The Blog of

This blog has moved!

2010-11-23T14:41:00.002Z

This blog has now been combined with

its sister site and can be read at

www.tax-hell.co.uk

Middle-class professionals could be subjected to lie detector tests

2010-09-23T10:06:00.000+01:00

Middle-class professionals could be subjected to lie detector tests as part of moves against tax evasion announced at the Liberal Democrat Conference. For more click the link here.

Tax errors hit 6 million people

2010-09-04T15:15:00.002+01:00

Around 1.4 million taxpayers owe up to £5,000 after computer system finds PAYE underpayments totalling £2bn

You just couldn't make stuff like this up, such astounding incompetents that would never be tolerated in the commercial world.

Full story from The Guardian here

OMG looks like HMRC is getting the message!

2010-08-22T13:42:00.001+01:00

Litigation and Settlement Strategy
HMRC admit: we have been too tough

We have trailed for some time that the "log-jam" created by HMRC's tough stance to tax disputes was unsustainable. The Financial Times today (20 August 2010) reports that Dave Hartnett, the Permanent Secretary for Tax has announced a revised interpretation of key policy document the Litigation and Settlement Strategy. It reports that "increasingly, inspectors will be encouraged to reach agreement", but that this fresh approach is "primarily focused on business rather than wealthy individuals".

In practical terms under this new interpretation, taxpayers and HMRC officers in a contentious negotiation will look for a range of "plausible" technical conclusions on the point at stake. HMRC officers are then free to conclude a settlement provided the amount of tax payable is based on one of those "plausible" outcomes. HMRC officers will no longer be hamstrung from reaching agreement in a suitable case simply because they have a credible argument that more tax could be due.

Senior HMRC officers have been suggesting for some time that a reinterpretation of this sort could be expected. This also brings HMRC's published position into line with the on-the-ground approach that officers have increasingly been following in recent months.

HMRC are already increasingly applying an approach of this sort in the High Risk Corporates Programme where HMRC have taken a project-based approach to resolving portfolios of issues for some of the UK's largest corporates. Interestingly, outside HRCP the "plausible outcome" approach has been taken up most visibly by HMRC Officers in negotiations over the affairs of wealthy individuals, which is not the focus of Dave Hartnett's statement today. Having said that, today's reports are unlikely to cause any practical change the approach for HNWIs, but make clear that the HNWI/HRCP approach has been broadened to also apply, across the board, in negotiations on corporation tax and other business taxes.

What has not changed?

HMRC's Litigation and Settlement Strategy, first published in Summer 2007, significantly limits the powers of Officers to reach deals with taxpayers. It was intended to prevent "horse trade" or "package" deals under which taxpayers would - in practice - always be allowed at least a small proportion of the tax benefit claimed to have arisen from tax avoidance schemes, in order to reflect the inevitable risk in litigation. Coupled with the introduction of the DoTAS rules, the abandonment of this approach was a key plank in HMRC's strategy to discourage the development and implementation of tax avoidance schemes.

The LSS set out a rigid approach for HMRC officers to handling contentious enquiries: establishing facts, reaching decisions, actively testing conclusions through debate with a view to establishing relative strengths of case. This approach has caused some concerns in that it seems to require exhaustive data collection before any engagement on technical issues which could narrow the scope of that collection. Many taxpayers have been able to manage this difficulty on a case-by-case basis, but it remains as part of the backdrop. Nothing in today's announcements affects this.

The LSS also states that "early legal or other specialist advice can bring important efficiency savings and is recommended" and "handling cases in a way that prepares for litigation assists in reaching agreed settlements". Nothing in today's announcements affects these either.

In fact, a more open approach to negotiations reinforces the importance of those two issues.

First, it will creates a newly important need to identify a range of technical conclusions and assess them for "plausibility" as outcomes before the Tribunal.
Next, it will increase the number of situations in which careful, Tribunal standard disclosure of documentary and witness evidence is needed. Although HMRC have more options to reach settlement, they will only agree to favourable settlements where the taxpayer has demonstrated not only that their technical position is plausible, but also that they can prove on the facts that they fit within that technical analysis. The Tribunal takes decisions based on the specific facts of any case, and it seems very likely that HMRC will do just the same.

What will be the impact?

The practical impact of today's announcement will be to allow many corporates to push forward with negotiations which might have seemed deadlocked, and to close a number of historic open years.

No doubt HMRC hope that this closure process will result in a significant sweeping up of potential corporation tax liabilities, substantially increasing the CT take in 2010 and 2011. For many corporates, though, that may be a price worth paying.

