Higher rate taxpayer amnesty ‘unfair’

An amnesty for higher-rate taxpayers who haven’t submitted tax returns is unfair on other taxpayers and shows that HMRC doesn’t have enough staff to collect tax, accountants have said.

Higher-rate taxpayers who haven’t submitted tax returns are being offered the opportunity to come clean and pay tax owed in return for lenient treatment.

The amnesty, announced by HMRC as part of a clampdown on tax evasion, is aimed at “people liable to pay tax at rates of 40% and who have been told to submit a self-assessment tax return for 2009/10 or earlier, but have not done so.

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Comments
frustratedwithhmrc's picture

Richard Murphy's views on this are tainted    14 thanks

frustratedwithhmrc | | Permalink

It should be recognized that Richard Murphy receives funding from the main staff union at HMRC (the PCS) and therefore his views on staff levels at HMRC are biased and should be treated as such.

Why AccountingWeb continues to present his views on these matters is beyond me.

ShirleyM's picture

Why the limitation?    2 thanks

ShirleyM | | Permalink

" ..... is aimed at “people liable to pay tax at rates of 40% and who have been told to submit a self-assessment tax return for 2009/10 or earlier, but have not done so."

It would have been simpler, and fairer, to apply the amnesty to everyone who has been told to submit a tax return, but failed to do so, so yes, I do think it is unfair. 

johnjenkins's picture

Not only

johnjenkins | | Permalink

is it unfair but it is also unjust, but then HMRC always does what it wants to do without thinking it through.

That may be so, but    1 thanks

Siilycountry | | Permalink

The only comment made by Richard Murphy in this article is that HMRC are too understaffed to collect staff (I think this should read tax). Do you not believe this to be true?

£600 + million collected and the only man in jail is a plumber.    2 thanks

Aprid | | Permalink

Shocking testimony to the treatment of the haves vs the have nots.

Attack the argument, not the person making it.    3 thanks

chatman | | Permalink

frustratedwithhmrc wrote:

It should be recognized that Richard Murphy receives funding from the main staff union at HMRC (the PCS) and therefore his views on staff levels at HMRC are biased and should be treated as such.

Why AccountingWeb continues to present his views on these matters is beyond me.

Surely his arguments either stand or fall on their merits, not on his motivation. I always think if you have an issue, you should address the argument, not the person who is making it. It is hard to see how you can have any credibility otherwise.

Well i always find it interesting    2 thanks

justsotax | | Permalink

when i find someone who makes a suggestion, and then you find out that they have particular connections.  But would agree the argument should stand based upon its merits....so for me simply relating the number of staff to tax collected is at best an over simplification of the system - very little merit in that argument on its own...... 

should_be_working's picture

Re HMRC 'understaffing'    2 thanks

should_be_working | | Permalink

If HMRC was renowned as a model of efficiency and effectiveness, then the understaffing argument would hold some water.

Too often though, as demonstrated above by the PCS spokesman Richard Murphy, the knee-jerk reaction is to call for more staff rather than fix the organisation or system itself.

Anyone would think the PCS were more interested in recruiting new members than the actual quality of the service. Heaven forbid!

well i know what we will not be told...    1 thanks

justsotax | | Permalink

and that is how much extra tax they would expect to collect per additional employee - that would mean we could measure there effectiveness....i am not sure they would want us to do that!

Off the subject

Eric Robinson | | Permalink

 

Non compliance is non compliance.

 

Is there a difference between a non compliant plumber and a non compliant higher rate taxpayer?

 

Some higher rate taxpayers ARE plumbers!

 

The amnesty system will be viewed by some as a shot in the dark by HMRC. It is not a good idea to suppose that the TPI that is available will not find an appropriate mark.  

Why can't HMRC just make an assessment?    2 thanks

Joss | | Permalink

Previously, when taxpayers failed to make returns on time, HMRC just made an assessment of liability (fair guess plus a bit or a lot) and then threatened to take the taxpayer to court for the assessment amount.

Usually the taxpayer got shifting, submitted their return (generally for less than the assessment) and it never went to court.

Did I miss something? Has this changed? Or has this method been deemed too expensive?

I am unclear why HMRC think it is necessary to give this amnesty.

frustratedwithhmrc's picture

I would argue that staffing is not the root cause of the problem    2 thanks

frustratedwithhmrc | | Permalink

should_be_working wrote:
Too often though, as demonstrated above by the PCS spokesman Richard Murphy, the knee-jerk reaction is to call for more staff rather than fix the organisation or system itself. Anyone would think the PCS were more interested in recruiting new members than the actual quality of the service. Heaven forbid!

The fact that HMRC are unable to answer phones 50% of the time or respond to letters within reasonable business time scales (days instead of months) COULD be because they have insufficient staff to operate the UK tax system.

