I have posted this thread on Twitter this morning:
There is justifiable outrage right now about the fact that the Post Office has been able to prosecute sub-postmasters itself based on data it generated. I get that anger, but we should remember that HM Revenue and Customs do this every day to thousands of people….
HM Revenue and Customs (HMRC) is, when it comes to imposing fines, quite literally a rule unto itself. It imposes millions of fines a year. Many of them are for not submitting tax returns, and many of those are on people who had no taxable income, or none to declare.
Tens of thousands (or more) of others are imposed on people who have failed to meet a deadline because (totally reasonably) their lives do not revolve wholly around the requirements to submit tax returns.
What is more, HMRC is very inclined to ignore anyone's reasonable excuse for making a mistake resulting in a fine. The term ‘reasonable' as it is used in common language is very rarely, if ever, known to HMRC.
The result is that innocent errors can also give rise to significant tax related penalties that often amount to 30% or more of tax owing. And the chance, for most people, of winning an appeal against these penalties is minimal.
To add insult to injury, if you have made an innocent mistake, you usually can't claim tax relief on the cost of putting it right, which also adds to the overall bill resulting from it.
And, once HMRC has found one mistake, you can be sure that they will go looking for more, and they are experts in extrapolating errors over very long periods of time so that they can to up the bills they seek to charge.
Now, let me be clear. I want HMRC to find tax cheats. And I really do want them to collect all tax that is owed. I also want them to encourage tax compliance amongst the UK population. After all, who wouldn't? If everyone paid their tax, the rest of us might pay less.
But let's be clear, this is not how HMRC work. For example, the area where tax compliance is just about worst of all in the UK is amongst small limited companies, where almost 30% of all tax at these companies owe is likely to go unpaid, in HMRC's own opinion.
You would think, as a result, that HMRC would focus all its efforts on this group of particularly non-compliant taxpayers. However, evidence I have collected over the years suggests that they fail to even ask for corporation tax returns from about half of all UK limited companies.
They do that because the companies have told them at some point – usually when they are formed - that they will not trade in the next five years, and without undertaking any further work, HMRC accepts that assurance and asks for no more tax information from them during that time.
So, you form a company, which, by definition, means that you create an entity capable of trading in its own right, and which can realistically do little else, and then HMRC accepts your assurance that you have no intention of doing any such thing.
Why the heck, you might reasonably ask, do they do that without asking more questions? Why don't they ask for more evidence? Why don't they appraise that evidence? And why are they willing to think that things won't change? I wish I could answer those questions, but I can't.
Nor do I know why a proposal I made ten years ago to require that HMRC demand that all UK banks advise them annually of all the companies to whom they supply services and of the amount that those companies deposit in their bank accounts each year has never been put into law.
If HMRC did this there would be no hiding place for the hundreds of thousands of UK limited companies that I am certain operate in this country but which never pay tax. HMRC would have data on them all.
If a law was then passed saying that if a company failed to supply information on its tax affairs then the directors would be personally responsible for any tax due the likelihood that more than £10 billion of tax a year could be recovered would increase substantially.
Saying this, let me be clear that I do understand limited liability, but it should never provide an opportunity to break the law with impunity, which is what it is doing in this country right now.
But, this law has never reached the statute book.
Instead, a law that requires that people who sell odds and ends of second-hand items on eBay, Vinty and other sites has been passed, causing great concern.
And, as I've already noted, after 31st January, the Revenue will impose hundreds of thousands of fines on people who did not submit tax returns, but had no income, or had no income that needed declaring on such returns.
And day in and day out, other penalties will accumulate on innocent errors made by companies and people struggling to comply with VAT and PAYE laws whilst the Revenue continues to ignore their business competitors who completely evade tax.
It is certain that the Post Office was out of control. But I think that HM Revenue and Customs is at least as out of control, and maybe more so.
Most of its board have little tax experience.
Most of its Tax Commissions have not worked in tax for most of their careers.
The people at the top of HMRC will, no doubt, be able to afford the tax advice that they need to prepare and submit their tax returns, and answer any other questions that they have on this issue. Many people have no such luxury. And HMRC has turned off its telephone helplines.
