HMRC have recently published details of their internal review of tax enquiries, employer compliance reviews, tax investigations etc in relation to cases that have occurred since 1 April 2009 which does make for interesting reading:

“Outcomes excluding penalty cases 3,443 cases out of 18,526

Upheld: review complete – 2,603 (76 per cent)
Deemed Upheld: time limit expired – 20 (1 per cent)
Varied – 349 (10 per cent)
HMRC decision cancelled – 471 (14 per cent)

Outcomes penalty cases 15,083 cases out of 18,526

Upheld: review complete – 6,281 (42 per cent)
Deemed upheld: time limit expired – 48 (0 per cent)
Varied – 793 (5 per cent)
HMRC notice cancelled – 7,961 (53 per cent)”

In basic english this means that 24% of non penalty cases were varied or cancelled and a staggering 58% of penalty cases were varied or cancelled

The results clearly show that it is in your interest whether you are an individual or a company (where there is reason to doubt HMRC’s assessment) to complain. We would also add that it is advisable to obtain specialist help when HMRC comes a calling, it’s not a time to dabble so give us a call on 0800 917 9176

There are still a number of individuals and companies out there that think the Inland Revenue won’t pursue them to the ends of the earth regarding tax debts – you need to wake up, seriously!

HMRC compliance visits and tax investigations take on real significance when you focus on HMRC’s mission to maximise tax take, as such its stated litigation settlement strategy (LSS) aims to push for a full settlement or court action if it believes it has a better than 50/50 chance of winning.

Now the issue is always the fact that HMRC have deep pockets when it comes to arguements, you only have to look at some of the employment status cases that have taken 3/5 years to conclude but the cost in terms of money, time and effort expended by HMRC (and delayed cash flow for the government’s coffers – this is most likely the issue) in pursuing these disputes is mounting.

Therefore some in HMRC are considering using a more “common sense” approach – can it be possible?

A new unit would split the dispute resolution unit from the anti avoidance division. The mission of the new unit would be to resolve the disputes more quickly; thus improving cash flow, even if the speedier resolution means a lower tax bill – I can’t see that being popular within HMRC, can you? So stick with the principle of getting things as correct as possible in the first place and if you’re not sure give us a call on 0800 917 9176 as a PAYE/NIC healthcheck could save your company, in more ways than one!

At last the results of the consultation exercise into false self employment in the construction industry have been published and we have summarised the more salient details below:

• Nothing is going to happen yet and nothing will happen until the industry picks itself up, certainly not before the Olympics in 2012

• The simplistic approach of the government having three tests has been widely criticised and they have conceded that further consultation will be required – no surprises there then

• There is also a lot of criticism that any simplistic approach away from case law is only being geared at the Construction Industry, what about other industry sectors?

• The government have indicated that they will look into organisations purporting to get round the rules such as umbrella companies, managed service companies and labour style agencies – this type of compliance is no bad thing as they are so blatantly flouting the rules and taunting HMRC (never a good idea for them or more importantly their clients)

• Interestingly, the Trade Unions aren’t happy as they could potentially see a lot of new members but the government proposals actually mean that although subcontractors would suffer PAYE/NIC they would not be regarded as “employees” but “deemed employees” which means that they would have no employment rights or benefits. This has been widely criticised because it would actually create “false employment” and the employment law side of this has not really been addressed

• There is a General Election due, probably around 6^th May, which could mean a different party in power. The Conservatives have not indicated that they will pursue what is effectively a witch hunt in the Construction Industry

So if you have self employed subcontractors and would benefit from an employment status review call us on 0800 917 9176

It’s obviously the season for HMRC penalty madness, whether it be in respect of the Construction Industry with CIS late filing penalties or self assessment penalties, half a rain forest is being wasted in incorrect paper penalties. However, HMRC have stated that it is no longer the computer that is at fault (I always mistakenly thought a human had to programme/operate a computer but no, they have a mind and life all of their own!), instead it is human error caused by a lack of following procedure. Now anywhere else and you would be questioning a) the training and b) the ability for a complete non review process before these penalties are sent out.

How bad can it be, well one poor sole in Cambridge obviously has an obsessive stalker in the form of HMRC as he received 52 envelopes from HMRC, each containing 4 letters demanding sums ranging from £100 to £3,000 (grand total £39,000).

The taxpayer is appealing the fines, which have been suspended pending a final decision.

HMRC told the Cambridge News:

“Incorrectly issued penalties are not the result of a system problem but failure to correctly follow procedure – this is being put right.“