You are probably familiar with the concept of an Ombudsman, an independent reviewer who will review the facts of a case once the normal complaints procedure has been exhausted, and will normally find in favour of either the complainant (usually the customer) or the retailer.
Now, we all know that HMRC no longer has victims, rather customers, and as such, it is open to complaints same as any other service provider. While there is no ombudsman for tax-collecting services, there is an Adjudicator. The Adjudicator has now published her annual report for 2013/14, which shows that an unbelievable 90% of customer complaints have been upheld- and government bodies including, and mostly HMRC, have been ordered to pay a whopping £4.4m in redress payments.
The Adjudicator provides an independent review of complaints about HMRC, as well as against the Valuation Office Agency and the Insolvency Service, although these are only a small proportion compared with the HMRC complaints. In fact, the actual number of complaints about HMRC has gone down, a staggering 90% of taxpayers’ complaints have been upheld this last year.
There were 1,131 new complaints in 2013/14, 1,087 of which were about HMRC. This is less than half the number in 2012/13, when there was a surge in complaints, many of them about PAYE.
Of the cases resolved last year:
90% were upheld substantially or partially (61% in 2012/13)
7% were not upheld (37% in 2012/13)
3% were withdrawn or reconsidered (2% in 2012/13)
The total amount the departments paid out in redress, on the Adjudicator’s recommendation, was £4,369,258 , massively up on the £1,194,031 the year before. The total includes tax credit overpayments written off, as well as costs reimbursed and compensatory payments.
Complaints to the Adjudicator are typically about mistakes, unreasonable delays, poor advice or inappropriate staff behaviour.
In her report, the Adjudicator noted that HMRC had put “a lot of effort” into transforming its complaints handling, and complimented the department on “listening to her constructive criticism.”
She did, however, acknowledge the startling proportion of upheld complaints and described seeing many cases “where HMRC staff failed to consider the circumstances of vulnerable people and where communication was poor.”
Anyone else with a 90% upheld complaint rate might be looking for their P45. But still, at least HMRC are trying, right?!
The number of bags handed out by UK retailers rose for the fourth year in a row in 2013 to more than 8.3 billion.
In England alone, the number of single-use bags rose 5% from just over seven billion in 2012 to 7.4 billion in 2013.
The Government are all up for the 5p levy that will be introduced in October 2015, but what about the bags NOW man? They’re there. Accumulating up like a mountain of manky plastic. Suffocating us all slowly.
The Government was forced to admit plans to also exempt biodegradable bags will not come in when the levy is introduced, because no such bag currently exists.
Northern Ireland saw their bag numbers plummet by 71% as a charge was introduced in April 2013, whereas Wales saw an 18% increase last year, but its use of carrier bags is a fraction of other parts of the UK following the introduction of a 5p charge in the country. The number of bags handed out in Wales has fallen by 79% since 2010. In Scotland, which is bringing in a levy this year, there was a 6% increase in the number of plastic bags handed out by retailers.
It’s good news for the more robust “bags for life” as they’ve almost doubled since 2006, up from 245 million that year to 424 million in 2013.
A unnamed spokeswoman for the Environment Department (Defra) said: “Countries with the 5p charge have seen a dramatic fall in the number of plastic bags taken from supermarkets – that is why we are introducing a charge in England from October 2015.”
“Our approach will help us reduce plastic bag usage and the litter they cause, while also protecting small and medium-sized businesses from any regulatory burdens at a time when the Government is supporting new growth in our economy.”
HM Customs and Revenue has published a list of 800+ schemes that they reckon are being used to deliberately avoid tax and as soon as they get brand new legal powers, happening in August, HMRC will be demanding the disputed tax as “accelerated” payments.
Celebrities such as including David Beckham and Arctic Monkeys have been those accused of using such schemes.
It has been forecast that around 33,000 people will receive tax demands for billions of pounds from HMRC over the next two years. They will be given 90 days to cough-up what’s owed and, should a court decided in the celebrities’ favour, then they will get their money back.
