In my experience, HMRC take this approach even where taxpayers have responded. I have seen them estimate astronomical income figures which would be completely impossible to attain, with no basis in common sense. They send out inspectors who know nothing about the taxpayer's industry and, in one memorable case, did not know the principle of double entry bookkeeping.
We had a case like this.
Apart from estimating tax and interest in respect of several years before the commencement of trading, they also assessed VAT on the estimated turnover. This was despite the fact that our client could not possibly trade without premises, plant, vehicles, employees, official licenses and contracts with local government customers.
They made several errors in their calculations regarding years he was trading, including getting the number of months in a year wrong ( twice), Trying to reconcile net reported sales with bankings without allowing for VAT and failing to ask for an explanation of the accounting records.
They also completely failed to understand the fundamental basis of our client's trade.
We went for a review by an independent HMRC officer.
His conclusion, "We haven't exactly covered ourselves with glory on this one".
All amounts assessed were cancelled, apart from a small adjustment to the first year's results, where we had insufficient records from the now deceased original accountant to fight it.
We complained and our client received sufficient compensation to cover our fees.
Not just vexatious but incompetently handled.
Neither I nor my colleagues have ever seen anything like this case, before or since.
What if the client has a portfolio of investments and is buying and selling shares? If the sale completes before the previous year's tax return has been completed, there may be available losses brought forward which are not yet quantified. Can any tax overpayment calculated be reclaimed between payment of the 30 day tax and submission of the "normal" tax return?
It could also take much more than 30 days to obtain and compile cost and improvement expenditure, or indeed a March 1982 valuation.
“It’s not like the government will spend it wisely.”
Sounds right to me.
Anyway, don't forget that Income Tax is a temporary measure. I forget, have we defeated Boney yet?
The thing I really miss from the days prior to self assessment was the system of submitting information to the Revenue, responding to their queries (if any) and getting it agreed. This meant that a given year could be closed.
Anything known to be unusual or contentious could be discussed prior to submitting any figures..
And ringing up your local tax office and being able to speak with a competent tax officer, who you had dealt with before and who was responsible for a particular portfolio of taxpayers and was therefore familiar with their business.
One of the things which often went wrong was where the bank branch confused one or more customers with the same initial and surname. The Revenue would then chase one for tax on accounts which were nothing to do with him.
But they were much more likely to apologise (and blame the dreadfully sloppy bank) in those days.
My answers
No, but the service is provided by drivers who work for Uber.
How are you going to change EU law, which mandates the VAT regime?
It isn't funny where the taxpayer under investigation stands to lose his home and his livelihood.
We had a case like this.
Apart from estimating tax and interest in respect of several years before the commencement of trading, they also assessed VAT on the estimated turnover. This was despite the fact that our client could not possibly trade without premises, plant, vehicles, employees, official licenses and contracts with local government customers.
They made several errors in their calculations regarding years he was trading, including getting the number of months in a year wrong ( twice), Trying to reconcile net reported sales with bankings without allowing for VAT and failing to ask for an explanation of the accounting records.
They also completely failed to understand the fundamental basis of our client's trade.
We went for a review by an independent HMRC officer.
His conclusion, "We haven't exactly covered ourselves with glory on this one".
All amounts assessed were cancelled, apart from a small adjustment to the first year's results, where we had insufficient records from the now deceased original accountant to fight it.
We complained and our client received sufficient compensation to cover our fees.
Not just vexatious but incompetently handled.
Neither I nor my colleagues have ever seen anything like this case, before or since.
Well, they could hardly text them.
What if the client has a portfolio of investments and is buying and selling shares? If the sale completes before the previous year's tax return has been completed, there may be available losses brought forward which are not yet quantified. Can any tax overpayment calculated be reclaimed between payment of the 30 day tax and submission of the "normal" tax return?
It could also take much more than 30 days to obtain and compile cost and improvement expenditure, or indeed a March 1982 valuation.
Does that make the curve Laffer-ble?
I'll get my coat.
“It’s not like the government will spend it wisely.”
Sounds right to me.
Anyway, don't forget that Income Tax is a temporary measure. I forget, have we defeated Boney yet?
The thing I really miss from the days prior to self assessment was the system of submitting information to the Revenue, responding to their queries (if any) and getting it agreed. This meant that a given year could be closed.
Anything known to be unusual or contentious could be discussed prior to submitting any figures..
And ringing up your local tax office and being able to speak with a competent tax officer, who you had dealt with before and who was responsible for a particular portfolio of taxpayers and was therefore familiar with their business.
One of the things which often went wrong was where the bank branch confused one or more customers with the same initial and surname. The Revenue would then chase one for tax on accounts which were nothing to do with him.
But they were much more likely to apologise (and blame the dreadfully sloppy bank) in those days.