Secure by design

I’ve made no secret of my support for HMRC’s digital strategy.

There will be lots of bumps and wrong turnings on the way, but I believe that, at the end of the journey, we will have a more effective way for individuals and businesses to manage their tax affairs.

How long it will take to get there is another issue.

Data security must be at the heart of the strategy. The Revenue’s latest update on phishing shows how inventive fraudsters are at tricking people into giving away personal information.

I couldn’t blame anybody who decided to play it safe and ignore all emails and text messages purporting to come from HMRC – but that could lead to problems because the tax department uses such means for genuine communications.

It is right for the taxman look at using all available technology, but it is in all of our interests to ensure the security is robust, so that important messages don’t get automatically deleted for fear of cyberattack.

Reasonable care

Read paragraphs 42 to 44 of the First-tier Tribunal decision in The Stableyard, a VAT case.

Readers who deal mainly with direct taxes may have missed it, but it is relevant to everyone because it considered what a taxpayer must do to demonstrate reasonable care.

How many of your clients would pass the test as set out by the judge (below)?

“I consider that a reasonable person without specialist tax knowledge who was preparing VAT returns himself and exercising reasonable diligence … would have read relevant extracts from Notice 733 carefully… He would have formed the conclusion that no credit for input tax could be claimed on the invoices… I have concluded that the appellant did not read Notice 733 sufficiently carefully and rather trusted too much to intuition when preparing his VAT return.”

The tribunal’s conclusion was that reasonable care had not been taken, and a penalty was due.

Is the bar being set too high?