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)

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

HMRC will recruit up to 5,000 extra staff to prepare for Brexit

HM Revenue & Customs will recruit up to 5,000 additional staff in 2018, the UK government said less than a week after HMRC Chief Executive and Permanent Secretary Jon Thompson told a parliamentary committee that the department was planning to review its priorities in the light of uncertainty created by Brexit …

“Alongside the negotiations in Brussels, it is crucial that we are putting our own domestic preparations in place so that we are ready at the point that we leave the EU,” a spokesman for Prime Minister Theresa May said after [an October 31 cabinet meeting]. “Cabinet heard many of these will be needed even in our preferred scenario of a bold and ambitious deal — for example, implementing either of our proposed customs arrangements will require investment in new systems and customs officers by HMRC.” Read more:

My news story for Tax Analysts, November 1 ($)

UK tax gap update highlights evasion, legal interpretation losses

A shift in the public debate is needed to ensure that everybody sees tax evasion as unacceptable, a leading UK tax expert said after official figures suggested that avoidance accounted for £1.7bn of a £34bn tax gap.

HM Revenue & Customs estimated that evasion, criminal attacks, and the hidden economy together accounted for £13.8bn, and error and non-payment for £6.4bn. Losses arising from differences in interpretation of the law accounted for £6bn, and failure to take reasonable care accounted for £6.1bn …

My news story for Tax Analysts, October 30 ($)

HMRC: Measuring tax gaps