Monday, December 05, 2011

BLOG 116


Have you noticed that under David Gauke’s tutelage HMRC no longer recognise that many people who set up new businesses are not financially, or even mathematically, sophisticated. Whatever people thought of Dawn Primarolo, I do not think she could be accused of lacking humanity or not being capable of putting herself in the shoes of the man or woman in the street, who make up the vast majority of taxpayers. For all her faults (and to the tax advisor community she had many) she did seem to recognise that some taxpayers:

- make mistakes
- pay rather more attention to developing their businesses than completing their tax returns
- do not fully understand the tax laws (Neither do most tax advisors in many areas, albeit that there is a statutory fiction that everyone is deemed to know the law and albeit that Ms Primarolo introduced harsh new penalties on those who do not understand their statutory obligations. The number of tax cases that reach the tax Tribunals and the Courts might be said to call into question whether the MPs who introduce tax laws fully understand them either, but that is another question)
- shy away from simple mathematics – including totting up their turnover on a monthly basis and keeping a running twelve-month total of it.

However I am sceptical whether David Gauke does so as, under his oversight, HMRC seem to have taken to describing as such people as “cheats” – who of course, in the main, did not have the benefit of the Oxford University education that us taxpayers (or our parents) provided for Mr Gauke. The use of such a disparaging – and inaccurate – term to describe honest taxpayers trying to cope with a complex tax system seems to me wholly unreasonable and unfair. I notice that the latest HMRC press release headed, “VAT cheats have one month to come clean” goes on to describe such people as “VAT rule-breakers”, which I suppose is a bit less aggressive than “cheats” but still carries with it a connotation of deliberately breaking the rules, whereas in many cases the taxpayer is either ignorant of the rule, or aware of it but ignorant of the fact that his turnover has triggered its application.

Of course, there are indeed a number of tax cheats who either know that they owe tax but have chosen to opt out of the tax system, or who do not know that they owe tax because they have opted out of the system, so are indifferent as to its intricacies. I hope that HMRC chase them with the full vigour of the law.

Actually, though, HMRC are not doing that. At the same time as they label as criminals honest taxpayers who are doing their best and failing, they are offering attractive deals to real tax criminals to come clean and escape the punishments – including most of Ms Primarolo’s penalties – that parliament felt appropriate to impose on such people.

Sadly, to many of us who spend our lives coping with the tax system, under the Coalition HMRC seem to have moved from collecting the right amount of tax at the right time (which was their slogan under the previous government) to collecting as much money as possible in the shortest possible time with little regard to what is due and to how much of what they do collect is tax and how much is penalties. Personally I am worried stiff (as a citizen of what I had believed to be a parliamentary democracy) that much of what HMRC extract from frightened taxpayers under the label of penalties is little more than extortion money because they constantly claim penalties in circumstances where legally none is due.

Wouldn’t it be good if Father Christmas were to give David Gauke an understanding of the common people, many of whom do not even know where Oxford is let alone have the intellectual ability to study there? He might then be able to tell HMRC that people less educated than their mandarins may fail through ignorance as much as they may, indeed, be crooks.

Sadly, though, I no longer believe in Father Christmas!



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