It will of course be crucial to handle this new HMRC approach carefully to get the best possible results. Will "Handling cases in a way that prepares for litigation" continue to "assist in reaching agreed settlements"? The answer is undoubtedly yes.

If you have any queries on this e-bulletin, please contact your usual McGrigors contact or:

RUPERT SHIERS
Partner, Tax Disputes and Investigations
Tel +44 (0)20 7054 2737
Email rupert.shiers@mcgrigors.com

JASON COLLINS
Partner, Tax Disputes and Investigations
Tel +44 (0)20 7054 2727
Email jason.collins@mcgrigors.com

JAMES BULLOCK
Partner, Tax Disputes and Investigations
Tel +44 (0)20 7054 2726
Email james.bullock@mcgrigors.com

A joke from hell

2010-08-02T13:36:00.000+01:00

Story behind the Mail on Sunday piece

2010-07-05T11:06:00.004+01:00

As promised, here is the full story about The Mail article I wrote... A few weeks ago Chris Chadburn from Venntax said, “There’s this interesting piece in Taxation that you should look at. He was kind enough to send me a cut called A Very Private Affair by Mark Morton. Now here’s the deal with a tax investigation, HMRC have to find something wrong with the tax records before they can ask for personal records. What Mark was saying was that inspectors were demanding to see private records upfront, which contravenes Article 8 of the Human Rights Act (not that that’s going to keep them awake. Anyway Mark was saying that the sections that dealt with this had been removed from the Enquiry Manual. Some mistake? I called HMRC press office to check on the impact this piece in Taxation had had – they'd never read it. So I emailed it over and they said – wait for it – “It is intended that the contents of CH223430 will be reinstated in due course.” I laughed so hard snot came out of my nose. I've just checked the Enquiry Manual and it's still not there!

PS PDF of the news cut is here.

Tax Story for Mail on Sunday

2010-07-02T16:15:00.000+01:00

Working on a top tax story for the Mail on Sunday, something very funny just happened with HMRC. Will tell all on Sunday when it's published.

New Business Cards

2010-06-23T21:47:00.002+01:00

I'm going to 'up my game' with tax-hell.co.uk - over 150 visitors a day go to the site, there is clearly a need and a demand. Here is the design for a business card I'm having printed for the TaxAid conference next Friday, a special half price offer from printing.com and - somewhat amazingly - tax deductible. This all costs cash and if anybody wants to experience the rosy glow generated by altruism, you know where I am!

TaxAid Conference

2010-06-22T17:14:00.001+01:00

The good people at TaxAid are holding - what looks to be - a very interesting conference on 2 July 2010. Info on flyers below.

Stop the Press

2010-02-12T21:44:00.000Z

What can I say, if I was Dave the last thing I would want is to speak with me! Asking his staff to log their hours! The cheek of it!

Hi Nick,

I’m afraid the constraints on Dave’s diary mean that an interview won’t be possible.

Sorry to disappoint.

Regards,

Sara

Press Request, will Dave step up?

2010-02-11T13:14:00.000Z

I've just sent this to the press people at HMRC. What are the chances that Dave will accept? Low.

Hi Sara

Thanks for that. I've written about tax investigations for The Sunday Times, The Mail on Sunday and AccountingWeb. I also run the www.tax-hell.co.uk website and have published an e-book on tax investigations.

Would it be possible to set up an interview with Dave Hartnett? It would be about recent developments in investigations and his plans for the future. I've been asking - In the Mail - for HMRC to log work hours and this would be an opportunity for him to reply.

Best wishes

Nick

2010-01-27T15:02:00.001Z

I’m a natural introvert so standing in front of a building full of the most powerful people in the country with a large placard is – frankly – absurd. The first five minutes are fearful, will I be asked to move on? Will I be threatened with arrest? The remaining two hours are just dull and very cold. I am – truly – a reluctant protester.

What I’m asking is also absurd: logging case hours is standard commercial practice in the real world. The system makes it easy to assess case costs so at any point a manager can assess how lucrative his team’s work is.

“You’ve got X cases where you’ve logged up Y hours and none of them have an expected outcome of more than Z! Sort it out.”

HMRC spends too much time investigating cases that are simply not lucrative enough, they do this to ‘ensure the integrity of the system’ but I would argue that the primary job of HMRC is to bring cash in for our – frankly – strapped government.

According to HMRC figures every one of your tax £1s yields a £2 result from a Self Assessment investigation. And you think: well they must be doing a good job then, but the reality is that if they started frying bigger fish – rather then boiling small potatoes – they could be getting figures as high as £70 for every £1 spent.