There’s going to be a lot of work in the courts, isn’t there?
The published list shows a series of numbers, known as Scheme Reference Numbers (SRNs), because those who come up with these schemes don’t give them jazzy names like ‘Sleb Cabale Tax Hole’ or ‘The Fu’coffers’. You can have a look at the most boring list in the world, here.
However, those filling out tax returns have to put these numbers on their forms, so they should be able to spot whether they’re owing money to HMRC pretty easily.
Of course, we can’t expect pop stars to be good for much, and in the case of Katie Melua, she admitted she’s been thoroughly “clueless about tax” when she signed up to a tax scheme. She’s paid off all the tax she owes though, so she’s alright.
That said, the main gripe here is not necessarily that pop stars and celebrities are avoiding paying their taxes, but rather, that they’ve managed to ferret all that money away and still be gigantically boring with it!
What ever happened to feeling a tax code and buying a crumbling French mansion and taking loads of heroin with models and the like?
HMRC seems to be getting more sinister by the day. Hot on the heels of regulations allowing HMRC to forcibly remove cash in unpaid tax debts from your bank account, new regulations out for consultation would allow HMRC to change an employee’s tax code, which governs how much tax is deducted from salaries before reaching their bank account, without telling them- for up to 30 days. This means employees could receive far less (or presumably more) wages than they were expecting with no prior warning. Which seems a bit off.
Currently both employer and employee are immediately informed when a tax code is changed, and this allows the employee to contact HMRC should the tax code be incorrectly amended. Figures released last month showed that the number of taxpayers who had paid an incorrect amount of tax rose to 5.5m last year, so it’s not like the system is foolproof either. The proposed delay would mean people only find out when it is too late to correct the mistake and the money has already been deducted from their monthly salary.
Lesley Fidler (her real name, honest), a tax director at Baker Tilly, said: “When you are counting the pounds in your pay packet…you are thinking ‘have I got enough this month?’…People will effectively be lending to the taxman out of their salaries.”
However, Lin Homer, chief executive of HMRC, insisted that the powers would only be used in extreme circumstances and would never leave taxpayers short of “enough money to live.” But before you start chuffing about how on Earth the stonkingly well-paid Chief Exec of a public body would be able to gauge what is enough to live on, don’t worry, because HMRC propose to be able to judge this perfectly by gaining access to 12 months of the target’s personal spending habits. That’s not terrifying AT ALL.
An HMRC spokesman said that the delay is only likely to be used in “limited circumstances” at busy times of the year, such as around the self-assessment deadline and that it was all OK as “HMRC anticipates savings for the taxpayer of several millions pounds in printing and postage costs, as a result of these changes.”
HMRC will, however, welcome “comments on the detail” of the regulations, before finalising them “in the autumn.”
The proposals are currently out for consultation until the end of July.
For instance, purchase a £7.30 portion of spicy chicken thighs at Nando’s and the cash flows into a network of accounting devices, involving Malta, the Isle of Man, Guernsey, the Netherlands, Ireland, Luxembourg, Panama and the British Virgin Islands.
Profits finally fetch up in Enthoven’s Taro III Trust. It is based in Jersey and has been operated by Kleinwort Benson. This trust, not liable for UK tax, contains no less than £750m and possibly much more.
It’s all legal, but not exactly transparent to the naked eye. These methods help reduce the tax that the company and family pay around the world in comparison to conventional onshore British operation.
The company’s arrangements can legally avoid capital gains tax, inheritance tax and potential future stamp duty for those like the Enthovens, whose South African heredity makes them “non-doms”.
Nando’s owners also legally reduce their UK corporate tax bill by making various permissible payments offshore. Nando’s does then pay UK corporation tax on the remainder of its profits.
The UK end of 280 restaurants, paid over £21 million of its revenues as a royalty for use of the Nando’s name. This money goes to a low-tax Netherlands set-up called Tortolli BV. Tortolli in turn collects the cash on behalf of another company registered in another tax haven , this time in Malta .
