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TW Ed worries that HMRC risks losing sight of its core objective in the rush to prove value for money.

HMRC recently issued a press release about how HMRC has successfully “protected” over £1billion in tax in the first 6 months of this year by winning numerous tax avoidance cases. While this is laudable, HMRC has thus far omitted to acknowledge the nearly £1billion it had to write off in PAYE tax when preparing for Real Time Information.

HMRC clearly believes it has a role to stamp out tax avoidance that it doesn’t like and part of its arsenal involves publicising its court victories – or, as with the Redknapp case, merely publicising that it was happy to take such cases to court was perhaps enough.

But what about when it loses? I have yet to see any mention by HMRC of Henderskelfe, where a painting was deemed to be plant and eligible for Capital Allowances, or Alexandra Countryside Investments, which rejected HMRC’s long-held view that VAT could not be reclaimed on converting the living areas in public houses. Admittedly the latter was heard only at the First Tier Tribunal but it seems an eminently sensible result.

These cases were quite recent, but what about Charlton where HMRC lost badly on claiming discovery of a loss of tax, (amazing really when considering how the legislation is weighted in their favour), or Total People (aka Cheshire Employer and Skills Development Ltd) where it was held that lump sums could be paid for motoring expenses and not be taxed as earnings. There was an HMRC press release for Total People but it seems to have disappeared from their website.

We have previously mentioned how long it took HMRC to change its guidance on reclaiming VAT on Bad Debts, and how unclear is their guidance on P11D late filing penalties. It could perhaps be inferred that the principle of ensuring people pay the correct amount of tax has been lost in the effort to prove that the government’s ‘investment’ in HMRC has repaid itself many times over.

Regards all,

TW Ed