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21 July 2009 / Anne Redston
Issue: 4215 / Categories: Comment & Analysis , cobweb campaign , Admin
In Harry Potter fashion, ANNE REDSTON solemnly swears that she is up to no good, finding cobwebs in HMRC guidance


  • HMRC pension pages are now up to date.
  • Capital allowance information is a mess.
  • The IR35 calculator is very hard to find.
  • Illogical indexing of Revenue and Customs Briefs.
  • Lack of care by HMRC.

The cobweb campaign has now been running for six months. My thanks to the many readers who have participated, e-mailing examples of where HMRC’s web guidance is out of date, inaccessible or just plain wrong.

The campaign has triggered significant improvements. A particular accolade goes to the HMRC Pensions team, who have mended broken links, added new caveats and rewritten sections of guidance.

The pensions sections of the HMRC site are now much easier to use. Given that most pensioners are unlikely to be unable to afford tax advice, these changes are particularly welcome.

Sadly, some cobwebs identified by previous Taxation articles (The cobweb campaign and Time for a spring clean) remain.

The Tonnage Tax Manual still does not reflect the Finance Act 2005 changes, for the simple reason that it was last updated in 2002 – around seven years ago.

Another unresolved point is ‘time to pay’, which is clearly an important issue in the current economic climate. If you enter this phrase into the HMRC search engine, the recommended link is headed ‘payment problems’.

But click on this, and you get the message ‘sorry, but the page you are trying to reach cannot be found’.

 The link should be repaired so that it goes directly to the Business Payment Support Service.

This is a change which could be made quickly and easily; it requires no more than the electronic equivalent of a feather duster. But other areas are more fundamental.

Capital allowances

In Budget 2007 the Chancellor announced ‘a series of wide-ranging reforms to the structure of business taxation in the UK’. One of these reforms was a rewrite of the capital allowances rules.

In July 2007 a joint Treasury/HMRC consultation document set out the main changes; these were then legislated in FA 2008.

These rules have now been in force for well over a year, and represent arguably the most important change to the taxation of small businesses in a generation.

However, a search of the HMRC website for ‘capital allowances and 2008’ produces this result:

‘HMRC recommends

‘Capital Allowances

‘Since 1997, a number of capital allowances schemes have been introduced to encourage investment in particular assets or by particular sorts of businesses.’

Click on this recommended link and you arrive at a page which begins:

‘Since 1997, a number of capital allowances schemes have been introduced to encourage investment in particular assets or by particular sorts of businesses.’

The text promises that ‘small and medium-sized businesses can claim 40% first year allowances on their investment in plant and machinery’.

It also provides a link to a page of the Capital Allowances Manual, which confirms that ‘there are three rates of FYA – 100%, 50% and 40% ... FYA is normally available at the 40% rate on expenditure incurred by SMEs’.

I reviewed the manual and could find no reference to the new legislation, and the update section of the website confirms that no such changes have been made.

It is shocking that the search engine produces such out-of-date results, and deeply depressing that the manual remains unamended over a year since this important legislation came into force.

Maybe I am looking in the wrong place. After all, when a page cannot be found, HMRC recommends that the searcher ‘return to our home page and use the links from there’.

The HMRC homepage offers no direct link to capital allowances, so one has to click on ‘businesses and corporations – more topics’. This also provides no direct link, but instead another ‘more topics’ button.

Clicking on this gives you a long list entitled ‘all topics for business’, one of which is labelled capital allowances. At last! But it leads to this:

‘Capital allowances

‘We recommend:

‘Disability Discrimination Act – new access requirements

‘Disability Discrimination Act – new access requirements – tax guidance’

This bizarre result was noted by David Payne and included in the second cobweb article, but astonishingly remains unamended.

It was by a complete fluke that I discovered that, although impossible to find by routine search methods, the HMRC site does in fact contain an entire draft rewrite of the Capital Allowances Manual.

When checking the Revenue and Customs Briefs for this article, I found Brief 66/08, which ‘seeks comments on draft guidance on the changes to the capital allowances rules made by the Finance Act 2008’ and includes a link to the draft manual.

The period for comment closed on 10 February 2009, some five months ago.

Given the importance of the capital allowances changes, HMRC must now make it a priority to:

  • replace the old with the new manual;
  • provide proper links to appropriate guidance via both the home page and the search engine; and
  • ensure that older guidance is clearly identified as such.

Royalties and interest

HMRC also appear to be struggling to keep up to date with other parts of the tax system.

One contributor points out that the list of FAQs on international tax includes the following:

‘Do I need to deduct full rate UK tax when making royalty or loan interest payments to a recipient in a country where there is a double taxation agreement in force?

‘A. Yes. You must deduct tax until the overseas recipient has made a successful claim for relief under the double taxation agreement.’

This advice appears to be around seven years out of date, as the rules were changed by FA 2002, s 96 (now ITA 2007, s 911).

Payments made after 30 September 2002 can be made using the treaty rate, providing only that the payer has reasonable grounds for believing that the recipient will be entitled to the treaty exemption.

Perhaps unsurprisingly, the FAQ also omits to mention that no tax need be deducted at all if the recipient is within the EU (ITA 2007, s 914).

In similar vein, another reader commented that the paragraphs 45775 and 45776 of HMRC’s Business Income Manual are overdue for an update.

Both paragraphs deal with interest payable abroad, and refer to provisions contained in TA 1988, s 82, despite this section having been repealed for the tax year 2005/06 and subsequent years (ITTOIA 2005, s 882).

Selling via the internet

Catherine Newman e-mailed to say she was struggling to find HMRC guidance on internet selling. Increasing numbers of people sell goods and services on the net: when are the profits subject to tax, when are the sellers merely indulging a hobby?