The rent for the restaurants is paid to a separate UK company, also owned by a Netherlands intermediary, and the finance to brand-up each restaurant comes through Channel Island loans.
And if that wasn’t dizzying enough, profits all go to a Luxembourg low-tax registered partnership. Accounts show the Luxembourg entity then pays cash over to the tax-free Jersey family trust as interest on a £750m loan.
Nando’s unnamed spokesman – who we’ll refer to as Mr Nando – said that the company does pay appreciable UK corporation tax and said its licensing fee was standard.
“In the UK, Nando’s Group Holdings Ltd incurred corporation tax of £12.6m on a profit of £58.2m with revenues of £485.2m in the year ending February 2013,” he said.
“Nando’s is a concept founded in South Africa. Nando’s in the UK is one of 22 national franchises operating globally. All the franchises operate under standard market licensing arrangements and this includes the brand licensing fee. This franchising arrangement enables the UK company to access expertise, intellectual property and capital from the company’s global operations and has helped fund its growth.”
If Nando’s peri peri clever (ahem) accounting if unsurprising or forgiveable, then this promotional video starring Goldie, Melinda Messenger and other famousish people should make you want to throw the whole company into the sea.
We all know that inflation has been outpacing earnings increases for years, and is only now getting back to levels targeted by the Bank of England. This means that the pressure on cost of living has been immense for many people, many of whom may have turned to discount supermarkets such as Lidl and Aldi in order to make ends meet. And this has had a knock on effect of driving down food prices across the supermarket sector, which is almost certainly A Good Thing.
But does discount shopping come at a price?
New figures released today show that suggest that food price inflation is standing at record low levels. But some are suggesting that, like Amazon, the way discounters are managing to undercut the market starts with tax avoidance, potentially adding a moral cost to the discount
George Bull from accountants Baker Tilly cites Lidl as an example. Most of Lidl UK’s stock, management and administrative support arises from its German parent which means that Lidl’s UK tax liability is low owing to all the costs being sent back over to Germany. While Lidl is providing jobs and cheap food in the UK, it is therefore contributing little to the UK tax pot. More worryingly, Bull suggests that the big UK retailers might be eyeing up the smaller discounters – for example, Sainsbury’s is reported to be taking to take a half share in a new Netto chain with the Danish parent – meaning more money is diverted away from the UK treasury.
But does that matter so long as the cash is, instead, staying in UK consumers’ pockets? After all, we will eventually spend that money and boost the UK economy further. Or is corporate tax avoidance always wrong, even if, as in the case of Lidl, it was a legitimate foreign company long before it ever landed here.
Or does anyone even care anymore so long as prices are kept low? Is anyone still boycotting Amazon and Starbucks now they are no longer in the news?
If you had spent £270 million on a shiny new computer system, you’d expect to see some kind of return for your money wouldn’t you? Time savings through efficiency, say, or a reduced number of errors than in the system it replaced? Unfortunately this is HMRC we are talking about, and their expensive new Real Time Information (RTI) system has not only caused headaches for employers, it’s also ended up with more taxpayers paying the wrong amount of tax. Great job.
The 5.5 million errors HMRC is estimating for 2013-14 is higher than the 5.2 million in the previous year, with an estimated 3.5 million people ending up owing the taxman more money, and having to pay it off through next year’s salary. Two million can claim a rebate as they have had too much tax taken from them every month.
HM Revenue and Customs has started writing to around 5.5 million taxpayers to tell them they paid the wrong amount of tax through PAYE last year, with the average error estimated at around £300.
Last year, the Treasury told MPs that RTI would “bring PAYE into the 21st century” and make it more accurate for both employers and HMRC. Under the RTI system employers report wage payments to HMRC on a weekly or monthly basis, meaning HMRC should have completely accurate and up to date information, reducing the occasion for errors. Or so we thought.
Accountants said the increase in errors in the tax system showed that RTI was not working as promised, suggesting that the data being fed into the new system was often flawed. Employment tax expert David Heaton of Baker Tilly, said: “RTI was supposed to make PAYE more accurate, not less. So why are there more [errors] this year, with RTI in full flow, than last year, when RTI was only a pilot? The number of PAYE differences has risen, not fallen. Something in RTI is not working.”
