So they’re understaffed are they, Ritchie?

The number of people being investigated by the taxman has doubled in one year, raising concerns that people who have made innocent mistakes are being targeted by the Government.

HM Revenue & Customs made inquiries about the tax affairs of 237,215 people last year, compared with about 119,000 in 2011-12, figures obtained by The Daily Telegraph show.

The number of self-employed people investigated has quadrupled in that time while annual prosecutions have risen sevenfold in three years.

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30 comments on “So they’re understaffed are they, Ritchie?

  1. Tax experts warned that middle-class professionals, such as doctors, lawyers and teachers, were being targeted. They were more likely to settle any claims without dispute because they felt “anxious” when HMRC sent warning letters.

    That favorite target of bureaucrats, the soft law abiding citizen.

    I hate to say this but given that so many people have to do self assessment and its getting ever more complicated perhaps its time to make accountancy fees for filling in tax returns tax deductible. Perhaps up to a certain amount.

    If it cuts out all those errors then it could lead to an overall saving anyway.

  2. If the figures for the increase in number of enquiries stack up, then I’d say the statements as to who is being targeted stack up too. I’ve neither seen, nor heard anecdotally, an increase in enquiries for taxpayers who are represented at the time the enquiry is raised, but we’ve certainly seen an increase in new clients who are under enquiry.

  3. I suspect HMRC resources have been diverted to easier targets, whilst the stubborn and intractable (outstanding) ones are being left to impending legislation.

  4. My wife was recently investigated. Took three months and she had to pay some trifling sum that we could have argued but couldn’t be arsed.

    Actually, the people she dealt with were perfectly pleasant, but it did highlight how little clue they have. They were very hot on the issue of why she had bought an iMac, even after she pointed out that you absolutely need a Mac for the particular part of her job for which she uses it – it involves working with Apple and PCs are incompatible.

  5. I hate to say this but given that so many people have to do self assessment and its getting ever more complicated perhaps its time to make accountancy fees for filling in tax returns tax deductible.

    It already is. Oh no, wait. It’s only MPs who can do that. Wrote in an exemption for themselves. Cunts.

  6. “They were very hot on the issue of why she had bought an iMac”

    That’s fairly disgraceful: being micro-managed by people that can’t get their own computer systems in order.

  7. A lot of these investigations, I suspect, are the relatively new “Records Check”, a telephone interview for which I can prepare clients from here.

    The folk who have undergone this check reckon the Revenue staff involved are pretty junior, ticking boxes and meeting a quota.

    If the boxes have ticks in the wrong places, it may lead to something more serious, but I make sure the client drops my name to make it clear he or she has professional backup.

  8. Bottler Brown and their own management scum destroyed the structure of the Tax office–now they are just picking on easier targets. It isn’t hard to double the number of stupid letters you sent out–esp to weak people who don’t have a clue. It shows the increasing desperation of the scum of the state to grab all the cash they can while they can. Won’t save them tho’.

  9. “They were very hot on the issue of why she had bought an iMac…”

    I share CHF’s bemusement here – surely all they’d need to do would be to establish it was for business use, not what make it was?

  10. Querying the iMac makes sense, because normally people buy Macs for the style rather than out of any need. It’s pretty common for people to try and claim something that is more a luxury item than a legitimate business necessity.

  11. Dave, no it doesn’t. I switched from a Windows laptop to a MacBook last year. Even MS-Office runs better on the Mac. I now use the Windows laptop for file storage and other apps for which there is no Mac equivalent.

    Who are HMRC to dictate on which technology to use?

  12. Dave: “It’s pretty common for people to try and claim something that is more a luxury item than a legitimate business necessity.”

    If the plumber down the road buys a Bentley as his ‘work vehicle’, fair enough! But this is absurd!

    iMacs don’t even have a lot of games-type software. Do they?

  13. Crun>

    There are exceptions, but most people buy Macs for luxury reasons. There is a significant design premium in the prices which has no effect on functionality. Unless you are locked-in to using Macs by some compatibility issue, or your business requires you to project a certain image, or some such along those lines, there’s never a business case for going Mac.

    It’s hardly surprising that things run better on your nice new computer than your old one, particularly given that you’ve apparently bought a premium model.

