A month or so ago I made a series of Freedom of Information requests of HMRC with regard to VAT. They are all summarised in their response, which was as follows:
What did I learn? I'd suggest three things.
First, HMRC are not now at our ports. In other words, as we face a whole new VAT and tariff world the agency responsible for tax collection has no one in place to check that any of the port declarations are correct. We now know that HMRC is, in fact, planning to abandon all tax collection at ports in the event of a Hard Brexit. But what this FoI confirms is that not only are they abandoning tax collection on a timely basis, they have no way of checking if subsequent collections might be correct or not because on the spot checks by tax officers will not happen. Brexit will be a tax fraudster's dream, and this in a country that already fails to collect 10% or more of VAT owing.
Second, I learned why that VAT gap is likely to exist. HMRC do not know basic information about their own activities. The answer is a litany of such tales.
And third, they do not do basic checks any more. Their business record checking service no longer exists, but I guarantee it was highly cost-effective. I also know it was a powerful weapon that clients dreaded when I was in practice as an accountant. As a consequence of abandoning basic business record checking, HMRC has lost their relationship with taxpayers, and a sense of the reality of what is happening on the ground. No amount of computer checking can overcome such knowledge as to where the problems really are, or the insight it gives to a Revenue officer who gains the ability to sniff trouble out as a result.
I wanted to get a feel if HMRC still had the frontline ability to tackle tax abuse when asking these questions. The plain answer is they have not. And to compound that, they have no systems that would make that apparent, meaning management is either deliberately or unwittingly in the dark about this failure.
I've said it before, and I reiterate it: the senior management at HMRC really do need to change their ways or go if we are to have an effective tax administration in the UK. We are a long way from that at present.
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[…] he is right. But it's worse than that. Not only is it an invitation to fraud, but as I have noted in an FoI I published this morning, the UK admits it has no Customs officers in ports to monitor these […]
items sent by mail and courier are no longer assesed for tax at airports, they all go to a central hub in coventry, it’s bloody slow
Think you’ll find the Coventry hub is just for ParcelForce – items sent via other couriers seem to be quicker and have a corresponding greater likelihood of never paying import duties at all.
So this is the future then?
The UK will set it self up as a off shore tax haven/tax free conduit for the world.
It’s almost as perverse/ dystopian as the Firemen in Ray Bradbury’s ‘Fahrenheit 451’ whose job it is, is to go around burning books. Creating fires.
Instead of collecting tax, our tax officials will be there to help you avoid tax. They will be independent tax avoidance advisors to importers and exporters.
It is extreme neo-liberalism now.
PS – on my way home from Berlin on the train (we’d started at 06:51 from Berlin Hauptbahnhof on an ICE, then changed at Cologne for another ICE to Brussels and got on the Eurostar from Brussels to London), we went through Derby Midland station which is in the throes of a remodelling project.
There on the very the new awning of the new Platform 7 at Derby was a self conscious little sign telling anyone who was interested that the project was funded (part-funded?) by the EU.
That is why I’d like to ask Auntie Theresa ‘What the f**k do you think you are doing?’. How are projects like this going to be realised in the future? It is bad enough that the work is not also putting up overhead wires.
I am amazed that this information is not available. When I worked in HM Customs and Excise we used to get figures every year of the number of control visits and the results in additional VAT for our own local office and also nationally. To suggest that the Department no longer has this information appears highly negligent. I did hear on the grapevine that a 6 month experiment in office examination of traders’ records without visiting failed to deliver any significant extra VAT and that management reluctantly accepted that on site inspections were the best way to assure the tax, but with highly reduced numbers of dedicated VAT staff the possibility of businesses being selected for a visit is also highly reduced.
I am as amazed as you
And am utterly unsurprised that inspections without visiting failed
Thank god I retired from HMRC 4 years ago. It had been clear for a number of years that compliance had taken a back seat to process and a pernicous combination of Human Resources people and concentration on process rather than outcomes.
What better way of making the rich richer whilst at the same time justifying the case through lower tax reclamation for increased Austerianism to the great unwashed masses. You’ve got to hand it to the Tories they’ve got the lumpen proletariat exactly where they want them well and truely under their thumb!