Ten minutes into the demo, Mike from Poland took my picture for his art project and asked if I was on a political demonstration, I said that it was more administrative than political which left him confused, he’s not the only one to be left feeling puzzled by the way things are at HMRC.

HMRC HQ Demo

2010-01-27T12:02:00.002Z

This is a pic of me on my one man demo outside HMRC HQ yesterday. "Log Hours" it's a ridiculous thing to ask, it's like saying wrap up warm it's cold. Oh and it was. More later, but I wanted to get the pic up now.

Double Bubble

2010-01-17T14:03:00.002Z

I've written a piece about HMRC's amazing staff survey - 84 percent of employees feel bullied! Oh, and that's Published in the Mail on Sunday today, and I'm also featured in The Sunday Times, PDF here, photographed and talking about tax-hell.co.uk

CAMPAIGN - Posters

2010-01-12T12:27:00.005Z

Just about everybody reading this knows there is a lot wrong at HMRC, but what can you do about it?

It’s a mountain! Are you going to move a whole mountain on your own?

I will If I have to - stone by stone - but it will be a lot more fun if I have some help from other people.

We’ll kick off with posters. Click here to download a high resolution image of the tax-hell.co.uk poster, then print it out and stick them where it can be of the most use - this is a big file so expect it to take a minute or two to load.

Why not take a snap of the poster in situ and email it in, we’ll publish the good ones and give a prize to anybody who makes us laugh.

New Face of Tax-Hell

2009-11-17T17:46:00.004Z

A new look for www.tax-hell.co.uk. I was amazed when I saw the scan and then dropped in some red. The whole thing just came together like magic. Putting devil's horns on HRM was going to be controversial and almost certainly rule me out of a knighthood, so I've just added two discrete circles of red (very Hellboy).

The Adjudicator Writes

2009-10-08T12:58:00.005+01:00

Letter dated 23 Sep 2009 reads, "Due to the volume of complaints we have received, it may take several months before we are able to look at your case." the letter then goes on to say, please do not call or write as our resources are so stretched!

www.adjudicatorsoffice.gov.uk

Now the Adjudicator

2009-09-04T13:19:00.002+01:00

About a year ago my heart sank a little when I learned that The Adjudicator was appointed by the head of HMRC, because how can you be fair and impartial when you are dealing with complaints against the organisation of which - in effect - your boss is their boss?

But you've got to give it a shot. Today I physically took my complaint into The Adjudicator's office, it is quite a thick file, with over 400 pages, but the basic complaints are quite straightforward. You can get an idea of what they are by looking here. The Adjudicator will let me know within 15 days if they will take up my case, watch this space.

Sprit of 1905

2009-07-09T13:41:00.002+01:00

I've just posted this on accountingWEB, I'm not going to hold my breath!

Is it time to stand up and be counted?

"We all know that HMRC are getting more and more power and we all know that they don’t always use that power in the most responsible way, but what can be done? Accountants and tax advisors are not known for rolling up their sleeves and painting banners, but perhaps now the time has now come to get away from the desk and make your views known. Anybody interested? Anybody got ideas to make a better tax system? Nick

www.tax-hell.co.uk "

2009-06-20T23:08:00.002+01:00

The good people at TaxationWeb have run the first of three extracts from the e-book today, you can read it here and the book, Tax Investigation for Dummies: Everything you wanted to know about a tax investigation but were too afraid (or skint) to ask, can be bought here. If you needed more convincing an eight page sampler can be downloaded by going here and then clicking on my right eye - I kid you not!

Tax Investigation for Dummies: everything you wanted to know about a tax investigation but were two afraid (or skint) to ask

2009-06-17T18:20:00.005+01:00

The e-book is out! Now the work starts promoting and looking for affiliates! So far www.hmrcisshite.com has run an ad and www.taxationweb.co.uk have asked to sell the book and run articles about it - should kick-off on Friday.

Getting affiliates is the best way to promote the book, so if you are reading this and you want to earn some real money from your website, now is your chance!

Go to www.tax-hell.co.uk for more info.

Cheers Nick

The End

2009-04-03T11:37:00.006+01:00

At some point last month the investigation came to a conclusion. I can't say exactly when because HMRC haven't written a letter to me to say that that case has been concluded, but we came negotiated settlement before the Commissioners hearing. There have been no new closure notices.

The final figure we settled on was just over £4k - so not quite the 12k HMRC were demanding this time last year. Thanks to Chris at VennTax for putting in his skill, time and effort into negotiating the revised figure.