    Please note, I’m not knocking Macs. They’re very nicely designed machines, and many people clearly think they’re worth the premium price. Looked at as a tool, and evaluated for cost-effectiveness, though, there’s no case to be made for Macdom. The Revenue is quite right to be looking hard at anyone expensing a Mac.

    I’m not sure what the tax treatment is if someone has spent more than they needed to on a laptop because they were unaware they were doing so, rather than because they were trying to get a luxury item through the expenses system. Anyone know?

  14. JuliaM>

    It’s not about games, it’s about the style, generally. It’s similar to all the people who tried to get an iPhone on expenses when they were new – because oooh-shiny – even though it couldn’t be justified by any conceivable business case.

    It’s not just Macs this applies to, of course. In a world of perfectly usable £300 business laptops, if I decide to buy a £600 business laptop and try to claim tax relief I’d better be able to explain why I needed the more powerful machine, particularly if I also use it as my personal laptop.

  15. If one needs to use a Mac, but doesn’t want to pay the design premium, the cheapest option is to build your own Hackintosh. Mountain Lion and Mavericks both work splendidly on Gigabyte motherboards with Intel processors. The Mac OS is much cheaper than Windows too.
    /geek

  16. Dave:

    Unless you are locked-in to using Macs by some compatibility issue, or your business requires you to project a certain image, or some such along those lines, there’s never a business case for going Mac.

    Utter nonsense. You don’t get to decide that, the business does.

    My case for a Mac is that it works, and works better than anything else in its class. Its annoyances — and it has many — don’t end up getting in the way: you can just do your job without having to fight the computer.

    A Chromebook might be even better, but it gives all your data to your software suppliers (Google, mainly). That’s not acceptable when your data really belongs to your clients anyway.

    (I’m posting from a newish machine I reckon will be my last non-Mac PC. It came with Windows 8. I tried that for a week, amazed at its unfitness for use, before installing what I really wanted, Debian. Even with that it basically doesn’t work very well, and I’m constantly worried that it’s going to break in a new and exciting way on each update.)

    Anyway, the important point is that HMRC have no business being suspicious of Macs, nor of any other reasonable business tool. Macs aren’t toys, and they’re not diamond-encrusted baubles, they’re just better put together than your average Intel box.

  17. @ Dave

    It’s not just Macs this applies to, of course. In a world of perfectly usable £300 business laptops, if I decide to buy a £600 business laptop and try to claim tax relief I’d better be able to explain why I needed the more powerful machine

    I’m sorry Dave, I don’t have time to elaborate now, but a lot of this is just complete and utter nonsense.

  18. I have a macbook pro

    6 years old

    Just spent €250 replacing the entire top case inc keyboard, more memory and upgraded OS.

    I am now totally updated. The mac will last another 4 years.

    No pc portable has lasted more than 4 years in our office; HP, Dell, etc

    What’s the business case for buying a non-mac?

  19. I’m guessing the taxman has read The Girl With The Dragon Tattoo which features a lawyer asking a young woman in his care why she needs such a powerful Mac computer. Before tying her down and fucking her in the ass.

    HMRC probably read it thinking it was a manual.

  20. Independently

    If i decide the company needs top end Macs it needs them. My board can say no, the taxman can take a running jump.

  21. If I decide I need a £1000 laptop them by golly the business is going to get a £1000 laptop. Size and weight are issues – larger size and lower weight tends to cost more than basic.

    If it was down to HMRC to decide we’d all be using reconditioned desktops and big clunky monitors!
    Sorry, directors decide in our business what is needed and look around for a cost effective solution – that may not be cheapest option possible. Could very well be a £1000+ laptop is most cost effective.

  22. As bilbaoboy points out, the cost of the machine will also typically be spread out over at least a few years. If instead of claiming a percentage each year, you’re using the Annual Investment Allowance regime, where one year gets the tax benefit, you won’t be claiming an amount each year for the same thing, so it’s not a big difference except in paperwork.

    What’s the gain to the Treasury if poor Mrs Interested were to buy a cheap & nasty Windows machine instead of the “luxurious” (ie, usable) iMac. She’ll still have to pay something for the Windows machine, so all that’s gained is the potential tax on the difference. I’d be surprised if that’s as much as £500, frankly, once VAT is out of the picture. Let’s say £1000, because that’s more impressive. (Remember, that’s only in one out of two or three years.) You can multiply it up a little by the number of people the investigators mug, but if the total gained ever reached £1,000,000 a year I’d be surprised, especially including the investigation cost. Do they ever do a cost/benefit analysis of this activity?