HMRC declined to shoulder any of the blame, saying instead that the increase in corrections was largely down to an increase in the number of people in employment that has come with the recovering economy. So it’s actually our fault for having jobs. Great work everyone.
According to the Citizens Advice Bureau, there has been a sharp rise in tax credit overpayments. The charity claim that in the year to March 2014, there was a 14% increase in people getting into financial difficulties as a result.
Yet HM Revenue and Customs (HMRC) have denied that people are being harassed to repay what they owe.
The overpayments happen when people’s income rises unexpectedly. They are then asked to pay back money they have received from Child or Working Tax Credits, and in some cases people have been asked to repay £7,000 after their circumstances changed.
Citizens Advice said it handled nearly 30,000 such cases last year.
Listen to the voice of Gillian Guy, chief exec of the CAB: ”For thousands of families, Whitehall calculations are leading to household debt. Tax Credits are there to make sure people get a decent standard of income, but the sharp rise in debts from overpaid tax credits suggests this policy is having the opposite effect.”
More than £1.5bn was overpaid to claimants in the year 2012-13. However HMRC has hit back at the claims, saying underpayments and overpayments are a necessary part of the system. Releasing new figures, it said there were 1.5 million overpayments in 2012-13, down from 1.6 million the previous year.
HMRC now uses private debt collection agencies to help recover the tax credits it is owed. Last year, it made 215,000 such referrals.
From 2015, HMRC will be given the power to take money directly from people’s bank accounts, providing they are left with £5,000 in the account.
Which all sounds like it’s going to be a smooth and unstressful affair.
This claim comes after the company’s latest accounts showed that more than £11 billion went through its Luxembourg-based subsidiary in 2013, but only shelled out £4 million in UK corporation tax last year.
Amazon trades through the Lux subsidiary Amazon EU SARL as to help reduce its UK tax bill.
When you buy that cookbook or even that elderly copy of Hits 8 on double cassette, your payment is channelled through Luxembourg, who in turn pay the UK branch a fee to deliver.
In the UK, Amazon has more than 5,000 employees, yet benefits from Luxembourg’s extremely low corporate tax rates. The strategy is legal but Amazon has faced fierce criticism from rival retailers, politicians and consumers over the amount it pays to HM Revenue & Customs in the UK.
That £4m that Amazon pays is barely a a percent of the £4.3bn sales the company chalks up each year. If that doesn’t sound a bit hokey, Amazon also claimed a £4m tax rebate from the Luxembourg Government too.
Unsurprisingly John Lewis and other high street clarts have attacked Amazon’s accounting tactics, which they say give Amazon an unfair advantage by using the Luxembourg loophole to shield its profits from the UK taxman.
Amazon, Google and Starbucks have long been on the “Hey, pay yer tax you arses” list, and seem quite happy to stay. A lot of hippies are going to be doing a lot of protesting, eh readers?
Stefano Pessina, the executive chairman of Alliance Boots, who are the parent company of the high street chain, batted away criticism that they’d only paid £2m in corporation tax. Their net consolidated profit was up 31% to £971m and underlying profits were up 18.5% to £840m for the year to April.
In short, they paid a £2m global corporation tax charge, down from £96m.
Pessina said: “We do not have to justify ourselves because we could not pay more tax. We respect the law in every single country,” adding that they’d paid £90m of corporation tax in the UK and £141m in corporation tax in total. The company’s finance director, George Fairweather stated that somewhere in the region of £550m was paid in taxes overall in the UK.
So what’s going on?
Well, if you ask the poverty charity War on Want, they’re not at all happy. They reckon that £90m tax on UK profits of £900m is, basically, a tax rate of just 10%. Owen Espley at the charity told the Indy: “The public expect a company like Alliance Boots, which makes profits from the taxpayer-funded health service, to be paying their fair share of tax. The Government has the powers to stop this kind of abuse, and yet is failing to act.”