Robert Frost/The Road Not Taken:

2008-12-25T20:32:00.003Z

"Two roads diverged in a wood, and I —
I took the 'one less traveled' by,
And that has made all the difference."

But there are times when I think: why didn't I just take the easy way! Why do I always make it so hard for myself?

This case goes to the Commissioners at the end of February, so watch this space. Results, good or bad will be posted.

QED ESC A19

2008-07-04T12:01:00.006+01:00

Dear Dave Hartnett

Here are some get-go facts. I was on a low income. I incorrectly claimed by drawings as an expense. It was an obvious mistake - which was very clear in the return. I received a small tax rebate from my PAYE employment. HMRC now what that back.

I think ESC A19 should apply in my case. Dave Thomas, Complaint Analyst dave.p.thomas@hmrc.gsi.gov.uk said that the answer was ‘NO’ his boss Cheryl Weeks, HMRC Complaints Team Manager cheryl.weeks@hmrc.gsi.gov.uk is now reviewing the ESC A19 facts, she’s written me a letter to say that it will take her two weeks to respond. My question is this: How long does it take to read a flowchart?

Have a look above or see here for a bigger pic.

And follow the logic:

Stage one:
Do the arrears arise from HMRC’s failure to use information received per PAYE95045 – PAYE95060?

OK, I don’t know what the numbers mean but I knew what PAYE means. In 2000 I asked for a tax rebate of my PAYE tax, my file was unlogged, a technician saw that my accounts were obviously wrong and the refund was rejected, see the document here. A case like this could have been nipped in the bud with some simple remedial action - but it was not. Further notes from 2004 show that a further request for a refund was granted even though it was known to be incorrect by HMRC. That document is here.

I think we can certainly say YES to this box. HMRC had the information, they knew my accounts were incorrect, but they failed to act on that information.

OK, this takes us on to box two: Did HMRC tell the taxpayer about the arrears within the time limit at PAYE95065?

So did the then Revenue figurehead Hector give me a call or drop me a simple letter saying, “Hi, you know we say tax is simple - well it isn’t, get yourself to an accountant tute suite my son or it will be a triple serving of grief.” NO HE DID NOT!

I don’t know what the time limit is, but I think it’s safe to assume that eight years is beyond that limit!

OK, so that’s a NO taking us on to the box that reads, “Was it reasonable for the taxpayer to believe their tax affairs were in order per PAYE95080?”

Here we come to a sticking point because what is “reasonable” to one person is not reasonable to another. But I’ll bet the farm that the majority of taxpayers out there believe that their tax returns are checked before they are processed. I’ll bet that the majority who write in the “other information box” believe it will be read. Why ask for information if it’s not read?

Here is what I wrote on my tax returns: “I found the attached tax form complicated and difficult to fill out. I have done my best with it and it is correct and complete to the best of my knowledge. Given that my income is so low it should be very easy to work out my tax. For the sake of clarity I am enclosing a single column of my accounts.”

Now the question you have got to ask yourself is this: am I a master criminal trying to trick the Revenue out of cash or am I somebody who is crying out for a tax officer to double-check my figures? And when I said, “… it is correct and complete to the best of my knowledge” was that a blatant lie to hide wrongdoing or did I really think my figures were accurate?

Here’s my tip for the RIAT (Risk intelligence and analysis) team: people who are trying to slip under the tax radar don’t submit letters, which scream: “look at me, look at me!”

So I’m going to give a YES here, it was reasonable for me to assume that the figures were correct. And it was also reasonable to assume that my return was read as it was processed - as indeed it was.

And suddenly here we are! At the box that says: “Give up the arrears under ESC A19”.

In a nutshell I made small (a few hundred quid) innocent (see above) and obvious (HMRC accepts that they were obvious) mistakes. HMRC saw the mistakes but failed to act on them - indeed they refunded PAYE cash when they knew that no refund was due.

QED ESC A19

Well that’s an hour of my life gone, quite why it will take Cheryl Weeks two full weeks to use the chart is beyond me.

Nick

Happy Birthday!

2008-07-02T12:19:00.006+01:00

Hi Dave Hartnett

Congratulations, this month my tax investigation is three years old!

Yes, I made a few mistakes with my returns, but the basics of the case are that I didn't pay much tax because I didn't earn much money - some years it was below the tax threshold!

My low earnings have been obvious for quite some time.

Why has it gone on for so long? Well HMRC would blame me for any delay (what with all that tedious complaining) but ultimately HMRC has been the one running the investigation so HMRC has to take responsibility. I think the Investigating Officer just felt that if she could dig for long enough she would eventually strike gold - she was wrong.

