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Administration
The last of HMRC’s 281 enquiry offices have closed, after the tax authority launched a new service based on phone contact and personal visits that is expected to save more than £27m a year.
Financial Times
Taxation heard rumours the trials in the northeast were not successful, but HMRC have gone ahead with the closures anyway, sparking fresh concerns from tax organisations.
The UK’s 1,128 tax reliefs are a £100bn recipe for abuse, avoidance and evasion, according to a report by the House of Commons public accounts committee (PAC), which lambasts the system as “substantial, complex and poorly managed” and warns that government departments are struggling to cope with the growing demands of managing the ballooning number of reliefs.
Independent; Financial Times
The biggest reliefs included capital allowances and zero-rating. As is so often the case, the PAC went after a headline, rather than information and understanding.
The UK’s public dramatically underestimates what the poorest pay in tax and wrongly believe the richest face the biggest tax burden, according to new research that calls for a more progressive system. The poorest 10% of households pay eight percentage points more of their income in all taxes than the richest, 43% compared to 35%, according to data from the Equality Trust.
Guardian
Both the Guardian’s headline and the introduction severely misrepresent the rest of the story. The poor do not pay “most” in tax, but they do pay a higher percentage of total income in total tax than other groups (according to the report) because they spend more of it on goods and services liable to VAT and other indirect taxes.
Avoidance & evasion
The Judicial Appointments Commission is to invite solicitors and barristers to become tax tribunal judges in anticipation of a surge of legal actions by financiers, celebrities and investors against new rules introduced as part of a £7bn government clampdown on tax avoidance.
Financial Times
So, the HMRC follower notices meant to clear the backlog of tribunal cases are going to create a whole new raft of appeals?
Lawyers and accountants should face criminal prosecution if they promote aggressive tax avoidance schemes, according to former tax lawyer Chris Elphicke MP, who has tabled a series of Finance Bill amendments to make it illegal to help clients reduce their tax bills.
Times
Define “aggressive tax schemes” in sufficient detail such that it can form the basis of a prosecution without being contrary to human rights, or even Magna Carta…
A High Court ruling has sided with HMRC over legislation introduced last year to stop wealthy property buyers avoid paying tens of thousands of pounds in stamp duty land tax. Advisers Blackfriars Tax Solutions LLP lost their legal challenge against the rules, after structuring a scheme to minimise users’ SDLT bills.
Telegraph
The success rate of HMRC in avoidance cases is spectacular. Offers by the department to settle ought to be considered carefully.
Business
The growth goals of the UK’s medium-sized businesses are stymied by a tax regime that overwhelmingly favours small and large firms, according to a report from the Confederation of British Industry (CBI), which criticises tax rules that disrupt cash flow, absorb management time and dampens export ambitions.
Telegraph; Times
The report primarily criticises the need to be concerned with transfer pricing rules and the requirement to pay tax quarterly in advance.
The Conservatives should pledge to abolish corporation tax for all small businesses to allow them to “challenge cartel capitalism”, and the firms’ investors should be relived of the burden of capital gains tax, according to ex-Tory grandee Maurice Saatchi, chairman of the Centre for Policy Studies (CPS) think-tank.
Telegraph
The final resting place of Sir Keith Joseph, who founded the CPS, is not given online – but it should be easy to identify by the hum being made as he indignantly revolves at 5000 RPM following the publication of such tosh under the once-respectable think-tank’s imprimatur.
Income tax
Around 5.5m workers have paid the wrong amount of tax through PAYE, with an estimated 2m facing attempts by HMRC to settle underpaid tax bills and another 3.5m set for rebates as the result of overpayment. The inaccuracies have increased year on year, despite the introduction of the real-time information system for employers to report employees’ payments.
Telegraph; Financial Times; Times
The correcting of PAYE bills is run-of-the-mill exercise and an annual excuse for the media to bash HMRC. That said, there are legitimate questions this year about the failure to use the real-time information to correct errors earlier.
Inheritance tax
The Treasury should review inheritance tax (IHT) because the middle classes are shouldering a growing proportion of the levy while the wealthy are able to avoid it, according to leading economist Paul Johnson, director of the Institute for Fiscal Studies (IFS). His call comes as an analysis of Treasury projections show that tax collected through IHT and stamp duty will exceed that collected through alcohol and cigarettes by the end of 2016.
Telegraph; Telegraph
The message from Johnson is actually to make sure the rich are taxed, not help the middle class escape IHT. IFS policy favours a tax on receipts, rather than one on gifts, so those who spread out their estate would have less tax ultimately paid on it.
Pension holders over 55 will from next April be able to withdraw as much as they want from their retirement savings – which may lead to them paying tax at 40% even if they were in the basic rate band their entire working lives, according to Andrew Tully, director of retirement income specialist MGM Advantage.
Times
Our editor, Mike Truman, made exactly the same point in March.