Although there are various pages relating to internet shopping, a search on ‘selling on the internet’ produces an unhelpful list of links, including a glossary of Scottish land law terms, an explanation of how to sell goods to Customs and Excise and a notice ‘of interest to manufacturers, wholesalers and retailers of women’s sanitary protection products’.

Catherine also points out that advice on the tax treatment of domain names is equally scant. Putting this term into the search engine produces an eclectic mix of topics, including landfill tax, members clubs and a link headed ‘every year thousands of people start out along the road to becoming an approved driving instructor’.

In the back of my mind, however, I remembered that I had once seen some HMRC guidance relating to trading on e-bay. A search for ‘e-bay’ produced a link to BIM59501.

This paragraph opens by agreeing that ‘online auctions provide new opportunities for selling’ but confesses that ‘detailed guidance on internet trading and e-commerce generally has however not yet been written’.

More encouragingly, the page also provides a link to the guidance I had remembered: which (in case anyone else is looking for it) can be found here.

It is entitled ‘a guide for people who sell items online, through classifieds and at car boot sales’ – not the last word in tax advice, but helpful – although very hard to find.

IR35 calculator

The IR35 calculator is also extraordinarily difficult to locate. Readers lucky enough to be unfamiliar with the personal services legislation may be unaware that calculating IR35 tax and National Insurance is difficult for the mathematically challenged because it involves grossing up.

The calculator does these complicated sums for you. But where is it?

HMRC have a list of ‘all calculators’, but the IR35 calculator is not among them.

Searching for ‘IR35 calculator’ also appears fruitless: the search engine produces miscellaneous pages exploring aspects of the personal services legislation.

I look at each in turn, and one, which appears to be merely a historical summary of the legislation, also contains a further section, headed ‘additional information about the managed service companies legislation’.

And there – wholly inappropriately because those within the MSC legislation are not affected by IR35 – is a link to the calculator. If you did not know it was on the website somewhere, you would never find it.

Revenue and Customs briefs

The Revenue and Customs Briefs section of the website also requires taxpayers to play hide and seek. HMRC’s current approach is to summarise the most recent briefs on the main page, with older ones grouped by topics listed on a side-bar.

Clicking on the topics, such as ‘trusts’ or ‘VAT’ opens a sub-folder which should contain all the Briefs relevant to that subject.

For 2009, briefs numbers 01, 11, 14 and 35 cannot be found in any of the folders, and 69/08 is also missing.

However, if you enter ‘Revenue and Customs Brief 01/09’ into the search engine, the brief (on the interesting topic of advanced thin cap agreements) magically appears.

The text at the top of the page states that it is stored in the Revenue and Customs Briefs sub-folder for companies, but if true, it must be written in lemon juice.

Brief 14/09 covers repayment claims and statutory interest, and the search engine finds this too, stating that is stored in the VAT sub-folder – perhaps wearing the cloak of invisibility.

As one frustrated reader said ‘This is a total mess: how can a taxpayer hope to find anything?’

Richard Fleet has suggested that Briefs be stored by number as well as by topic; I endorsed that idea in ‘Time for a spring clean’ and repeat it again here. A numerical listing would prevent important guidance notes slipping between the cracks, or disappearing altogether (where are Briefs 11/09, 35/09 and 69/08?).

Other missing links

Rebecca Cave is rightly concerned with a similar issue: the differences between the hard copy Employer Bulletins and the web version.

Bulletin 31 was issued February 2009, and the printed version includes an article on page 5 concerning disabled drivers, but this has mysteriously disappeared from the HMRC website version.

Why these things matter

These are just some of the many examples sent in by readers frustrated by the cobwebs currently festooning the HMRC site. The poor quality of the guidance misleads users, and, as pointed out in Time for a spring clean, these users include HMRC staff themselves.

Even where diligent detective work succeeds in unearthing the correct advice, the process is time-consuming. To get a flavour of the experience, here is a single unexpurgated example (provided by Paula Sparrow):

‘£3 use of home allowance

‘We were trying to work out whether the £3 allowance for additional expenses for working from home was already in operation or was about to come into effect.

‘If you type in “use of home employee” or some such in the search engine it comes up with pages of completely irrelevant references. There are a couple of pages linked early on in the list which refer to the £2 weekly allowance. One of these is headed TA 1988, s 198, so I believe predates the introduction of the £2 allowance.

'The next relevant reference refers only to those employees who are obliged to work from home and starts off talking about the additional costs incurred as a result.

‘It is only at the bottom of page 1 of the search lists (even after a page on insurance premium tax) that I could find a page that mentions the increase of the allowance to £3 a week for 2008/09 onwards.

‘When I first looked for the increased rate I gave up on the search function after half a dozen pages, and tried to go straight to booklet 480. The link on the HMRC website appears to be to an out-of-date version of that book, since the online version also only refers to an allowance of £2 a week.’

In relation to Paula’s final point, I have confirmed that the current version of booklet 480, as at July 2009, also refers to a £2 allowance and not to £3.


These cobwebs are not isolated issues, but systemic errors. They damage the collection of ‘the right amount of tax’ and cause unnecessary burdens and costs to taxpayers.

In their guidance on negligence, HMRC say, ‘repeated inaccuracies may form part of a pattern of behaviour which suggests a lack of care by a person in developing adequate systems’.

I couldn’t have put it better myself.

Anne Redston is a visiting professor at King’s College, London and sits on the Technical Committee of the ICAEW Tax Faculty. The views expressed are her own.


Your contributions are vital to the cobweb campaign. Please send any HMRC website errors to me via email, with ‘cobweb campaign’ in the text box. Some will be published in future articles. I will endeavour to communicate the others to HMRC by alternative means. They will not be wasted.

Issue: 4215 / Categories: Comment & Analysis , cobweb campaign , Admin
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