I’m sure the Spud will comment on this

The taxman will be accused by MPs today of hounding innocent workers on benefits while letting rich tax dodgers off the hook.
An American contractor employed by HM Revenue and Customs adopted a ‘guilty until proven innocent’ approach in pursuing low-income households suspected of fraudulently claiming tax credits, a report says.
Around 45,000 are thought to have been wrongly stripped of tax credits. Of the 25,000 who appealed, 90 per cent were successful.

The new rules if you owe tax are guilty until proven innocent. Pay up before the appeal is heard, no? Spudtollah thinks this is a wonderful idea.

No doubt there is some difference between owing money to the government and owing money to the government.

18 thoughts on “I’m sure the Spud will comment on this”

  1. IME almost everyone has some little scam going on regarding income/tax. In the lower income echelons its going to be more undeclared income from ‘jobs on the side’ and in the middle income echelons it’ll be more ‘knock the VAT off for cash?’ to tradesmen, and paying cash to people who are technically employees, but aren’t on the books. In fact I’d say the cleanest section of society of all are the wealthy – they’re unlikely to be ‘working on the side’ for cash, and they can structure their wealth to legally avoid or reduce many taxes, so don’t need to break the law.

    I’d be prepared to hazard a guess that if you took 100 people from each section of society and were able to mind read them so you knew the truth, more people at the bottom would prove to be tax evaders than at the top, although the amounts evaded would be considerably greater at the top, as one or two rich evaders could easily outweigh all the tax evaded by 100 poorer people.

  2. Bloke in North Dorset

    The difference is that this is being done by evil and incompetent US companies, in the Courageous State it would be done by kind, considerate and benevolent State employees.

  3. @Jim

    It’s only anecdotal… but HMRC seem to be spending lots of time on pursuing self employed taxi drivers etc. and applying fines in many cases where they are simply estimating liability and ignoring submitted figures – and for piffling amounts of claimed underpayment.which in many cases are resolved in the taxpayer’s favor – if those taxpayers spend hours standing up for themselves.

    One cannot help thinking that the fiddling has an unacceptable institutional side too.

    I wonder at the cost benefit ratio – obviously it keeps shiny bums on Herman Miller seats

  4. @tomo: I’ve no doubt HMRC are as self serving as anyone else, and as unlikely to provide honest ‘service’ as any State body. And that targeting the lower income echelons is pointless, for the amount of tax recovered and time and money spent getting it.

    I was just pointing out that human nature is such that when you have little money there’s a far greater incentive to cheat than when you have a lot, and individual for individual there’s probably more tax evaders at the bottom than the top. But far more worth targeting the ones at the top, because thats where you’ll get a decent return on efforts expended. But that doesn’t make the poor somehow morally purer than the rich.

  5. “The taxman will be accused by MPs today of hounding innocent workers on benefits while letting rich tax dodgers off the hook”

    I’m not sure about the first claim (although quite why I should be giving money to people who, while they might WANT more money probably don’t NEED more money is beyond me) but the claim that rich tax dodgers are being let ‘off the hook’ by HMRC is nonsense. If there are faults in the tax system, if there ae inbuilt inequalities, then they have been built in by those who passed the laws. MPs. The very same who are now wailing and whining about the systems they created.

  6. @Tomo.

    Yes. Anecdotal.

    Not an anecdote but a true story is the taxi driver I investigated who claimed his takings, every single day, were £50. Exactly. Never more nor less. He said he stopped work as soon as he got that amount. If someone got into his taxi after he’d taken (say) £49.50 he’d only charge then 50p no matter where he took them.

  7. I worked for CSA, the number of ex wives that would do in a self employed guy was high.
    They would often give chapter and verse about how he was hiding his income, what he was claiming was false etc. Because the ex wife used to do the books!

    HMRC were never interested, they needed multiple years and decent size fraud to be interested.
    Saying that, jobs that are very much cash in hand – it would be impossible to prove that annual turnover was not what the person said it was.

  8. Martin – How do you know we weren’t interested? We never commented on information given to us. If we did investigate, we wouldn’t say we had or what the outcome was.

    It’s true that ex-wives (and husbands) were often privy to financial information. They were also often vindictive trouble makers spreading lies.

  9. “Saying that, jobs that are very much cash in hand – it would be impossible to prove that annual turnover was not what the person said it was.”

    If their lifestyle/assets were way above what could be expected on their returned income, that was sufficient proof.

  10. “No doubt there is some difference between owing money to the government and owing money to the government.”

    The difference being which instance of “owing money to the government” is where in that sentence?

    Or is what I think is a typo, something else that’s eluding me?

