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Lib-Dem spokesman calls for Hartnett to resign

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12th Sep 2010
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HMRC permanent secretary for taxes Dave Hartnett is fighting for his job after bowing to pressure over the weekend to apologise for the volume of this year’s PAYE underpayment claims.

On Saturday morning, Hartnett added fuel to the media frenzy surrounding the PAYE claims by telling BBC Radio 4’s Moneybox programme he “saw no need to apologise” to the 1.4m people who are being asked to pay additional amounts of tax to offset inaccurate tax codes.

“I’ve read the papers and heard stories of HMRC blunder and IT failure. Neither of those are true,” Hartnett said. “Every country that I know of that has deductions of tax has to do a reconciliation at the end of every year and were’ doing one.”

Pressed by presenter Paul Lewis on the sheer size of this year’s miscalculations, the tax chief responded, “I don't think they are extraordinary. There is a need for reconciliation every year. Once or twice in the past the numbers have been very large, sometimes they're less. It depends on how the system has been operating and what issues there have been.”

The Daily Telegraph reported that Chancellor George Osborne was “incandescent” after hearing Hartnett’s Moneybox interview. Later on Saturday afternoon – in time to meet Sunday newspaper deadlines – HMRC issued a statement in which Hartnett conceded, “I am deeply sorry that people are facing an unexpected tax bill.”

He continued: “Everyone in HMRC is working hard to make this as painless as possible. I apologise if my remarks came across as insensitive. I am working flat out with my colleagues to ensure everyone’s tax is correct and the new computer system will help us do this.

“It was this new system that revealed the extent and size of reconciliations required and will help us be more accurate in future but we do not underestimate the distress caused to taxpayers and once again I apologise.”

The Independent reported that the Liberal Democrat Treasury spokesman in the House of Lords (corrected: see comment below - Ed), Lord Oakeshott, had called on HMRC’s permanent secretary to resign.

The Lib Dem spokesman said Hartnett's response to the tax crisis made the BP chief, Tony Hayward “look like a model of disaster management and accused him of living in a world of his own.

“This is the latest in a series of management failures in the HMRC going back many years,” Lord Oakshott added. “If Mr Hartnett cannot see why he should apologise for this one, then he really should be reconsidering his own position.”

AccountingWEB.co.uk members have been debating the latest episode in the HMRC PAYE crisis in this Any Answers thread: Is this man arrogant, or just deluded?

UPDATE: Monday 13 Sept - The Financial Times reported a Treasury statement backing Hartnett in what the paper characterised as an attempt to bring the PAYE crisis to an end. “The chancellor thinks that Dave Hartnett did the right thing in apologising following his interview yesterday. The right thing today is to focus on putting things right, and for Dave and HMRC to get on with doing everything they can to help those facing additional bills,” the Treasury said.

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John Stokdyk, AccountingWEB head of insight
By John Stokdyk
12th Sep 2010 11:18

Too little, too late

From the minute the Moneybox interview went out, you could just see Hartnett's attempt to set the record straight spiralling out of control.

Somewhat like prime minister Jim Callaghan’s 1978 “crisis, what crisis?” comment, he underestimated the PR damage that is being wrought on his department by the press firestorm. Mainstream journalists will sensationalise the issues and sometimes get their facts wrong, but as programme editors smell blood, they assign more people to cover the story and more damaging revelations come to light, such as last week’s interview with an anonymous tax collector who claimed HMRC is “in meltdown”.

Expect to see more revelations on the HMRC PAYE crisis as the week progresses.

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By carnmores
12th Sep 2010 12:03

John

i dont think that Callaghan ever said 'crisis what crisis' that was your lot!

what struck me was the difference in Hartnets or should i say Hairnets hair style - the difference between his apppearance at the select committee and on his PR photos are quite astounding

 

hubris > nemesis

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Rebecca Benneyworth profile image
By Rebecca Benneyworth
12th Sep 2010 14:56

Sorry but I think he was right first time

This media frenzy is doing my health no good at all. I have never heard so much rubbish talked about tax in all my life. Dave was right first time - reconciling your tax position is something that has to happen when people have frequent job moves. I do think that the old PAYE system had become unfit for purpose, but screaming about that just as the issue has been resolved by introducing a new system is plain daft.

For YEARS MP's have been chastising HMRC (and rightly so) for failing to reconcile PAYE cases. It is something I have direct experience of and which made me very angry at the time - an employee taxed at BR for their entire working life and nobody spotted it. Now they have NPS and have started to do it everyone is jumping up and down. Let's not forget that the significant majority of people will get refunds - which they probably wouldn't otherwise have received.

And I'm afraid I don't have a bleeding heart about people who owe more than £2,000 either. At 20% tax rate that's at least £10,000 of income which was received untaxed. And THEY DIDN'T NOTICE???? Darn sure I would have. In fact my suspicion would be that they did notice and have been keeping quiet in the hope that HMRC doesn't either.