Worse, between them the entire senior management of HMRC appear to have little understanding of small business or what it is like to struggle with tax whilst also meeting the needs of customers, staff and your bank. They all come from big business or civil service backgrounds.
There are no representatives on the board of HMRC from small business, smaller firms of accountants, trade unions, pensioners, the self-employed and others with experience to offer on how the tax system should be managed.
And the whole focus of that board is increasing total tax pounds collected per pound spent to collect it, which is the most useless corporate goal when the aim should be tax compliance in our population.
Because of their focus on cost control, HMRC has closed almost all local tax offices in the UK, and in recent months HMRC has closed down its telephone helplines just as people need them most in the run-up to tax return submission deadline.
Instead, HMRC claims that all the questions to all the answers that anyone might need are available on their website and supposed chat services, but that is not true.
What is more, quite ludicrously, HMRC has cut the number of tax investigations that they do each year to save cost, which lets the cheats get away with what they're doing.
If you wanted to set up a tax authority to help tax cheats whilst punishing honest people who make innocent mistakes in their tax affairs, you would do what HMRC is now doing. We need something very different.
If you want to have a tax system that serves the community of this country, creating the public good that they tax system should be, then you would have local tax offices giving people the opportunity to ask for help face-to-face.
You'd also answer the mail and pick up the phone. And you would staff your telephone helplines with people who knew what they were talking about because you would properly train your staff in all aspects of tax.
And of course, you would take proper, strong action against big tax cheats, who you would actively seek out. But you would use those powers with considerable discretion and only when there was obvious evidence of the intention to abuse.
You would, in other words, make it clear that the tax authority is on the side of honesty and will do everything you can to help people be honest whilst accepting that honest mistakes happen.
Simultaneously, you would focus all your tax collection efforts on the areas of maximum risk, where the activities are small limited companies that do, in the current UK legal environment, provide licensed opportunities for what is effectively identity theft, would be your focus.
I am not saying let's ignore the Post Office. Far from it. But let's not pretend that they are the only UK government agency that has a terrible track record when it comes to prosecuting innocent people.
HMRC does it very much more often to people who have done literally nothing of any consequence wrong or who have made innocent mistakes whilst turning a blind eye to the problems that they should be addressing. And that is also a national scandal.
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This blog is, yet again, a living example of the points made in “Late Soviet Britain” regarding neoliberalism – which like the SovU – thinks that computers and planning provide all the answers and (ref Post Office) cannot be wrong. This of course suits those whom neoliberalism most benefits – the rich.
It is not any better in the USA –
https://www.dailykos.com/stories/2024/1/13/2217009/-IRS-has-collected-360M-more-from-rich-tax-cheats-as-its-funding-is-threatened-yet-again
where the imbeciles in the Repub’ party want to cut IRS funding (echoing what the Tories have done in the UK). Deparate & pathetic stuff.
The UK truly is a basket case – with no improvement in sight even post-election..
I suggest that there are wider issues about the application of ‘Administrative penalties’ by various branches of Local and National Government and we need to have a proper review of how and by who these can be applied?
You said: ”Instead, a law that requires that people who sell odds and ends of second-hand items on eBay, Vinty and other sites has been passed, causing great concern.”
The advice around this currently on the gov.uk website is:
”You do not need to tell HMRC about this income
You do not need to pay tax on personal possessions you sold for less than £6,000.”
https://www.tax.service.gov.uk/guidance/check-non-paye-income/outcome/sales/you-do-not-need-to-tell-hmrc-about-personal-possessions
When is this new law going to have effect from, and will this mean the current government advice, as stated above, will no longer be valid?
That advice is wrong, or very misleading. It relates to the sale of chattels for CGT as far as I can see
Latest information from HMRC
At https://www.gov.uk/government/publications/selling-online-and-paying-taxes/selling-online-and-paying-taxes-information-sheet#:~:text=From%201%20January%202024%2C%20digital,report%20certain%20information%20to%20HMRC%20.
Is:
When you may need to pay tax for selling goods or services online
In order to pay tax on the goods or services you sell online, you either have to be trading or making a capital gain.