However, a more likely possibility is that they have adopted a system of operation, specifically regional centralization, which is dependant upon call centre style operations that are unsuitable to the operation of the UK tax system.

How would an extra 5,000 or even 10,000 extra staff actually help anyone (other than the PCS union)? Perhaps the phones and letters might be answered more quickly, but would the quality of the responses improve?

Would the amount of tax collected improve if they are simply low level clerical staff or yet more call centre drones?

As I've said before HMRC is going in the wrong direction and accelerating - adding more low-level staff will simply compound the problem.

Things seemed to work well when we had local offices, local clerical staff and local inspectors.

If they want to make a call centre model work for UK taxation then they need to radically simplify the UK tax system so that it CAN be handled by a call centre operator.

I don't believe the current system could be made to work correctly if you tripled the number of HMRC staff - it is the system that is broken.

Ever more inventive ways of not doing anything

The Black Knight | | Permalink

all these amnesties must be loosing their value as those waiting in the bushes have seen how ineffectual they are. Only really stupid plumbers have been caught.

Why don't we have any enforcement?

1. No tax return = determination? That works so they stopped doing that.

2. Suspected Evasion = COP9 they either make a declaration or not.

Not using the above shows that they do not have as much information as they are pretending to have and it is all a bluff! I am sure your average evader worked this out a long long time ago.

How are they going to identify 40% payers who are only paying 20% on some of their income.

Really they would be better off if they said YOU have had enough warnings this is your LAST CHANCE! (REALLY) Then we will take the gloves off and use the powers that we have had for a long time.

T.V. Add

Then pay informants (they do for other police work) perhaps based on percentage recovered.

You would think these evaders would be difficult to spot but they are not, and all of these problems result from HMRC incompetence.

beddj's picture

Unfair on others who cannot afford expert help

beddj | | Permalink

Any basic rate tax payers who have been fined the £100 for non submission have every right to be very peeved by this benefit for higher rate tax payers.

I know of one individual who has been unable to resume his career as an international salesman after his wife died from cancer whilst his children still needed someone to be around at home.  He failed to submit tax returns because he thought none were due when he did not reach the taxable income level, I know he was fined for not submitting when he already struggled financially.  Is this fair?

 

 

Appeal

The Black Knight | | Permalink

The purists will tell you HMRC will not accept that as a reasonable excuse.

But we have seen many £100 penalties cancelled by HMRC agreeing that a tax return would be treated as if it had not been issued on a complaint of that's not fair.

And even if you appeal they already have a back log of 38 years for the tribunal so will probably find that it is cancelled anyway certainly we have seen many penalties disappear when expecting an argument.

Tax Return Initiative

L Hunter | | Permalink

I have read the guidance on the HMRC web-site and canot see anywhere where it says this "amnesty" is limited to higher rate taxpayers. If it were so limited then I agree it would be unfair.

The press release

The Black Knight | | Permalink

says it is?

I do wonder how someone who has been issued a tax return but has not completed it can take part in an amnesty ?  At that point a return is merely late?

If an insufficient determination has been issued and the taxpayer deliberately does not inform HMRC of that they may have a point, to lower penalties.

Or are they going to waive the late filing penalties too?

Not completing a return when issued has been an effective way of avoiding the system as HMRC do not even collect the Hundred pounds and if a later return is filed all the previous years will disappear (they even refund from later years to my surprise) That's computers for you! No body know they are not doing their job.

Determinations may have collected some tax and supported the system but that will be a FAT NO again.

 

I said I couldn't be bothered but I lied.

androo235 | | Permalink

I will say that I didn't know that Richard Murphy was substantially funded by HMRC staff union (assuming that's true) as that somewhat explains his coolness toward LVT even though he has said that he supports it. LVT ought to be much simpler to run and probably could work on a call centre model - at least in terms of collection - tax lawyers and accountants also have reason to fear LVT - one reason I keep on posting here.

 

Henry George - Poverty and Progress. Landvaluetax.org. Mason Gaffney Corruption of Economics - http://homepage.ntlworld.com/janusg/coe/!index.htm

I also like Steve Keen and the other Jubilee and positivemoney.org - but that's slightly off topic being monetary rather than tax reform so apologies for that.

What penalties

Huw Williams | | Permalink

Is HMRC offering anything here?  The plumbers scheme was owning up to undeclared income and a reduction in the possible penalties that can be added to a settlement when HMRC come for you.  If you file a late tax return under this "amnesty" do you get a discount on the late filing penalties or the late payment surcharges?  If not what is the benefit of trying to come within the scheme (sorry I cannot think of a suitable word which does not imply some form of tax avoidance)?