Tax barrister denounces ‘assessment by computer program’

HM Revenue & Customs defended its transformation strategy after a tax barrister claimed that the move to a centralised administration, with liabilities assessed “according to computer program”, is detrimental to the rule of law.

My news story of March 6 for Tax Notes (paywall) is now reproduced in full with permission:

Tax Barrister Denounces ‘Assessment by Computer Program’ (PDF)

Old versions of tax law on government website – an update

Last week HM Revenue & Customs apologised for linking to some very old legislation, in a guidance note on new criminal offences, and removed the offending links. HMRC guidance at GOV.UK does not normally include statutory references, but if that is going to change there is a clear risk that the same mistake will be made again.

Legislation.gov.uk is described as “the official place of publication for newly enacted legislation”. Great care is needed in relation to older tax legislation, including some of the major consolidation Acts.

For example, go to Income Tax Act 2007 and you’ll see a prominent warning about an apparently very large number of changes that have not yet been processed.

There are also some Acts for which Legislation.gov.uk provides only the original version – for technical reasons, according to the website.

I’ve discussed this lack of progress with The National Archives. “Expert participants”, mainly from the public sector, are helping to update the legislation and have “substantially increased the resources we have available to update legislation”, a spokesperson said. Continue reading

HMRC guidance points to old tax law

You can find out about criminal offences relating to offshore income and assets in a new guidance note on HMRC’s website. But the guidance points to some very old tax law.

While HMRC guidance for taxpayers published on GOV.UK does not normally include statutory references, this guidance note has six.

At the time of writing, there are links to sections 7 and 8 of the Taxes Management Act 1970 as reproduced at Legislation.gov.uk, the “official place of publication for newly enacted legislation”.


UPDATE 22 March: HMRC has deleted the links to sections 7 and 8 and apologised for the error.


The problem is that while some progress has been made in processing changes enacted in annual finance acts, Legislation.gov.uk still presents the original versions of some of the key consolidation acts. The original TMA 1970, which turned 48 last week, is here. Continue reading

HMRC, business records checks and the tax gap

HM Revenue & Customs risks stigmatising small and medium-size enterprises unless it provides a more detailed analysis of the UK tax gap, the Chartered Institute of Taxation warned in January. A delay in publication of an HMRC review of its business records checks programme, scrapped in 2015, appears to have added weight to concerns that the tax authority has overestimated non-compliance by SMEs.

My news story for Tax Analysts ($), published on 16 January, is now reproduced in full with permission:

HMRC Risks Stigmatizing SMEs in Absence of Record Checks Report, CIOT Says (PDF)

Scottish tax plans create additional complexity and anomalies, experts warn

Planned changes to Scottish rates of income tax would add further complexity to a system that is already difficult for taxpayers to understand, tax professionals said after Derek Mackay, cabinet secretary for finance and the constitution, set out Scotland’s draft budget on December 14.

My news story for Tax Analysts, published on December 15 (paywall), is now reproduced in full with permission:

Scottish Tax Plans Create Additional Complexity and Anomalies, Experts Warn (PDF)

Designing good compliance into the tax system

HM Revenue & Customs estimates the total UK tax gap, the difference between the tax collected and the amount that should be collected “in theory”, at £34bn. Just £1.7bn relates to avoidance (excluding international tax planning strategies such as profit shifting, which are being addressed slowly but multilaterally), and £6bn relates to interpretation of the law.

In contrast, criminal attacks account for around £5bn and evasion another £5bn, while £3.5bn is attributed to the “hidden economy”.

Read more: My article for AAT Comment, 12 January

Tax is really complex, but where is the law?

The Scottish budget has heaped more complexity on an already complex income tax system. There are to be two new rates for taxpayers on low and middle incomes.

Already, a UK taxpayer may have income that is charged at default rates, savings rates and Scottish rates. These rates include:

the default basic rate, the default higher rate, the default additional rate, the savings basic rate, the savings higher rate, the savings additional rate, the starting rate for savings, the savings nil rate, the dividend nil rate, the dividend ordinary rate, the dividend upper rate, and the dividend additional rate …

That list is drawn from a quick look at sections 6 to 16 of the Income Tax Act 2007, as revised, published in Tolley’s Yellow Tax Handbook. (Other handbooks are available.) Continue reading