It's time we in the UK stopped being such idiots about our financial affairs. All children should be taught to check their tax and NIC before they leave school, should understand what a tax code is and how PAYE works. Then everyone would know what the reconciliation was going to say when it arrives because they will already have checked it when they get P60's in May.

And the Editorial in the Times today is a disgrace - with a veiled suggestion that there is some evil plot in the plans for PAYE modernisation. HMRC has its problems, but the current witch hunt by the lay media does little to address the real problems and seriously engage with putting things right.

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Wild Billy Hickok
By Wild Billy
12th Sep 2010 17:00

An insight into the dark hearts of the media

Rebbeca is, as always, right.

Dave Hartnett was asked a question, asked with the intention to create a story. A journalist wouldn't ask that question for any other reason. Same reason they asked him whether he was going to resign. And remember the BBC ran with the story BEFORE the interview was aired so they chose to create a big issue out of half a sentence. I doubt he went into the interview intending to say he was unapologetic and, worth noting, he was directly responding to the ill-informed, incorrect and sensationalist headlines in the press. And, as Rebecca makes clear, he was absolutely right that this happens every year in every country; the only real difference this year is that the new computer found more errors. Some of the comments on AWEB are surprising for their lack of knowledge of a subject they should really know alot more about and tells me much about the profession. While the general public at large might not understand the nuance of the arguments, it is beyond me how tax practitioners and accountants cannot form a balanced view.

What is he being asked to apologise for? We don't actually hear the question in the interview. Another journalistic trick. He wasn't necessarily asked whether he apologised for creating distress to taxpayers. The question might have been framed as whether he apologised for the mistakes caused by the computer, in which case he was right to say no and that it was simply doing a more accurate job of reconcilliation. Was he wrong to say that HMRC,empoyers and employees all have their part to play in making sure PAYE works? No. The journalist said he was shifting the blame; no, he was pointing out a fact and specifically said he was not interested in playing the blame game.

All that said, Hartnett did show a surprising lack of media savvy during the interview and fell into the trap set for him. It really would have been easy to avoid the issue. But he isn't a politician and if we choose to moan about "spin" and lack of honesty from politicians but then lambast a civil servant for giving a pretty fair answer then we are hardly encouraging an environment where we can expect the whole truth and nothing but the truth.  

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Wild Billy Hickok
By Wild Billy
12th Sep 2010 18:15

And Lord Oakshott is NOT a Minister

I believe he is the Lib Dem Treasury spokesperson in the Lords; he is not a Minister. Lord Sassoon, the Commercial Secretary to the Treasury, is the Government Minister in the Lords.  Again, nothing like accurate reporting... and this ain't nothing like accurate reporting.

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John Stokdyk, AccountingWEB head of insight
By John Stokdyk
13th Sep 2010 08:51

Corrected on both counts

It's good to see Dave Hartnett's allies coming to the fore to speak up on his behalf, including Rebecca.

While inadvertently tarring myself with the same brush as the national and broadcast reporters who have leapt on to this story, I also have to apologise for the inaccuracies that crept into Sunday's article. I didn't mean to fan the flames with deliberate inaccuracies. I've altered the piece to reflect Lord Oakshott's true status and take on board the "crisis, what crisis" myth that has grown up around Jim Callaghan's 1978 comments.

But in our spin-driven society perception IS vitally important. While Dave Hartnett is technically correct about the natural progression of annual reconiciliations, I don't think he has acknowledged that the current crisis is the result of internal shortcomings and long-term msitakes.

The situation is so bad because HMRC is dealing with a backlog of unreconciled records that have built up since 2007-08. If you look at the NAO's report on HMRC's 2009-10 annual accounts, the new NPS computer introduced in June 2009 made the situation worse so that HMRC didn't get on to tackling the backlog until August this year, which started manifesting itself in the letters that went out to taxpayers this month.

While we can continue to debate the technical and procedural issues here, that is all secondary to the public's perception and the political impact of the story. And I'm afraid that it's my job to report that the media pack is smelling blood, which will lead to even more aggressive reporting and damaging stories for HMRC and Hartnett.

 

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By sue scherzo
13th Sep 2010 11:49

harnett's job

Too late really- he has already presided over the biggest IR mess ever...there should be an award for it.

I had 20 notices of coding last week from one client, received over a period of 4 weeks, all for the same year and job , all different....and he left that job 3 years ago!

We are now being told that 12 weeks is a 'reasonable' time to wait for a reply to a letter, as we complained to the MP about one case we shortened this to 10!!

Tax repayments are not being made where bank details are not given unless a phone call is made to request it even though the tax return has been appropriately ticked.The HMRC staff are so fed up it's a wonder there are any left at all. 

