WHO CARES, IT'S ONLY TAXPAYERS' MONEY

 

BLOG 223

WHO CARES, IT’S ONLY TAXPAYERS’ MONEY

 

I read the other day that the Department for Work and Pensions (DWP) has had to pay HMRC £88 million in back PAYE and NIC for not having correctly applied the rules on Workers’ Services Provided to the Public Sector through intermediaries.  The Home Office has similarly had to pay £29.5 million.

 

These rules are colloquially known as IR35.  That is not technically correct.  The rules on Public Sector workers are a parallel system running alongside IR35, which are the rules that require a Personal Services Company (PSC) to apply PAYE and NIC to income received in specified circumstances that are attributable to a supply by it of labour – typically the labour of its shareholders.  The Public Sector rules are of course the rules that (with some changes) large businesses that engage workers through PSCs or other intermediaries are now required to apply.

 

The DWP say that they used HMRC’s CEST tool.  HMRC say that an engager is entitled to rely on its CEST tool provided that it uses it in accordance with the HMRC guidance.  The inference is accordingly that the HMRC guidance was not clear enough for the DWP and the Home Office to have correctly understood it.

 

I laughed out loud when I read this.  How ironic that the government itself should be caught out by not understanding its own legislation!

 

But on reflection, I find it less amusing.  How many hours (funded by the taxpayer) did the DWP and the Home Office have to spend in trying to properly apply the legislation?  And how many hours (funded by the taxpayer) did they spend arguing with HMRC (also funded by the taxpayer) in trying to convince HMRC that they had applied its guidance correctly?

 

And if the legislation is incapable of being applied correctly by civil servants, isn’t it so fatally flawed that it is unreasonable to expect businesses to cope with the legislation much more successfully than the civil service seems able to do?

 

Another thing I read recently (very belatedly, as it was in Tax Advisor magazine last January) was an article by a gentleman called Karl Kahn entitled “Self-Assessment Tax Returns: Your FAQs”.  Mr Kahn is described as Director General for Customer Services at HMRC, which sounds to me like a pretty important role.  The first question was “I am not sure if I need to complete a tax return.  How will I know if I do”? The answer was “This depends on your circumstances.  You must complete Self-Assessment if you fit into one of the following categories …  If you’re still not sure whether you should complete Self-Assessment, you can check by running through our handy tool online at …”.

 

I was struck by the word “must”.  I generally interpret that as meaning “the law requires you to” do something.  However, Mr Kahn obviously interprets it differently.  The law is quite clear, “a person … may be required by a notice given to him by an Officer of the Board – (a) to make and deliver to the Officer a return …” (TMA 1970, s 8(1)).  The concept of self-assessment when it was introduced in 1994 was that a taxpayer has to tell HMRC that he is chargeable to income tax or capital gains tax unless they have already asked him to complete a return or the income has been taxed by deduction at source (TMA 1970, s 7).  It is up to HMRC to then decide whether they want to give him a Notice under s 8.

 

So how does Mr Kahn interpret “must”?  I assume he interprets it as meaning “We would very much like you to volunteer to”.  However, if so, I have never come across such a definition of “must” before.

 

It is of course also possible that he believes that by writing an article in Tax Advisor magazine – which is an excellent magazine, but I suspect has a very limited circulation – he is giving to the whole of the populace of the UK a notice under TMA 1970, s 8.  I hope that is not his intention.  It would clearly be unfair to the millions of people who do not read Tax Advisor magazine (and probably do not even know that it exists) if they can be penalised for not having complied with the Notice.  Many readers will by now be thinking that I am being far-fetched, and that no-one can possibly be penalised for not complying with legislation of which they are unaware.  Sadly, that is incorrect.  A number of Appeals Tribunals have penalised people for not having complied with laws of which they are unaware because lawyers have a maxim, ignorance of the law is no excuse.

 

What potentially worries me is that an alternative explanation might be that Mr Kahn is unfamiliar with the Taxes Management Act and believes that he can perform his job without needing to worry what the law may be, because HMRC seem to frequently take the view that the law is irrelevant, and that people should do as they are told by HMRC irrespective of what Parliament thinks.

 

Alternatively, he may believe that taxpayers need to comply not with the law that a wishy-washy Parliament has chosen to enact, which gives rights to taxpayers, but they should instead comply with the law that HMRC would have liked Parliament to have enacted which treats the convenience of HMRC as far more important than taxpayer rights.

 

ROBERT MAAS

 

CRUISING THE UK

 

BLOG 222 

CRUISING THE UK

 

I have just returned from my holiday cruise – on the newly refurbished Celebrity Silhouette.  In Covid times it was a somewhat bizarre experience.  When we booked, the cruise was mainly around Scotland.  However, either Nicola Sturgeon would not let us in or Celebrity opted not to cope with Scottish restrictions, so by the time we set off from Southampton, the cruise destination were Dover, Liverpool, Belfast and Portland, Dorset.  Furthermore, they also decided that, even though Boris had scrapped most of the UK restrictions before we sailed, we could not get off the ship unless we went on a Celebrity curated tour excursion – and if we went on a tour excursion we had to remain in the “bubble” that consisted of everyone on the coach.  As I know both Liverpool and Belfast, not being allowed to wander around on my own was a disappointment.  We never actually got to Portland.  The captain deemed the sea too rough to dock there (the waves looked to me to be 9 to 15 inches high which as a layman I was surprised can cause havoc with a massive cruise liner).

