On Monday, HMRC published 10 of the most terrible tax excuses it has previusly received for missing the January 31 tax return deadline. You can understand where HMRC is coming from: making light of an issue as a means of reminding people of the penalties for non-compliance with their tax obligations.
This set our weekly tax brief team thinking along two separate lines.
First, the serious. The fact that a taxpayer on a mountain in Wales with no post box or internet signal lost an appeal against an HMRC penalty, as did a person living in a camper van in a supermarket car park reminds us all that HMRC has a responsibility to protect those who, by reason of geography, poverty, disability or age, find themselves unable to ‘interact’ with HMRC digitally.
Rather than lampooning digitally disenfranchised taxpayers, HMRC would do well to remember what happens to MPs who tweet infelicitous photographs of voters’ homes.
The second strand of our thinking was intended to be more humorous. We decided to publish some of the excuses given to us by HMRC for not dealing promptly with the affairs of taxpayers. We leave you to judge for yourself whether these are funny, or a desperately sad indictment of an under-resourced government department:
1. Please can you call back in about an hour, Mr X (the Inspector) has just gone for a lie-down (that one was used by HMRC a few years ago).
2. We can’t issue your tax repayment, as shown in your Corporate Tax Self-Assessment, because it’s on a work list.
3. It’s in a pile and because it hasn’t been two weeks since we received it we don’t have to look at it yet.
4. Automated HMRC message: ‘If it’s less than 4 weeks since you submitted the return to us, please call later’.
5. Automated HMRC message: ‘We are very busy at this time’ and the call cuts out.
6. Letter in connection with the taxation of a lump sum termination-of-employment payment and the underlying rationale for its payment as compensation: "I cannot comment on employment law or the other [tax] references you make, but I can tell you what my [internal guidance] employment income manual says".
7. "HMRC does not have the budget for the inspector to travel to the meeting". The business had a complex research and development (R+D) claim. It is HMRC’s view that the best way of understanding the basis of an R+D claim is for the HMRC specialist to meet the business to understand the issues. The business was willing, indeed keen, to have a meeting but HMRC said that they could not hold a meeting at the client’s premises as the inspector dealing with the case was in a different part of the country and there was no budget for the inspector to travel to the client’s premises.
The very nature of the excuses given to us by HMRC demonstrates beyond doubt that it’s in nobody’s interest for HMRC to make a virtue of cutting resources. If HMRC is to do its job properly, government must finance it adequately.
George Bull is senior tax partner at Baker Tilly