My case is an important one because it highlights what is in need of reform at HMRC, showing poor communication, little accountability, investigators who just won't let go because they are afraid of a 'nil' result and the running of the Tax Service like an organisation with a bottomless pit of funding. And crucially it shows the poor treatment of tax payers who are not represented they - no surprise here - are the poorest and most vulnerable.

As time passes commercial pressures will force HMRC to be more responsible and practical about investigations such as mine.

If you want to see just how bad cases are run I suggest you start by having a look at the schedule here (nice pic of you Dave) and then go to the main site here to see the horrible truth about how HMRC runs a small 'segment' enquiry.

No consultancy fee necessary - but if I could pick up £400,000 when I retire, well that would be just dandy.

Sincerely

Nick Morgan

--

Nick Morgan

The Site www.tax-hell.co.uk

The Blog http://nick-wwwtax-hellcouk.blogspot.com/

The Schedule http://web.mac.com/nickmorgan/HMRC/schedule.html

The S-Word

2008-06-20T23:54:00.007+01:00

I’ve just been filling in the complaint form for the Parliamentary Ombudsman - one of the questions they ask is, did the department apologise when it got things wrong?

Do HMRC apologise? Oh yes. They say “Sorry seems to be the hardest word” but that’s not true for the good people at HMRC.

Compliance Officer Steve Coomber kicks us off on 24 October 2006 with, “I apologise for not returning your telephone calls.” And then we have to wait a month before, on the 24 November 2006 Complaints Officer Mrs N M Pirrie says, “I am sorry to learn of the problems you have recently experienced with our handling of your tax affairs.” And later that month we get Jacqui Lamper’s (HM Inspector of Taxes) first s-word, “I apologise if the opening paragraph of my letter… was in any way unclear.” It’s less than 30 days to her next apology on 18 December 2006, “I am sorry that you feel that the issue of £10 spent on the David Beckham book was not dealt with swiftly.”

This is the first of the unapologetic apologies, “I’m sorry that you feel…” is the playground way of squeezing in a s-word without meaning it. More on Beckham here.

On 3 January 2007 Mrs N M Pirrie returns with a new apology, “I am sorry that you are unhappy with...” A week later Jacqui Lamer is still sorry: “Sorry that I have not yet returned your documents.” Followed quickly by, “I said that it was my view that you were playing a game. If I misunderstood your intentions then I apologise.”

Note the skilful use of the unapologetic IF.

Next up is Dave Thomas of the Director's Complaints Team who delivers three quick sorries in one letter - here is a career apologiser! “I'm sorry that we have contributed to a misunderstanding here… I'm sorry if you've found the process uncomfortable… I'm sorry if we contributed to any misunderstanding on this issue.” The notes obtained through the Data Protection act show that Dave Thomas was using his position in Complaints to feed information back to the investigating officers - a common tactic.

In April its, “I apologise for not responding earlier to your letter.” Then it’s “I'm sorry that I haven't been able to listen to the audio clip…” followed by, “I apologise for the delay in replying…” and “I'm sorry but I'm still unable to listen to the audio clips on your website.” Well if you can’t listen to them then you can’t respond: top move.

On 10 October 2007 Jacqui Lamper says, “I apologise for not responding sooner.” And 14 days later she is, “sorry this is a long letter.” In December she is, “Sorry I have not been able to respond to you earlier.” In the New Year she is, “Sorry but I feel that I have already answered your question.” And later in January it’s, “I apologise for the fact that this has taken longer than I anticipated.”

It could be just me, but I am I getting the feeling that nobody at HMRC is very sorry at all.

trench warfare

2008-06-05T16:49:00.002+01:00

I got an email today from a stained glass window restorer who is having a tough time at the hands of HMRC.

He said, "I must admit I thought I was nuts and was going to capitulate for a quiet life until I read your site - now it's trench warfare."

If we all stand together they will have to reform the system. www.tax-hell.co.uk

Tax Hell is up for a New Statesman / New Media Award

2008-05-28T13:01:00.002+01:00

Well, it's lovely to be recognised! If you have a bit of time on your hands could I urge you to leave a comment? Go here to make your views known. Thanks Nick

Reply To Chris Cumming

2008-05-23T16:17:00.006+01:00

This case has now been passed to the legal team to process and take before the Special Commissioners. It will be the first time in almost three years that somebody independent has viewed the case.

It's been over a year and a half since I first put in an appeal and over six months since HMRC sent in their 'closure documents'.