Alliance Boots are based in Switzerland, for the record, where no dodgy tax practises go on AT ALL.
Are we going to see people booing outside Boots pharmacies like we did with Starbucks, or do tax-protesters only pick on coffee houses because it’s fashionable to hate them?
The Government have hit on this idea and it is proving to be controversial. Basically, it would allow HM Revenue & Customs to go straight into your bank account and take what they want. No, we’re not talking about tax. We’re talking about money on top of taxes.
Gideon Osborne has come up with this plan and fellow MPs aren’t impressed, with the cross-party Treasury Committee showing “considerable concern” and want more scrutiny over his proposals.
In their evaluation of the Budget, the MPs point out that these new powers could mean a sly reintroduction of the discredited Crown Preference rule, which gave the HMRC priority access to assets when firms went under.
“The proposal to grant HMRC the power to recover money directly from taxpayers’ bank accounts is of considerable concern to the committee,” the report said. “The committee considers a lengthy and full consultation to be essential.”
“Giving HMRC this power without some form of prior independent oversight -for example by a new ombudsman or tribunal, or through the courts – would be wholly unacceptable.”
They went on to dismiss the Chancellor’s idea that, which is based on the way the Department for Work and Pensions (DWP) currently has similar authority to collect child maintenance, because the “parallel is not exact”.
“In those cases, DWP is acting as an intermediary between two individuals,” the MPs said. “HMRC would be acting not as an intermediary between two individuals but rather in pursuit of its own objective of bringing in revenue for the Exchequer.”
Not to mention the opportunity for fraud and cock-ups. “This policy is highly dependent on HMRC’s ability accurately to determine which taxpayers owe money and what amounts they owe, an ability not always demonstrated in the past. Incorrectly collecting money will result in serious detriment to taxpayers.”
“The Government must consider safeguards, in addition to those set out in the consultation document, to ensure that HMRC cannot act erroneously with impunity. These might include the award of damages in addition to compensation, and disciplinary action in cases of abuse of the power.”
New ISAs (or NISAs, as they are ‘nicer’ than the old ones) come into effect on 1 July 2014. The delay between last month’s announcement and introduction will allow providers to get their systems and processes in order before the new rules kick in, but where does that leave you if you have an ISA wedge burning a hole in your pocket, ready for 6 April when the new tax year starts?
So how much can I pay into my ISA on 6 April 2014?
On 6 April, the old rules will still apply. This means the maximum amount that can be contributed to a stocks and shares ISA is £11,880 and £5,940 into a cash ISA. However, on 1 July the limit will increase to £15,000 for both stock and cash ISAs, so you can then whack in the extra £3,120/£9,060 on that date.
But I pay into my ISA monthly?
A few years ago the ISA limit was adjusted so it always fit roundly into a monthly figure, and from 6 April the monthly figure works out at £990. You could contribute £990 for three months and then pay £1,366 to reach the £15,000 contribution limit, or you could just start paying the new monthly figure of £1,250 from this month, as you would not exceed the old annual limit before the limit was increased in July.
Am I still limited to one provider?
You are still limited to one provider per tax year, for each of a cash and stocks ISA, but as before you can transfer previous ISA balances to another provider- something that has been particularly useful for cash ISA holders who found themselves lumped with a rubbish rate of interest. Note that you can now transfer both current and old stock ISA balances into new cash NISAs- if you have found the stock market too volatile for your delicate risk/reward balance for example.
As always, remember that you must always complete the required ISA transfer forms when moving ISA cash- as otherwise it will count as a new contribution.
Many of the stocks and shares ISA supermarkets have announced new charges following the changes to platform charges and commission – even if your previous provider has been good value it may be worth looking at alternatives to make sure it is still the best one for your circumstances. There are some comparisons out there- like this one- and the best choice will depend on how much you have to invest, your choice of investment, how many trades you are likely to make and how much pretty apps mean to you.
