Tax simplification and HMRC's recent struggles
You might also be interested in
Replies (4)
Please login or register to join the discussion.
Is the tax free dividend allowance of £2,000 from April 2018 (introduced in 2016 as £5,000), automatically applicable to a citizen in a commonwealth country as per common wealth agreement?
Unfortunately we are unlikely to get simplification in any useful form until HMRC is forced to publish their view of a particular situation, with reasons, and not be permitted later on to change that view, unless a Court decides that it is incorrect.
HMRC has a habit - one noticed and mentioned in most of the submissions made to the current TSC inquiries going on - of arriving at an analysis that produces maximum tax, rather than the "right" tax. Often that analysis arrives several years after the event, despite the fact that information was available to HMRC under the DOTAS or other reporting regimes.
I suspect that HMRC love to have this ability and to argue that the complexity of the tax system means that it is essential.
Unfortunately for the taxpaying community, all this does is create uncertainty and gives the impression that often HMRC is engaged in grabbing as much money as it can, often by using dubious tactics.
Until simplification can be paired with certainty, we are condemned to - in some instances - taking a guess at any given situation but knowing that HMRC will go for whatever produces the biggest bill.
Why point the finger at HMRC for complexity? HM Treasury has had responsibility for tax policy since 2005. Since then it's Treasury officials who have had the main incentive to think up wizard wheezes which catch a Minister's eye. And of course it's Ministers who want to announce changes, introduce legislation, and generally give the impression they are doing things - especially the Chancellor with the drama of the annual Budget.
But you have to give the Treasury credit. It still seems to be a golden rule across all policies and programmes that, no matter what goes wrong, the Treasury's never to blame.
Certainly agree that Treasury is Teflon coated.
I do not believe that a Treasury type looking for this years' money raiser, does so without input from HMRC. The Counter Avoidance teams in HMRC are full of "interim" people who are doing their time there before moving up the greasy pole to "mandarin". They know that they can suggest a charge and be safely gone by the time Treasury and HMRC realise that they have created a means for the unscrupulous to exploit the unknowing.
So I see this as a closed loop. HMRC is asked how they can raise more money, they tell Treasury who shape a "policy" and sell it to the politicians, explaining that tax is so complicated that they should not waste time understanding the detail. The policy is agreed and HMRC told to draft legislation and implement. The policy is perhaps flawed (surely not I hear you cry?) and to cover themselves, HMRC reinvents the "intention" of Parliament, many years later, creating complexity and uncertainty.
I know that sounds cynical but unfortunately it is borne out in practice.