If you are just selling some unwanted items that have been laying around your home, such as the contents of a loft or garage, it is unlikely that you will have to pay tax.
If you buy goods for resale, or make goods with the intention of selling them for a profit, then you are likely to be trading and will have to pay tax on your profits.
However, if your total income from trading or providing services online was less than £1,000 (before deducting expenses) in any tax year, you would not be required to inform HMRC nor pay any tax on the profits (this is due to the Trading and Miscellaneous Income Allowance).
Agreed
But you miss the point – which is where is the line?
Many people trade clothes often to refresh their wardrobe
Many hobbyists turn over kit often
HMRC is not reflecting the complexity of this
The new rules regarding online sellers came into force on January 1st 2024 I believe. I’d also like to know if HMRC can look back at people’s accounts retrospectively, over many years
Yes, in a word, if they think there is evdience of trading. Six is usually possible, occassionally more.
Just out of interest, why would this be staring at the beginning of the chronological year and not the tax year? It just seems a bit of an odd way to do it.
That’s the way it has been doine – because these agencies all work on a calendar year.
Your line itself is clearly incomplete; “Instead, a law that requires that people who sell odds and ends of second-hand items on eBay, Vinty and other sites has been passed, causing great concern.” Said law requires what, exactly? You don’t say.
The law requires information exchange from these sites to i9ndeitfy trading – mopst of it very small scale
Meanwhile, it is not happening from banks.
A tax authority deliberately in my view designed to bear down on the little man, whilst creating nice little tax aversion policies for the rich who run the country and high net worth individuals who vote and fund parties who keep aversion alive helps this to happen:
1) Gives tax (and the state) a bad name in the eyes of voters.
2) Makes tax cutting politicians popular.
3) Perpetuates tax cutting which really only benefits the rich at scale.
4) Which increases inequality.
5) Leads to private opulence and public squalor
6) Perpetuates the lies told about what tax actually does and the role of the state.
7) Which helps us to keep having financial crashes and public sector crises.
8) Which turbocharges the lack of ideas, locks them in, prevents change and helps society spiral towards disaster.
I contend quite seriously that this is not by accident.
It is deliberate design.
Never under estimate the cunning of unreason.
We are in tune here, PSR; save to say I feel impelled to claim it is perfectly rational, indeed definitive of ‘reason’ to create and use a “deliberate design”. Reason applies to means, not to ends.
Ends are rarely, if ever rational (I think the appropriate term here to describe the sorce of human ends as ‘unconscious’ – not the dubious Freudian concept – but that of cognitive science, and the molecular biology of cognition; it’s philosophical origins rest originally with Schopenhauer and Carus). The modern Cambridge School historians are to me, rationalists (the legatees of linguistic philosophy).
I think we are back to the proposition that the resources are withheld from HMRC to do the job it is supposed to do, quite deliberately; it couldn’t be easier, and nobody notices: which is exactly what Government wants; that the tax may be due, but is never collected.
Conservative (and no doubt when its turn comes, snivelling, cavilling Labour) Government is relieved and can continue to sell the proposition there is no money, taxes need to be high where it can largely be raised blindfold (PAYE, NI, VAT from consumers); but not from the suppliers, or supposed suppliers of capital (typically lots of bank debt and a small fraction of risk equity); and little tax, especially from corporates, who are obviously going to fund the politics that continues the insanity (which the electorate do not seem to understand – the majority are being systematically mugged by the Governments they vote in).
Simple.
Of all the sources of the the unethical and incompetent behaviour of the Post Office that we have been told about the one that I have yet to see mentioned is the contribution caused by the neoliberal dogma that Private is always better than Public and the resulting pressure since 1979 for all public institutions to become more business like.
I presume that HRMC has been subjected to the same pressures
In forty years has there been any evidence that in any instance this approach has ever produced a better level of service to the Public or indeed achieved any kind of benefit to the nation?
Whether it has been the creation of pseudo-businesses, pseudo-markets or privatisation the result is always a lower level of service, much higher prices, complete unaccountability, the loss of any sense of justice or ethical compass and trebles all round for the directors and the management consultants.