This letter may not make much sense without context. I plan to create a PDF of the entire file so everybody can see what's happened with this case. Which - I hope - will encourage HMRC to reform.

Dear Chris Cumming

I acknowledge receipt of your letter dated 13 May 2008.

J Lamper’s letter 26 March 2008 asked for a response if I wanted the penalty determination appeal to be on the same date as the as the main appeal. I do not what them to be held on the same day - which is why I did not respond.

The Sussex Tax Shop is not acting on my behalf in this matter; please do not contact them again.

I see no reason why any part of this hearing should be held in private.

In the interests of fairness to all I want draw your attention to the public nature of this investigation. There has been an article written about me in The Sunday Times, here and an article written by me in The Sunday Times here. I’ve also written for accountingWEB here. I have created a website about Self Assessment tax investigations here and attached to it is a blog here. In the past I’ve recorded telephone and face-to-face interviews, I would advise you to assume that any telephone call or face-to-face interview may be recorded.

A schedule of events is listed here, if you disagree with any of the salient facts I would urge you to make me aware of them.

As was reported in The Sunday Times, I have used the Data Protection Act to get copies of files held by you about this case. I appear to have the entire file including your emails with J Lamper discussing the weaknesses in the HMRC case.

I have read the emails that warn J Lamper that her actions put her in breach of the Human Rights Act - she has failed to act on your advice.

The losses of 2005-6 are to be carried backwards, not forwards.

I think that there are two points at issue that need to be addressed immediately by the Special Commissioner.

1. Can HMRC vary its figures?

In September 2007 HMRC issued closure documents setting my tax at £2,531. I appealed this decision and as a result the tax increased to £6,664. My understanding is that HMRC do not intend to issue new closure notices and that there have been no new findings to justify such a high increase in tax liability. I have been told by HMRC officer Tim Lintott that the only reason the figure was increased (almost threefold) is because I’m appealing.

HMRC may have the privilege to change its mind after closure documents have been sent, but to increase the figure so dramatically without making any new findings seems to be a gross abuse of this privilege and a bullying tactic. The fact that they are reluctant to issue further closure notices compounds this.

2. Discovery

The issue of discovery is a complex one, there are issues of both if and when a discovery was made along with what the discovery actually was. If a discovery was made after discovery powers were used the legality of those powers needs to be questioned.

When I completed my tax return for the pertinent years I deducted my tax and drawings as an expense. This was a mistake, but in the “other information” box and in an enclosed letter I made it very clear that I’d found the Self Assessment form confusing and I also gave a clear single column breakdown of which made it very clear of what I was doing.

No discovery can be made as I had made full disclosure.

I queried if a discovery had been made in December 2006 J Lamper replied, in a letter dated 10 January 2007, “I am unable to see where I have referred to discovery.” Which suggested to me a discovery had not been made. She later said that my questions about discovery were a “smokescreen”.

However in January 2007 J Lamper used discovery powers without completing the pertinent paperwork (as far as I can tell the paperwork was completed on 6 September 2007 - a full seven months after discovery powers were used).

In a telephone conversation of 22 February 2007 J Lamper said that discoveries had been made but she was - once again - unable to give pertinent examples, when pressed she refused to talk further about the matter.

While J Lamper failed to be specific about what discoveries had been made she was very specific about what her discovery was not. In view of my full disclosure in my tax returns she said, in a letter of 15 February 2007, “In this case I have taken the view that the words drawings, tax and entertaining shown obviously on the lists accompanying your earlier returns prevent me from having discovery in years earlier than 2003-2004.”

I agree with this: it was reasonable for me to expect my Self Assessment return to be read by a member of HMRC.

When J Lamper revised her figures in December 2007 she not only almost tripled the alleged tax liability, but she also changed the reason for discovery. Now arguing that the disclosure did not prevent her from making a discovery.

It’s reasonable to assume that the HMRC legal team didn’t feel J Lamper’s reasons for discovery were strong enough to go before a the Special Commissioner so she has now been forced to change her grounds for discovery.

The use of discovery powers in January 2007 was hasty, misjudged and illegal. HMRC should be sanctioned for failing to carry out the investigation in a correct manner.

If the new grounds for discovery are allowed, how do we address the use of these discovery powers at an earlier date? We must question if the use of discovery powers was legal.

I draw your attention to Langham v Veltema where it was concluded, “…the Inspector is to be shut out from making a discovery assessment under the section only when the taxpayer or his representatives… have clearly alerted him to the insufficiency of the assessment in question.”

