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Taxman getting desperateA group of stormtroopers from stars wars iv a new hopeIs the taxman getting desperate?

Are HMRC being a little heavy handed?

I am starting to receive more and more anecdotal evidence of increasing desperation on the part of HMRC to collect tax as soon as possible and the adoption of a worryingly aggressive approach to taxpayers who are late with a payment.

Below I’ve selected three recent examples of cases concerning my own clients, which I believe will amply illustrate the point:

  1. A client of mine runs a small plumbing business that pays around £50k a year in VAT & PAYE, invariably on time; on reflection, I seem to recall they were late with one VAT payment five years ago and that was because their bookkeeper was rushed to hospital with appendicitis.

    Last month they were late a second time, on this occasion it was PAYE, because the bookkeeper was on a beach at the time (well recovered from her appendicitis I might add). HMRC’s first response was to ring the owner at home at 7.58am in the morning demanding to know when he last made a payment and when. He explained that it was a little difficult to give them a definitive answer at that moment as he was as naked as the day he was born and about to get into the shower. He politely requested that perhaps they could call him in the office later that morning; they rang his office at precisely 8.01am and not surprisingly there was no one in to answer the call.

    When the client arrived at the office and checked the answerphone, the HMRC official had left, what can only be described as an abusive message, including comments such as, “we can put you in court within 48 hours”, and “our bailiffs can strip your home to recover the monies owed”. He paid up that day, but was left with an overwhelming feeling of resentment, especially as the phonecall had been made when he was precisely 3 days overdue with his payment.

  2. Only last week, I saw a foster carer who was a neighbour of mine. She came in to see me in tears, with a debt collection agency letter in her hands demanding a £49.55 payment (that wasn’t a typo, yes they’d employed bailiffs for a £50 debt). For those of you not familiar with fostering, it is crazy that they’re required to complete a Tax Return at all as the allowable costs invariably exceed the income, therefore no tax to pay. The poor lady had made a simple mistake trying to complete the online Tax Return. I decided to make this a pro bono case, redid her return and it turned out that she didn’t owe £50; rather HMRC owed it to her.
  3. I act for a Citizens Advice Bureau in Shropshire that was late with a PAYE payment. The payment was overdue simply because the local council was two weeks late sending the CAB the quarterly funding. The CAB had not missed or been late with a PAYE payment in the 27 years of their existence. The belligerent clown who contacted them from HMRC, threatened to arrange for recovery officers to visit their office and remove their office furniture and computers, if payment was not forthcoming immediately.

    I contacted the HMRC official who had made this call and politely informed him that the charity was entirely dependent on the local council for their funding and that if he was prepared to be helpful; perhaps he could intervene with the council and inform them of the consequences of their delayed payment. It will not surprise you to hear that he expressed all the sympathy of a concentration camp goon at my suggestion and repeated his earlier threats.

    I therefore decided to take a different approach and suggested that when he and his stormtroopers visited the CAB to strip the offices, which would effectively close them down for a late payment of £1,423 PAYE, that they do so by appointment. I also informed him that they would be met by the local MP and reporters & photographers from the local paper to witness the event. I’m pleased to report that the official concerned, backed off, albeit with ill grace.

I could fill pages with similar stories of bullying and threats; do HMRC really think they are acting in the best interests of the taxpayer and increasing revenue for the Treasury, by harassing the “good guys”? I know that if I started chasing clients who were 3 days late in paying their fees by calling them before 8 in the morning at home or by employing bailiffs over miniscule amounts, very soon I wouldn’t have very many clients left.

I’m certain that by going “over the top” and being overly aggressive they will achieve little, other than antagonising honest taxpayers and turning it into an “us and them” situation. All tax returns, SA, VAT and RTI, are now done online and HMRC know exactly how much they should be receiving and when. Why oh why, can’t they do what any normal business would and send a polite letter or email a couple of days after the due date pointing out the possible omission?

I know my memory isn’t perfect, but I’m sure HMRC haven’t always been like this, have they?

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David Jones is the Senior Partner and Founder of Morgan Jones & Company. Born in Liverpool and an Accountancy graduate of the University of Wolverhampton, David spent twenty years working for the Customs & Excise in London then Shrewsbury before starting his own business. David’s depth of knowledge of the UK tax system and his ability to communicate this learning has seen Morgan Jones & Company grow into Shropshire’s most respected Accountancy Practice. Email David