It is the mock- adoption of private sector ethos that so annoys me, because it so totally fails the principles of public service.
That should be a testable proposition. So how many Post Office Board members at time of first appointment had prior experience at Board level of a private company?
If it’s a high ratio then your point stands but if the ratio is low then the proposition fails.
That is not the test
The test is what it was set up to be
We know the answer to that
Exactly so Richard.
Having encountered it on several occasions it seems to be a way of behaving derived from watching TV business dramas and the kind of management consultants who think Donald Trump is a successful businessman rather than a small-time gangster.
“The test is what it was set up to be”
To which year are you referring? Let me know about the year of this ‘set up’ and I’ll check it out and see if it supports your proposition.
Are you being deliberately obtuse
?
Apparently David Cameron (PM 2010-2016) does not even remember being briefed on the Horizon problem. It is not surprising. The British Sate has always been content to live off taking advantage of the British people. The only protection it offers, is when the State is found out; and given the power exercised by Government, supporters, the machinery of administration, the power of money, the skill in disinfrmation honed over centuries, and friendly State media; being found out is rare.
Do you have any comments about the Post Office underpaying tax and being likely to be insolvant after paying it and being fined by HMRC? I believe Dan Neidle wrote an article about it in the FT on Friday but I found out about it here:
https://youtube.com/watch?v=OLzMRM97z2o
I broadcast on this yesterday
I think this a non-issue
The PO is already insolvent
Any tax due will be payable by the PO using government moneyu t9o the government
Time wasted on that really is irrelevant
Dan shouldd learn to look at bigger pictures
The big issue is why were bonuses paid on profits that did not exist?
Thanks.
Dan Neidle’s forensic deconstruction of the Compensation Application Form published separately as a Blog was, however highly relevant. If Kevin Hollinrake MP (the Minister) was planning to continue to use that Form for applications, that would be scandalous. See Neidle’s assessment of the form, here: https://www.taxpolicy.org.uk/2024/01/11/hss_scandal/
Totally agreed – very good work
That’s a startling piece – the scheme itself is a whole new scandal and confirms that the PO management, board and its lawyers are incapable of understanding what they have done. The whole lot need to go.
The legal profession needs to take a long hard look at itself. It has also been brought into disrepute.
What I find fascinating in the link is that the doublespeak in the form reminds me so much of the wall of indifference that one senses in Orwell’s 1984.
Yet the PO scandal has nothing to do with some Left-wing dystopia.
This all to do with a right wing enabled market corporatism – in the name of freedom of choice and liberalism!!
The form is disgusting – thanks for sharing.
I have some small experience of the HMRC’s tactics. I was pursued for 6 years back taxes after a simple error on my tax return (2 numbers juxtaposed). They insisted that I should have used their own exchange rates for foreign income rather than the rates I was actually paid at (which were significantly different to the actual rates). This resulted in a large underpayment and a bill of thousands. It took me 3 years to find out that they had lied to me and that their assertions were false and that the exchange rates I had used were valid. I was repeatedly told untruths and was threatened with prosecution for tax evasion. They paid back some of the money, but never admitted their error in writing and never apologised. The tax investigator who prosecuted my case made many claims that later proved to be untrue – but never in writing.
Sorry to her that
I think this is likely to be a common problem. Where would one go to find accurate information? We’ve seen from reporting and commentary on the new selling online reporting requirements there are various interpretations of what it will mean and that’s just one example of something which ought to be quite straightforward. Who to believe? And I personally wouldn’t be inclined to take the word of the taxman for anything either because I suspect what tax collection is these days is simply another fiefdom, farmed out to pliant overseers who’ll be duly grateful at some point, just as, say, I imagine (from their behaviour) TV licensing is.
Your claims 8n the second half of your comment are not true, in my opinion.
We are presented with a dilemma.
Having said that private companies are failing in key sectors (eg. water) and that public ownership is preferred we are now presented with two public bodies – HMRC and The Post Office – that are also failing. A change of ownership is not the “magic bullet” we need something more.