 

Although Celebrity have an office in London, they are a US company – they proudly tell me that they were voted Best Cruise Line 2020 by LA Travel Magazine Readers (which sounds a bit of a niche readership but if Celebrity value the award, I assume it is a discerning readership).  That probably explains (in Celebrity’s mind at least) why everything in the onboard shops was priced in dollars.  It may also explain why our perception that on a cruise around the UK with “guests” restricted to double-jabbed, PCR tested UK residents, our phone chargers, etc would work on-board was a misconception.  The plug sockets accepted US and EU plugs, but not UK 3-pin ones.  Fortunately, I had brought the charger for my Kindle in Chicago so had brought along an adaptor which could work in both directions.  My friends who I went with were able to borrow an adaptor from Celebrity but were charged a $50 deposit to do so.

 

Being severely digitally-limited, I opted not to check in online via the Celebrity app as that required me to upload a photo of my passport and a photo of myself, and I felt that I did not want such personal information on my phone as I am more likely to lose my phone than my passport. Furthermore, they had already forced me to instal the NHS app so that I could prove that I was fully vaccinated, and I had problems uploading the same information for the NHS.

 

Check in was a bit of a disaster.  I had not worked out that to show my vaccine certificate I needed to sign on to the Southampton port wi-fi and that to open it I had to wait for the NHS to send me a code.  I was hustled along by a Celebrity assistant whose efforts to be helpful tended to fluster me even more.  Worse, the check-in assistant to whom she took me appeared unfamiliar with the check-in procedure and kept having to ask the adjoining person for help.  Check-in seemed to involve Celebrity scanning everything in sight, my passport, my vaccine certificate, my PCR test certificate, and my credit card.  There was a problem with that.  My card expired at the end of July (the day we would disembark from the cruise) and the replacement one was valid only from 1 August.  Initially, I was told they could not accept it, but when I pointed out that it was valid for the entire period of the cruise, I was told that I could sort it out on the ship.  It is of course illegal under GDPR for Celebrity to capture all this personal information without telling me how they intend to use it and what they would do with it when my cruise ended.  I assume either that GDPR does not apply at sea or Celebrity feel that the UK legislature is not entitled to pass laws that need to be complied with by US companies.

 

Because we had been on a Celebrity cruise before, we were upgraded to Concierge Class, and as “exhilarating days of discovery deserve exceptional space to recharge”, “this gave us luxurious accommodation artfully created to make your stay warm and welcoming”.  To my mind that is just a teeny bit OTT, but the cabin (sorry stateroom) was much bigger than the one I had when I went on my cruise to Alaska and certainly met my needs.  We were also given Celebrity’s “classic package” which included free wi-fi and free drinks other than premium drinks.  The free wi-fi was fine if all you want to do is access the internet, but you needed to buy an upgrade if you needed fast broadband.  The distinction between normal and premium drinks was a mystery.  Again, the UK laws requiring prices to be displayed at a bar do not apparently apply to Celebrity.  I mainly drank Glenfiddich, a single malt whisky, which I had expected to be a premium drink, but seems not to have been.  My friends were told they would have to pay for a rum and coke, or for a Baileys or even for a bottle of sparkling water, all of which I would have expected to be normal drinks but turned out to be premium ones.

 

Paying my bill at the end of the voyage was an interesting experience.  Celebrity again refused to accept my credit card, explaining that it would have expired by the time they presented it for payment.  I do not have a clue why.  I thought that the way credit cards work is that Celebrity puts my card into a machine which sends a message to Celebrity’s computer in America, which sends a message to Barclaycard’s computer in England, which sends a message to Visa’s computer in Hong Kong, which confirms that I have sufficient credit, and that message is then relayed back through the chain to the card machine, all in a matter of seconds.  Has Celebrity done something to upset Visa and Mastercard, so they refuse to allow them to use this system?

 

I said I was happy to pay in cash and asked how much the bill was.  The response was $87.36.  Curiously, in England I tend not to carry dollars around with me, so asked how much that is in sterling.  This appeared to be an unusual request. Happily, the lady said that she would calculate it and told me it came to £70 and she would give me some change.  I duly handed over the money.  She then scrambled around in a drawer and handed me a 5 dollar-bill, three quarters (25 cents), two dimes (10 cents) and three pennies (1 cent) a total of $5.98.  As I normally go to America every year, I am happy to have dollars, but wonder whether other passengers took a similar view.

 

Apart from this, the cruise was great.  Good food.  Unbelievably good service from friendly staff (after the first night, Olive, the assistant waitress, brought my Glenfiddich unasked and topped it up during the meal too).  Brilliant entertainment in the Celebrity theatre and live music in other places.  Someone told us that there were 800 passengers (instead of the 2,800 that the ship normally embarks) and 1,500 crew to look after them.  Reminders to wear a mask in public spaces were friendly and indeed mask-wearing was largely unenforced most of the time.

 

I would recommend it to anyone – but bring along a fistful of dollars and an adaptor to fit US sockets!

 

ROBERT MAAS