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Another Fine Mess : Is it not time that HMRC faced fines for their failings?

20th Sep 2014
Brought to you by
ICPA

ICPA is a professional organisation for accountants in practice.

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Over the years, the imposition of fines for virtually every conceivable civic misdemeanour has become the norm. And as fines are introduced for previously ‘fine-free’ indiscretions they are, without fail, promoted with the line that “the fine is not about revenue gathering, it’s about changing actions”, or “the fine is being levied in the hope that the perpetrator will re-think their actions and change their ways”. So we have fines for taking children out of school in term time, fines for littering and fines for noise pollution – and every time it’s been about getting people to change their ways rather than generating revenue.

HMRC has been at the forefront of the ‘fines’ culture, which they fully support, and whenever anything changes – such as the introduction of RTI or iXBRL – details of the fines for errors or inaction follow hard on the heels of the initial announcement.

HMRC has promoted the principle that fines and penalties for failures on the part of the taxpayer are an acceptable deterrent. The result has been that for every failure on the part of the taxpayer to meet a deadline a penalty is imposed; every failure on behalf of the taxpayer to handle their affairs in a manner that is acceptable to HMRC results in a fine.

As accountants, our clients are being penalised and it is natural that they look to us for advice and help in what is perceived to be a thinly veiled attempt to close the tax gap. Our advice is, correctly, that appeals cost time and money and there is no guarantee of ultimate success. The usual result is that as accountants we suffer – we have to bear the brunt of the client’s anguish and ire. Thus the anger against such HMRC impositions grows not only in those directly penalised but also from their advisors.

One can only imagine the time spent by the client and the accountant over such issues, while HMRC simply accumulates income and urges compliance borne of better working practices.

Yet when the boot is on the other foot what happens? If HMRC is tardy in making repayments, issues coding numbers that are manifestly inaccurate or issue penalty notices when nothing is amiss are they subject to a fine? No!

Recently, we had to suffer over 12,000 – yes, that’s the correct figure – interim penalty letters for 2013/14 that were wrong. Were these letters checked before they were sent out? Was it a computer problem? Who knows. Frankly, HMRC gets it wrong for over 12,000 fully compliant taxpayers and what do they do? Well, naturally they apologise. Do they send the apology to the taxpayers concerned? No, they simply state that “HMRC is sorry for any inconvenience and concern caused” in the ‘What’s new’ section on its website. This is not the first error of this type but the question, surely, is will it be the last? Probably not, but would the likelihood of such an error reduce if HMRC was forced to pay each and every taxpayer sent the letter a £100 fine? If you follow the logic then the answer should be yes. If fines and penalties have resulted in better taxpayer behaviour, why does the same principle not apply to HMRC?

Next time your client gets a fine, try apologising – and see what happens.

• Tony Margaritelli, Chair, ICPA

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Tony will be presenting a seminar entitled ‘Challenges facing the GP accountant’ at the ICPA Conference on 25th September at Stoke-by-Nayland Hotel, Colchester. To book your ticket(s) call us on 0800 074 2896

This article is taken from “Accounting Practice” the ICPA quarterly magazine. Dedicated to supporting and promoting the needs of the general practitioner. You can find us at www.icpa.org.uk  or email [email protected]  or by phone on 0800-074-2896

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