 

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Mark Lee 2017
By Mark Lee
13th Sep 2010 13:06

Well said Rebecca

It's disappointing when respected financial media follow the tracks laid by those who don't understand the tax system and get the story SO wrong.  As I said on the TaxBuzz blog last week, the speed with which the new system can perform the NECESSARY annual reconciliations is a positive step forwards given the longstanding problems with applying PAYE to situations involving multiple employments/pensions and changing benefits in kind.

Mark

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By cymraeg_draig
13th Sep 2010 22:51

I disagree Revecca

Sorry Rebecca, but I think you're wrong.

We will have to agree to disagree about whether or not these bills should even be being sent out - I've put my views in another thread.

BUT - Part of Hartnett's job is to be the public face of HMRC.  His job - for which he gets paid a hell of a lot - includes going on programmes like money box.  His performance was inept and plain stupid. If he thought for one second that he was going to get away with such a display of arrogance then he is seriously deluded.

What came across very clearly was a picture of a man earning a large salary who didnt give a damn about the man in the street who cant make ends meet now and whose finances could be pushed over the edge by the loss of £100 a month next year. 

Harnett should not resign, he shouldnt get the chance - he should be fired.  The way he handled that interview, and indeed his performance for some time now, falls well below the standard we are entitled to expect from someone in his position. And dont forget, he works for US, the taxpayers. We pay his large salary, huge expenses, and gold plated pension.  

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By mikewhit
14th Sep 2010 11:13

Bad admin leading to underpaid tax

@Rebecca:

"And I'm afraid I don't have a bleeding heart about people who owe more than £2,000 either. At 20% tax rate that's at least £10,000 of income which was received untaxed"

I have seen a case from one of the reputable MSC providers (before they were vaped by the MSC laws) in which all subject taxes were paid (basic rate and Corp tax) apart from that arising from 40% banding on the divi.

Hence the subject thought he was receiving income net of tax, and budgeted accordingly (repaying into mortgage, taking time off for holiday ...), whereas at the end of the year there was more to pay.

The provider should ideally have retained the extra tax on account which it could then have repaid if the work did not last as long as expected.

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By thomas34
14th Sep 2010 14:24

I couldn't agree more Rebecca

If people receive a coding notice they should either check it themselves or pay an accountant or ask a friend to interpret it for them. If they're too thick or too lazy to do neither they'll have to realise that there may be consequences down the line.

I haven't read or listened to so much media crap for a long time. Who are these people who owe more than £2,000 as I don't know any. I can't see any justification for writing off one penny of tax let alone £300.00 but again this may be yet more misreporting.

I don't condone the shambles that are HMRC but there again I don't recognise anything different in people's tax position to that which existed in any previous year.

Tom Egerton

 

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By Chris Wise
14th Sep 2010 14:34

codes

I also agree with Rebecca and Mark.

Those who are affected will be those with significant benefits, who lets face it are unlikely to be pensioners or on very low incomes.

Yes there are those who may have more than one job where multiple allowances have been applied, but i can't imagine there are hundreds of thousands of those cases.

HMRC is at fault to a degree because they don't work  the P11ds efficiently and they should. But then if you know you have a company car and its not on your code, you've a good idea you owe tax.

Major issue i find is when corporate clients contact me about benefits left in codes which don;t belong there, and HMRC of course won't speak to me and Joe Bloggs has to spend half an hour hanging on the phone waiting for someone to cut him off.

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By mikewhit
15th Sep 2010 06:39

Deserving cases

In any case, whether to disregard sums under £300, if it's done at all, should surely depend in some way on their total income. Someone on 40% can afford to pay.

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By cymraeg_draig
15th Sep 2010 22:47

Tom

If people receive a coding notice they should either check it themselves or pay an accountant or ask a friend to interpret it for them. If they're too thick or too lazy to do neither they'll have to realise that there may be consequences down the line.

Tom Egerton

 

Posted by thomas34 on Tue, 14/09/2010 - 14:24

 

I'm sure that millions of intelligent people up and down the country will be thrilled to know that you consider them to be "thick".

It's time you realised that to the majority of people a coding notice is a complete mystery. It's very easy because you understand them to assume that everyone else should also.

If i saw you stranded at the side of the road with a broken down car I could think that you are pretty thick because you can't strip an engine down and rebuild it. I could consider you pretty thick if you couldnt strip and reassemble a semi automatic rifle in the dark. Why not - I can do it so I think youre thick if you cant. Its so easy to be judgemental and to deride those who dont posses the same knowledge or skills as yourself.

For decades HMRC have told people - we are the Revenue and we are always right. And YES I've heard those exact words in a court by a senior HMRC manager.  Not only was she a fool, she was an arrogant fool.

The fact is that where HMRC have been in possession of all the facts, as in 2 cases we have had brought to us, then there is no excuse. HMRC have been incompetent and the taxpayer should not be penalised for HMRC  being "too thick or too lazy" to get it right.

 

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