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R&C TRADE UNION - PROTECTING REVENUE AND CUSTOMS MEMBERS AT WORK AND HOME

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Job Cuts and Panamanian Adventures

Monday, April 25, 2016

Well – what a month we have had! (and what a “welcome” for the new CEO)

We have not entered into the media scrum that ensued after the revelations of the so called “Panama papers” and all we will say now is that it is right and proper that any independent investigation is undertaken by the professionals – HMRC. It is excellent to see that we will work with our colleagues in the NCA on the issues that arise from the “papers”.

It was also “interesting” to note that Vince Cable said that the job cuts in HMRC went too far when he was in the Cabinet. Hindsight is good it is said.

Then we had the Public Accounts Committee weigh in with a report on Tackling Tax Fraud. The link to the conclusions and recommendations is attached:

http://www.publications.parliament.uk/pa/cm201516/cmselect/cmpubacc/674/67405.htm#_idTextAnchor007

Job Losses

Yes – too many but also we have not made, in our view, the most efficacious use of the additional operational compliance resources allocated since 2010 to HMRC. Why? For reasons we know about but will not divulge here. Our members know and we know because they tell us.

Tax Fraud

Our views are well known – we stand by our previously raised concerns and we are more than aware of the current situation and the “strategic” direction and we will not go into any detail of what is occurring in either point in this forum suffice to say – we have seen and heard nothing (and we see and hear a lot) to ameliorate our concerns.

We have noted these comments doing the rounds in the Accountancy community though and believe they speak for themselves and in many cases chime exactly with our knowledge and our concerns.

It started thus:

Note: The RCTU edited the extracts for spelling and grammar and refined some comments – these are highlighted by underlining otherwise no alteration was made.

I live and practise in a small market town and over the years have seen how HMRC cutbacks have allowed and encouraged the hidden economy. The town, like so many others, used to have its own tax office with inspectors keeping an eye on business activity. This week I have seen:

  • A director’s house renovations of £20,000 invoiced to his limited company as “factory repairs”. The contract will exceed £100,000 and I have no reason to think that future invoices will not be treated in the same way.
  • The same director charging weekly contract cleaning of his house to his company as “office cleaning”
  • A builder with an annual turnover of more than £100,000 who is not registered for VAT
  • Subcontractors in the building industry who tell contractors that they don’t want tax deducted at source because they settle their own tax and they actually manage to obtain work on these terms
  • Businesses which have not notified HMRC of their existence.
  • Company vans used for private purposes when directors have confirmed they are not used privately.
  • Tax credit claims based on director’s salary of £8060 with no mention of dividends of >£20,000

And it was followed by these selected extracts:

I am afraid we need an army of empowered tax inspectors, checking everyone’s affairs from top to bottom every 5 years or so.

 

HMRC's efforts are entirely predicated on creating an artificial expectation of capture... when you read the annual report identifying the cost/return figures, you really do wonder why the Government doesn't simply throw more money at the problem, at least until there are signs of the law of diminishing returns starting to bite.  They are so far away from this at the moment, yet continue to reduce headcount in key areas of their business leaving under experienced staff trying their best to do their job. 

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Inspectors no longer have any influence over the cases they take.  We had our first "full enquiry" for probably or 15 years the other day and the Inspector said the case was allocated to him by "the system" with instructions about how to deal with it.  It was a complete waste of time and the case was poorly selected and, as expected, no adjustment was necessary at all.  The only good thing about the way they now work the cases is that this was all agreed during the one day visit, rather than after six -months of correspondence.

It seems that government does not want to put in the resources over a long period that would be required to deal effectively with a high number of investigations.  That is really a decision by politicians about the importance they place on these matters.

 

 

Things have got worse since everything has been centralised, and there is little local responsibility, which can only get worse when the local offices have gone.  The only specific responsibility for taxpayers is for the large companies, and even there HMRC do not have sufficient resource to affect an efficient litigation strategy. 

­­­­­­­­­­­­­­­­­To say we in HMRC do not know about such activities is incorrect however legitimate points are made here. There are other legitimate points to be made in this “conversation”. The RCTU is committed to doing just that – on behalf of the hard working and diligent members of staff in HMRC who work on behalf of all the honest hard working people in the UK. Let us be clear on one thing that really does come from all of this – tax fraud (evasion – call it what you want for all we care) is far more pervasive and endemic that any of the myriad of calculations that currently exist show. The organisation to tackle that needs to be clearly constructed and that can only be accomplished with the frontline staff being involved – not being moved around like pieces on an ever changing chess board. Structure and organisation are vital and necessary components to tackle the world we live in and we need that conversation to start now. We are here for that.

 

 

 

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