And of course…HMRC are all too busy preparing for the next catastrophe known as MTD for VAT which is putatively rumoured to become fully operational by March 2019.
Personally I would stick five years onto that date as a minimum.
I hope so
Doing that and any form of Brexit in the same month? Pure madness
Regarding reference to Making Tax Digital (MTD) for VAT from April 2019.
One interesting aspect of HMRC’s MTD scheme is that they are not keen for traders to use a spreadsheet for VAT purposes unless they also use bridging software, so there is a seamless link between accounting data and the VAT return. When MTD eventually rolls out for the reporting of general accounts data (for income tax and corporation tax purposes) this would provide HMRC with an ideal opportunity to set up benchmarking critieria to highlight taxpayers who are suspect. For example, HMRC used to have a standard list of gross profit markers for different trades, it would be noddy stuff to compare this to quarterly downloads to HMRC when the requirement to do so starts say 2020?
When I first started as a practitioner in the late 1970s, I would make an appointment to see the tax inspector who looked after a particular client’s affairs and we would work out a fair compromise based on a common understanding of the client’s circumstances and the prevailing law. Those days are long gone. The best you can hope for these days is to speak with a support line person who has some intuitive sense of the technical issues involved.
However, handled well, MTD could level the playing field. If data was uploaded that was obviously incorrect, low gross profit etc, this could kick off a systematic compliance challenge from HMRC. Much of the grunt work could be automated.
My fear is that HMRC will be so focussed on getting the process to work, these compliance opportunities will be lost, “like tears in rain”.
But that assumes no accruals and prepayments and no stock Bob
I’d say this is a recipe for false accounting conclusions
MTD for income tax and CT purposes requires adjustments for accruals accounting (and the normal tax comp adjustments) unless the cash basis has been used.
But they’re only doing VAT next year….
I utterly oppose IT and CT quarterly reporting – wholly inappropriate
The answer to this FOIA request is a disgrace. HMRC appears to be trying to avoid giving any meaningful answers, when even just a year ago my experience was that HMRC staff took these requests very seriously and made a genuine attempt to provide a comprehensive and useful reply.
They did not have to aggregate all these queries and I have not known them to do so in the past. Did you submit all the questions together, or have they rolled up a number of individual requests? The answer implies that they could answer some of these within the cost limit. Perhaps some of us could submit one of the questions each. Could they ignore an MP question on the same way?
Worth asking PCS for some hints on the exact format records are kept in now.
Some of these answers are nonsense. Of course HMRC keeps records of the number of visits, and the number of officers below. It does not need looking at individual files to discover this. Perhaps they don’t distinguish between different heads of tax at as high a level as they used to. If they are telling the truth that they do not have central records they certainly will at team level, and probably league tables to set these teams against each other, so that each can be told they are failing against some statistic and need to “improve”. The teams are probably about the size of the planned geographical spread of the 13 offices they are reducing to. The cost of collating the info would be negligible.
The FoIs were submitted separately and should have been dealt with as such
Well, that really is a disgrace then.
I am surprised that HMRC staff should behave like this, and it suggests to me that you are on their radar, and that it has been referred up quite high to somebody who has made a political decision that you should be told as little as possible. That there is now a view that FOIA legislation was down to a previous Government and should no longer be taken seriously. and that the true answers would reflect very badly on HMRC.
it looks to me like some of the requests could easily have been answered within the financial limits, and others could have been answered in spirit by revealin the results in the format in which stats are actually recorded.
If anyone would like to make the requests again, separately, please do
lionsafterslumber says:
“Well, that really is a disgrace then.”
HMRC is a disgrace. It has been allowed to become sclerotic. It has to have been deliberate policy choices that have created this shambles.
Yes – indeed – when I was in HMRC the managers used to use the statistics on visits and yield to beat the staff who they thought were “underperforming” according the expected “norms” – which was quite unfair as I always maintained that the yield should be no difference regardless of which individual officer did the visit as otherwise the traders were not being treated in an equitable and impartial way
Yet there is no staffing shortage of rottweilers in the DWP to investigate to the far end of a fart what pittance might be saved by denying benefit payments to the most disadvantaged in or palsied and sick society. And apparently no expense spared in saving this pittance.
It has become shameful to be British.
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