  11. Or is what I think is a typo, something else that’s eluding me?

    It’s the difference between companies paying less tax than they should – which Murphy thinks is wrong and must be punished – and people claiming more benefit than they should – which Murphy thinks is fine and must be forgiven.

  12. Andrew – when they didn’t want the information. Admittedly the lady with the 100 plus page document detailing stuff with copies of his bank statements going back years had a lot of information and methods written up, they simply didn’t want it.

    I was quite friendly with a few of the contacts I had around the area, there was some back and forth in a few instances where they already had an ongoing investigation and asked us for documentation. I was the only accounts trained staff in one office I was in so all the directors and self employed stuff passed through me.
    We were required to inform benefits agency, HMRC or local authority if information came to light regarding possible fraud, 95% of the time the other body wasn’t interested.
    Same with us – a good chunk of what was supplied by other bodies was not able to be used in a claim.

    Lifestyle inconsistent was a nice term to use, don’t recall ever hearing of CSA successfully implementing it. Maybe the tax office had better luck.

  13. @tomo, Andrew C

    Heard the same thing round our way a couple of years ago; not limited to industry sector or just the self employed though. All the demands from HMRC bore no relation to figures for any trading year (saw one that was for a single trading year that was a whole order of magnitude greater than gross revenue). All the people we know have addressed it via their accountants, several demands have turned into repayments and in a couple of cases, HMRC are no longer responding to any communication at all.

    Frankly, some of the stuff going on seems to be downright malicious right now.

    That said, a few years back I was told the story of an HMRC inspector who had been dealing with Hackney carriage drivers, and was given a case load of Private Hire drivers, and promptly issued a load of demands for double the declared liabilities, going back years. Turns out that his reasoning was that they were all dropping customers at airports and picking up fares from the ranks to get back, and not declaring that trip. This was discovered just before things went to tribunals, when a higher up read the supporting statements from council licencing officers, noting that private hire drivers aren’t allowed to pick up from ranks…

  14. I would think that any tax avoidance / non-trivial evasion by high earners is likely to be tied up in “professional advice” from accountants and lawyers and therefore likely to lead to law suits and the risk of losing such. HMCR in my experience being willing to do anything (varying from abandoning cases to, anecdatally, outright perjury) to avoid losing lawsuits and the potential precedent that would set to taxpayers less keen to be on the bleeding edge of tax loophole exploitation.

    Whereas tax avoidance by people whose tax affairs aren’t arranged by professional advisors tend to be less likely to go beyond the HMRC internal complaints route when challenged.

  15. I was involved in one case where somebody had a second job doing minor electrical installations and repairs on yachts. More to keep him out of the bar / trouble than anything serious.

    Turnover was reasonable – in most cases he bought the units he fitted – but profit was a few thousand pounds a year.

    I became involved as the representative of his main employer when his wife got a final tax demand for £15,000, while he was away and incommunicado. It was an interesting run around the system, getting hold of the right information, the right people and persuading them that it didn’t matter that they weren’t allowed to disclose to me confidential details of his tax affairs – I had all of those and was making a disclosure to them.

  16. Bloke in North Dorset

    Jim,

    “I was just pointing out that human nature is such that when you have little money there’s a far greater incentive to cheat than when you have a lot, and individual for individual there’s probably more tax evaders at the bottom than the top. But far more worth targeting the ones at the top, because thats where you’ll get a decent return on efforts expended. But that doesn’t make the poor somehow morally purer than the rich.”

    Agreed, but HMRC does need to keep a lid on it otherwise it will run rife.

    Also, we had a long discussion on here about HMRC’s special unit for going after the wealthy following one of Murphy’s ignorance based rants. One of the Andrews gave us some good insights, but I haven’t got time to go looking for it now.

  17. When the tax court was still operational I got a demand that was just plain looney tunes – I took The Inland Revenue as it was then to the court – and won – and they got a proper telling off from the panel.

    As I understand it at the moment from a accountant of some considerable experience the situation is positively dystopian and challenging HMRC is being made more difficult.

    50% of appeals succeed

    That 50% figure is extraordinary imho as most small self employed people wouldn’t countenance a legal challenge in large part due to the bullying that accompanies HMRC’s antics – which on occasion have ventured into perjury.

    I’ve mentioned it here before – but it bears repetition – the case of Abbey Forwarding

    Several Telegraph articles “disappeared” during the court case – the court transcript makes for outrageous reading – and yet no heads rolled for HMRC officials fabricating evidence

    @Jim the self serving cannot be allowed to be indulged at the present levels across the public sector. The consequences of wrongdoing by officials overreaching themselves should be as profound and financially punitive on the perpetrators as it is for their victims.

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