    By contrast, the time Mrs I saves not having to fight an unpleasant system, or indeed deal with impertinent but highly threatening investigations, might easily produce £1000 more income to be taxed, and that not lightly.

  23. They wouldn’t like my business. Windows is banned on the basis that they’re a sack of shit and as professional software engineers, we need computers that work. False economy buying anything else. Even the data entry clerks are on MacBook Airs.

  24. Anecdata alert
    When I started working as a consultant the MD told me – you must buy a notebook PC because although the Mac is better 90% of software is written for Windows so we have standardised on Windows and I duly bought a Windows notebook. If Mrs Interested worked for a firm that has standardised on Apple technology, then she *had* to buy a Mac and someone should tell the junior officious in HMRC not to be ridiculous.
    Secondly, when I sent in my first self-employed return, I sent the tax inspector the two spreadsheets for income and expenditure: I soon (relatively very swiftly) got a reply that I only needed to send them a summary. Since then no-one has ever queried details of my expenditure: I have had to buy five new computers since then and no-one has even asked how my capex for the year was made up.

  25. Sorry Dave, but that’s b*ll*cks.

    The only 2 questions HMRC care about are:

    1) Is the expenditure wholly and exclusively for the purposes of your trade or profession? and
    2) Is the price paid/claimed no higher than a reasonable fair market value for the make and model in question at the time the purchase was made?

    Because that is all that the relevant legislation is concerned with. Neither HMRC nor the rules care whether you buy a PC or a Mac.

  26. Alex sort of gets it. They kept asking what room it was in, I assume because you can use a Mac as a TV. She is a robust individual and just said ‘It’s for business use, I can’t do this particular thing on a PC and it’s in my office’ and eventually they went away. It was more that she had to say it twice or possibly thrice that amused me.

    My feeling on this was there is no way they can ever get you (assuming you’ve bought a Mac on your business as a bedroom telly) so why do they bother? Equally – and relatedly – why do they think you might do that, given that a bedroom telly is about a fifth of the price of an iMac?

    I assume they’re idiots.

  27. Alex is right.
    However not all tax inspectors are right – one of mine (male) was frequently wrong, which was a minor nuisance. The one I got rid of was female, not so much because she was blatantly wrong in her judgements but because she treated her (female) subordinate (who was right) like dirt. I submitted a formal complaint and was allocated a different tax inspector.

  28. The Business Records Check scheme, which was new to me, as described is fairly sensible, and has a reasonable list of questions, since in practice many people do get themselves into a mess (not just for tax) by being shockingly disorganised. Accountants have told me about people arriving with bin-liners full of paper to sort out. (Ker-ching!)

    Periodically the Revenue apparently also gets details from people in particular trade sectors so they can build models of usual expenditure in those trades, which can be a big nuisance since it arrives out of the blue, but I suppose they have to get the detail somehow.

    On the other hand, if the information collected from people whose affairs are basically in order and not unreasonable is being used for fishing expeditions and the shake-downs of a protection racket, it goes back to Bloke’s “soft law-abiding citizens”.

    I suspect the tax-gap in the UK is actually so small by comparison with many other countries and with the demands of the Budget that it’s not worth worrying about, or wasting money hiring extra people to try to invent it, which is possibly what’s now happening. It would have been better if the last three Chancellors in a row hadn’t spent too much time making tax law much more complicated even for personal taxation.

  29. After 3 years of being self-employed, HMRC wanted to do an audit. As I was in the US on a longish holiday when they phoned, I only found out when I got back. By then they had sent a letter giving me a date with no option. They seemed to be OK about it when I phoned, and the audit went OK. They had never heard of my accounts program (GNUCash), and that confused them a bit. The inspectors (2 women) mostly seemed to want to make sure that my documented income matched the invoices. They said mine was a random check but I sometimes wonder if there was another reason. If so, I have no idea what it might be.

  30. I agree with Kevin Monk above.

    I don’t allow Windows on my network at all: life’s too short to deal with all the crap that generates. My business runs on a combination of Mac workstations and Linux back-end servers.

    And if HMRC doesn’t like that then they can swivel.

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