The twin issues of figure variation and discovery need to be considered and decided upon by the Special Commissioner before we can meaningfully proceed further.

Means

It’s worth highlighting my means at this point. From what I can see the bulk of the tax HMRC is seeking is calculated by subtracting my earned income from that they estimate my outgoings are. As I’ve said many times in the past I’m married to somebody who is independently wealthy. There is no shortage of evidence that she was both in a position and did support me during the period in question.

I am prepared to take this matter to the Special Commissioner but it seems to be a waste of everybody’s time. If you can tell me what evidence would satisfy you that my wife paid the bills I will send it to you.

Sincerely

Nick Morgan

A Plug For A Shit Site

2008-05-16T10:00:00.003+01:00

Ken Frost has his finger on the pulse of HMRC. His writing is funny, insightful and extremely well informed. His blog is here (www.hmrcisshite.com) and is well worth checking out. He's up for a New Statesman Media Award, do take the time to visit here and let the New Statesman know what you think of the site.

Accounting Web News Story

2008-04-17T10:01:00.005+01:00

Accounting Web, the website for tax professionals by tax professionals was amazed that people being investigated by HMRC could apply to see confidential files using the Data Protection Act. So amazed in fact that they commissioned me to write an article about it which can be read here.

It's been said that I'm abusing my position as a journalist in this matter because HMRC have no power to reply. HMRC - of course - can reply either to this blog, where there is always a space to give a response, or on the Accounting Web website where is it equally easy to leave a comment.

The Sunday Times article was discussed with HMRC legal experts in great detail before it was published - they accepted that all the material facts were correct.

Bad advice for Jacqui

2008-04-09T10:59:00.011+01:00

On 30 July 2007 Jacqui Lamper wrote a confidential email to Claudine Lashley at the HMRC press office it was a cry for help. She wrote, “I’m feeling a bit lost in all this. Do I need to do anything now? I’m on the point of quantifying this and writing to him prior to closing the enquiry. There was a lot wrong but [it’s] not a large settlement.”

Within 20 minutes Claudine replied, “You carry on - we should deal with him as we would any other taxpayer under enquiry. It looks to me as if he is using the journalist bit as some sort of threat… I cannot imagine any publication being interested in his experiences… a serious newspaper would not publish his article…”

In the light of the two articles published by The Sunday Times last week: Ten of the taxman’s sneakiest tactics and Internet war declared on ‘bullying’ taxman it looks as though this was a piece of pretty bad advice.

Visit Tax Hell.

Sunday Times

2008-04-06T14:33:00.005+01:00

Hi to everybody who's come to the blog through The Sunday Times. I work as a full-time freelance journalist and this website and blog are normally written in the early hours of the morning.

I'd like to thank everybody who's emailed for their support. If you want to help please let me know if any of my links are bad or if I've made any spelling mistakes!

Below is "the directors cut" the unedited article - which names names and is quite a bit longer. Enjoy. Nick.

Tax Hell

Her Majesty’s Revenue & Customs are constantly telling us “Tax doesn’t have to be taxing” So - like over four million of us - I completed my own Self Assessment return and when I got a letter saying an enquiry was being opened into my tax affairs I wasn’t frightened, I had nothing to hide - what a naive fool!

No detail was too small to question, a £10 David Beckham autobiography - which I’d bought for research - quickly became of great interest. Senior inspector Jacqui Lamper asked, “Are there any documents to show that you purchased the David Beckham book in the belief that you would get to interview him? Otherwise there is nothing that shows that it was not purchased for your own enjoyment.”

Beckhamgate went on over nine months, two interviews and many letters. This was the beginning of a Kafkaesque nightmare.

Jacqui Lamper presented me with a frightening blur of figures on stacks of official headed paper - each getting progressively more daunting. Further years were opened for investigation and more documents were requested, bank and credit card statements were examined with forensic intensity. In the second interview there was talk of my negligence, large amounts of tax to pay and penalties too. Patches of eczema started to break out all over my body.

In January last year [2007] I used the 1998 Data Protection Act to get copies of my HMRC file - which is something anybody can do. Two months later the true picture of the investigation emerged. Jacqui Lamper - so bullish on the phone and on headed paper - admitted in an email to a colleague, “I haven’t insulted him, mostly I was… trying to make him go away.” And in a separate email she continued talking about the case, “I'm feeling a bit lost in all this… [it's] not a large settlement."