You allude to this by saying the Post Office is/was run “as if” it were a private company and I do think that matters…. but we do need to explore how governance should work in the public sector whether it be water, post offices or health.
Correct
I agree, but what happened to the idea of’public service’ where one did one’s job to the very best of one’s ability because one knew it was for the good of everyone? Of course, one expected to be paid the ‘going rate’ as in the ‘ labourer is worthy of their hire’, but the main motivation of doing a good job in an honest way was the inner satisfaction of helping in the general improvement to the well-being of all people in society. Or am I away with the fairies?
No, it really existed
Most of the businesses that need to be publicly owned are what, very roughly we may term quasi-natural network monopolies (there is no known way to deliver the goods/services save via a monopoly deliverer, or a fake market/internal market or whatever scam may be imagined); not because the public service guarantees competency or even good will in execution. Democracy requires eternal vigilance; most electors unfortunately often fail the test. Only the public can ensure their security and future survives intact, through vigilance. We need a regiment of Mr Bates. We do not possess it; there is some new box set binge on telly we are being sold.
The truth is, we cannot fully trust either public or private institutions, without checks, balances oversight and regulation (‘red tape’); without this framework both our liberty and well-being will be undermined; and eventually destroyed. The cost is of secondary importance. Th problem is security has been replaced by profit (and the freedom to make it, at any cost to anything else), as Holy Writ.
I meant to add in there somewhere that I strongly suspect the DWP leaders want a piece of the same kind of independent prosecution action that HMRC have got, and that the surveillance of our bank accounts is a step towards that. There’s some empire-building going on, I think.
There’re has been a lot of scare-mongering in the press about the new digital marketplace disclosure rules.
The simple facts are as follows:
* These new UK rules implement the OECD’s model reporting rules for the operators of online digital marketplace platforms https://www.oecd.org/tax/exchange-of-tax-information/model-rules-for-reporting-by-platform-operators-with-respect-to-sellers-in-the-sharing-and-gig-economy.htm
* The OECD model rules require a digital marketplace to collect basic information about its sellers (similar to basic “know your customer” or client due diligence checks), and then to make reports to tax authorities if a seller makes more than 30 sales (or more than €2,000) in any year
* The same OECD rules were implemented by EU member states a year ago, from January 2023, in the form of DAC7, the seventh directive on administrative cooperation in tax matters http://data.europa.eu/eli/dir/2021/514/oj
* Here are the UK rules. https://www.legislation.gov.uk/uksi/2023/817/made
* It is all about HMRC getting more information, just like the information on depositors reported by banks, or mandatory information exchange, CRS, country by country reporting, etc.
* The tests of whether or not a person is “trading” have not changed. And the rules for calculating trading profit have not changed either. Many sellers will be making a loss.
I agree. I wanted this data to be made available.
But the messaging is dire when, as I note, the most like it tax evaders are not being touched by this.
That is the point.
None of that mentions the use of the data by DWP to catch ‘benefit cheats’, which appears to be the primary purpose.
Who cheats on their state pension? How? Why then are pensioners suffering surveillance? PIP isn’t means tested, so why are those in receipt suffering surveillance? Whatever the reason for monitoring accounts, ending benefit fraud clearly isn’t it as that simply isn’t applicable to those groups.
I might add too this is the working environment into which DWP boss Mel Stride sees it fit to introduce more responsibilities https://www.disabilitynewsservice.com/dwp-boss-dismisses-union-warning-of-mental-ill-health-epidemic-and-staffing-crisis/ “The head of the Department for Work and Pensions (DWP) has dismissed evidence from scores of his own employees that his department is experiencing a “staffing crisis” and a “mental ill-health epidemic”.
The “devastating” dossier was compiled by the Public and Commercial Services Union (PCS), which said last month that its evidence showed DWP was “a failing organisation in a state of crisis”, after its members reported benefit claimants in vulnerable situations “falling through the gaps” in the system.
The union pointed to serious understaffing across the department, a failure to recruit and retain staff, poor working conditions and low pay, and it warned that DWP was currently running at 30,000 below required staffing levels… Many PCS members spoke of their “unsustainable” workload and the stress and depression they now experienced because of these staffing issues.”
