will recall how tortuous was the IBAs legislation and its subsequent interpretation by the courts.

The decision of the FTT is at Next Distribution Ltd. & Others v HMRC [2012] UKFTT 405 (TC)

The taxpayer appealed against the First-Tier Tribunal’s decision, but it was upheld by the Upper Tribunal – although the reasoning changed a little, and HMRC’s case was not approved on all points.

The Upper Tribunal’s decision is at Next Distribution Ltd. & Others v HMRC [2014] UKUT 0227 (TCC)

HMRC has been quick to publicise its victory in this latest turn and seems intent to cast the taxpayer in a poor light, with Jim Harra, HMRC’s Director General of Business Tax quoted as saying,

“This case shows that, when any business – large or small – tries to claim capital allowances beyond their scope, HMRC will challenge it, including through the courts if necessary.”

HMRC’s press release also asserts that this decision “safeguards about £2.8 million of revenue”.

Whlie the taxpayer hardly needs TW to speak in its defence, we think it appropriate to question the manner in which HMRC has reported this case. The language is not dissimilar to that reserved for “artificial” schemes which are perceived to have little economic basis other than to reduce tax. Simply put, the taxpayer constructed two large buildings – at substantial cost – in which some fairly complex operations were undertaken – a “genuine” economic activity. The taxpayer seems to have held a quite reasonable belief that it was entitled to tax relief on a good part of that expenditure. The tribunals – both of them, to be fair – have upheld HMRC’s view that relief was not available.

While HMRC is of course right to publicise the limit of IBAs, it is questionable whether the tone of its report serves an aim in the public interest, or effectively tries to dissuade taxpayers from making what one might loosely term “reasonably believed” tax claims in respect of “genuine economic activities”. 

 
<< Start < Prev 1 2 3 4 5 6 7 8 9 10 Next > End >>

Page 1 of 36

Watch our latest tax video

Tax Books

BOOK OF THE WEEK

Financial Planning with Trusts 2013-14

Topical tax and financial planning strategies using trusts

BOOK OF THE MONTH

Employee Benefits & Expenses: 2-volume bundle

Clear, practical commentary on the taxation of employee benefits and expenses, across two volumes, with a discounted price when both books bought together.
HMRC Investigations Handbook 2014/15

HMRC Investigations Handbook 2014/15 (previously titled: Dealing with HMRC Investigations) will assist and support when you are representing clients under investigation.
Tax Investigation for Dummies

Tax Investigation for Dummies provides a good and easy to read guide for anyone involved in an HMRC tax investigation.
VAT Registration Handbook

A new guide to VAT Registration, showing why the topic is more complex than it may seem.
Hitwise Award Winner Apr-Jun 2008 Hitwise Award Winner Jul-Sep 2008 Hitwise Award Winner Oct-Dec 2008 Hitwise Award Winner Jan-Jun 2009 Hitwise Award Winner Jul-Dec 2009 Hitwise Award Winner 2011 Alexa - Most popular news and media website

TaxationWeb Limited (Registered in England No. 4571386), 6 Coleby Avenue, Peel Hall, Manchester, M22 5HH, United Kingdom

By using this website, you agree to using cookies. Cookies are small text files stored on your browser when you use websites and applications (learn more about cookies).
You can control how websites use cookies by configuring the privacy settings within your browser (please refer to your browser help function to learn more about cookie controls).
Note that if you disable cookies entirely, there are parts of this website which may not function properly (e.g. logging in, commenting, etc).

Website by Dorifor Internet Marketing