Some people say the NHS is what makes Britain great, and the principle of free healthcare for all is one cherished by many. Now, however, a Labour peer is calling for NHS treatment to be limited to those contributing a monthly fee in order to become NHS members.
In a report published by think-tank Reform, Lord Warner, who was in charge of health service reform under the Blair government, is calling for a combination of membership fees and ringfenced taxes to protect the NHS and guard it against collapse under the weight of chronic illnesses.
Currently NHS spending is protected in Governmental budgets, but Lord Warner argues that this “risks seriously damaging other public services” as a consequence.
In addition to earmarking sin taxes as going directly to the NHS and increasing inheritance tax, the report also suggests that “some form of social care tax” could be introduced in middle age. Whenever that is. Lord Warner cites the case of Japan, which introduced a such a compulsory levy in 2000, which “helped considerably to fund the care costs of their ageing population”.
An NHS “membership fee”, which would be gathered along with the council tax, of around £10 per month should also become compulsory and would fund preventative care but would also entitle each “member” of working age to a health “MOT”. Groups entitled to free prescriptions would be exempted.
A spokesman for the Department of Health said: “The founding principles of the NHS make it universally free at point of use and we are clear that it will continue to be so. This government doesn’t support the introduction of membership fees or anything like them.
“But we know that with an ageing population there’s more pressure on the NHS, which is why we need changes to services that focus far more on health prevention out of hospitals.”
So is it just a matter of time until we all have to dig into our pockets? Or is there a better alternative?
The problem-haired joybringer George Osborne is bringing in new laws making sure that internet downloads are taxed in the country they are purchased.
This means, that Apple and Amazon will have to charge the UK’s 20% rate of VAT. The current situation they are allowed to sell digital downloads via places like Luxembourg, where the tax rate is as low as 3%.
This will affect books, music and apps and comes in from January 1 2015.
His budget document said:
“As announced at budget 2013, the government will legislate to change the rules for the taxation of intra-EU business to consumer supplies of telecommunications, broadcasting and e-services. From 1 January 2015 these services will be taxed in the member state in which the consumer is located, ensuring these are taxed fairly and helping to protect revenue.”
2013 saw singles ales at their highest for years, so after 2015 consumers are going to go the extra to obtain their music. Or maybe they’ll not bother and riot instead.
While some of the Chancellor’s Budget announcements have been almost universally welcomed (other than by annuity companies), others have subjected Gorgeous George, and his party to some ridicule, and spoof ads. But it could have been worse- imagine the uproar if he had implemented the latest tax idea from campaigners PETA. A meat tax.
That’s right. The cabbage-eating sorts consider meat the next “obvious culprit” for being the subject of a sin tax, such as those levied on cigarettes and alcohol in the name of public health. Of course, it is only health organisations who have criticised last week’s scrapping of the alcohol duty escalator and drop in beer duty given that it will, accidentally perhaps, also make brain-frying Tennent’s Super cheaper. What with that and whisky, Scots must be loving Westminster right about now…
But back to meat tax. PETA managing director Ingrid Newkirk believes they have come up with “a practical, money-saving suggestion that would score highly on both the fiscal and the moral front” saying:
“Consumers already pay duty, or “sin”, taxes on cigarettes, alcohol and gasoline to help offset their health and environmental costs, yet although eating flesh and animal secretions is another unhealthy habit as well as a leading cause of climate change, it has so far escaped being taxed. Unfair! And unhelpful.”
Now. You might write this off as the deranged ramblings of someone suffering an iron deficiency, but Ingrid has actually found a similar proposed tax to support her point- a ruminant tax proposed by scientists writing in the journal Nature Climate Change. That’s right, the meat tax is apparently vindicated by the suggestion we should have a fart tax on cows to limit greenhouse gases.
Disappointingly for PETA, a meat tax is not on the cards, although discussion still rumbles over other food sin taxes, such as sugar or saturated fat tax to try and tax the lardy more than the wealthy. Still, PETA reassures us that we don’t have to wait for a meat tax, we can all become vegetarian, or preferably vegan, right now.
I’ll get my sprout.