It’s just laughable.
The FT has provided a very useful guide (not behind a paywall) to: ‘The City grandees who let the Post Office fight to the bitter end’. It is a web of interconnections between City and Government. No surprise there.
It is important to ensure that responsibility – and justice – turns toward the last ditch, where final responsibility for the scandal rests; with Government itself. There should be no hiding place.
Ironically, in Scotland BBC News are doing their best to hold the Scottish Government responsible for the Post Office scandal in Scotland, in its entirety; because there were prosecutions in Scotland through the Crown Office. This is fine as far as it goes; but that is not really the purpose of the energy BBC Scotland News throws into its aggression. Would it cared about the Governance of Scotland by the Union.
But BBC Scotland News (in reality a dogmatic Unionist Media Outlet) has already decided Scotland is already independent and the Scottish Government is fully responsible for everything in Scotland (which is how devolution was designed by Unionists, to dish the Nats – with the help of unionist institutions like BBC Scotland). BBC Scotland News does not wish to recognise The Post Office is a Reserved Matter (or communicate that fact to the Scottish public); and therefore is substantially, almost wholly in most practical effects a matter for the British Government alone to explain and redress (and how it has used its influence in Scotland). BBC Scotland isn’t interested, presumably because there is no political benefit to the Union pursuing that murky responsibility.
Thus BBC Scotland News does not bother directly to interrogate Alister Jack MP, Conservative secretary of state for Scotland and Scotland’s UK Cabinet Minster. That would never do; nothing good for the Union would come out of that.
One can see a presumption of guilt where the less well of are concerned by the current government and party, whether benefit claimants, immigrants – or sub-post masters.
The same standards are not of course applied in those those well known bastions of probity such as the City.
This is a major lonmg known to most accountants.
For those following the Post Office saga closely, there has just been a good piece in Computer Weekly with lots of useful cross-references.
https://www.computerweekly.com/news/366565720/How-Fujitsu-became-a-central-part-of-the-Post-Office-scandal
Computer Weekly and the Eye have both been on the case from the beginning and get a lot of credit.
This has just resurfaced https://archive.ph/2024.01.15-174328/https://www.telegraph.co.uk/news/2024/01/14/post-office-tim-parker-chairman-courts-horizon-scandal/
“The former chairman of the Post Office presided over its attempt to block an appeal by convicted postmasters while he was at the same time leading the country’s courts service.
Tim Parker has been accused of a conflict of interest over his role as chairman of His Majesty Courts and Tribunal Service (HMCTS), while occupying the same position at the Post Office.”
It gets worse and worse
Shocking.
Now that is really important.
Can you imagine the discussions going on about this behind closed doors, where I bet the main theme was not to discredit the PO and ‘manage the narrative’ and forget about the postmasters who were people – just people – who must have just seemed like ants to these conspirators and turd polishers in high places.
But we’ve been here before haven’t we?
Look how the haemophiliacs who were given AIDS contaminated blood were treated. Drawn out processes to wear them down and thin them out, an attempt to wash ones hands of them.
There is nothing so more revealing of an ex-empire as when it starts to treat its people as it treated those in far flung places.
Modern Britain – a complete sham of a country.
Interesting article. The developer who said “You’ve got to throw the cash account away and you’ve got to rewrite it,” was right. Patching up defective code rarely works satisfatoraly. You end up with a mess and nobody understands how it works.
This sort of thing happens time after time in the IT industry. The managers of companies like Fujitsu seem not to have heard of the concept of a sunk cost. Actually the cost us never complety sunk as you learn quite a lot implementing a system incorrectly and starting again usually works out much cheaper than carrying on.
The irony is that large IT projects usually have a modular structure one of the advertised advantages being that it makes it possible to re-implement defective modules.
And now the loan charge scandal begins to surface. I think Vorderman’s got hold of it now. I’m reminded of dominoes falling…
Another good article about the Post Office and Horizon.
https://www.mysociety.org/2023/10/16/whatdotheyknow-and-the-post-office-horizon-scandal/
I recall Blair saying the worst thing he ever did was bring in FOI.