HMRC don’t calculate costs on individual cases so it’s impossible to find out the exact price to the taxpayer. Stephen Camm former Inland Revenue Investigator and now head of tax investigations at Price Waterhouse Coopers says, “In a case like this it’s reasonable to estimate figures of £50,000 for the investigation and that figure may well double with appeals .” And how much tax does HMRC hope to get back? Well the figures change with the wind, but in September last year [2007] they sent closure documents setting it at just £2,530.

Here are 10 things you need to know about tax investigations and what HMRC would rather keep quiet.

Tax is not simple

Advertising front man Adam Hart-Davis who has been delivering the “Tax doesn’t have to be taxing” line for five years walked out of his job in January [2008] saying that our tax system is too complex, especially for the self-employed and VAT, he said, was "absurdly complicated".

The National Audit Office estimated that a third of all Self Assessment returns are incorrect and that’s not surprising when you consider that a recent Civil Service Capability Review admitted one in four of us contacting HMRC for advice is given, “incomplete or inaccurate information.” It’s all so complicated they can’t even get it right themselves.

They lie and you get the allowances you negotiate

When a tax inspector opens a case he simply looks at a list of expenses and says, “That’s not allowable, that needs to be reduced to 80 percent. And do you get personal enjoyment from this? OK well we will have to reduce that…” When your expenses are eroded your profits shoot up - et voila - the taxman gets a result. Inspectors are well within their rights to question expenses, but if they say something is not tax deductible - when they know it is - that is lying.

In my case I put in expenses of just under £4,000. Every item was questioned from newspapers and magazines (valid research for a journalist) to my office rent. After a year I was told I’d be allowed just £1,000 of that figure - an unrealistic reduction. I dug my heels in and stuck to my guns; the figure went up to £2,500 and then to £3,000.

Stephen Camm says this is typical. “In investigative cases there is a strong element of negotiation, and it’s likely that the investigating officer saw the offer of £1,000 as a starting figure. Tax investigations are like sport, you need to know the rules: if you play Lacrosse without knowing the basics you are going to get hurt.”

They bend the legal boundaries

There is legislation in place to protect taxpayers, unfortunately some inspectors choose to ignore it. When an investigation is opened it’s normally an ‘aspect enquiry’, which means that the investigator can only enquire into a narrow band of information. If they suspect wrongdoing the investigation becomes a ‘full’ enquiry, and if a ‘discovery’ is made the previous 20 years can come under enquiry.

‘Discovery’ is the inspector’s nirvana: but what constitutes ‘discovery’ is a grey area open to interpretation. Stephen Camm says, “HMRC will say that they have made a discovery at the drop of a hat, we then have to question what that discovery is.”

John Whiting from the Low Incomes Tax Reform Group, an organisation that give a voice to those who cannot afford to pay for tax advice says, "The unrepresented taxpayer is at a huge disadvantage in an investigation, particularly if the inspector says a discovery has been made. There are certainly inspectors who will try it on. You have to understand, the job they are paid to do is to collect the tax, not to help the taxpayer."  

You are guilty unless you can prove otherwise

Under criminal law you are innocent until proven guilty, the tax system turns this on its head: the burden is on you to prove your innocence. Let’s say your grandmother gave you a cheque for £100 for your birthday four years ago. HMRC will seek out your personal statements and question where that amount came from, if you can’t explain and provide proof they will most likely assume that the money is undeclared income and you will be taxed on it.

The interview is a trap

In criminal investigations you are cautioned that what you say may be used against you - no such niceties are offered by HMRC. You can be represented - which HMRC is very vocal about - but then there are other rights they prefer to keep quiet. You can have the interview at the location of your choice, you can ask for a detailed agenda of the meeting beforehand and you can also record the interview - an invaluable tool.

Accountant Ken Frost of the www.hmrconline.com blog says, “Under no circumstances should anyone attend an interview with HMRC personnel without propper representation. HMRC staff are incentivised to maximise the tax take therefore it is in their interests to skew records of meetings in their favour.”
Stephen Camm adds, “Importantly taxpayers should know that an interview is voluntary – most don’t realise this and feel compelled to attend.”

The lifestyle questionnaire is given for a reason

The lifestyle questionnaire is often used by HMRC and is designed to entrap the taxpayer. If HMRC can’t find any evidence they will simply look at your lifestyle, calculate your living costs as X and they know that your declared income is Y. They will then simply send you a bill for the tax on the difference between the two. It’s the perfect investigation: evidence free.

I was sent a questionnaire just after my first interview. It looked innocent enough; three pages asking about everything from mobile phone bills to holidays and haircuts. I filled it in as honestly as I could - but it was little more than guesswork so I wrote “All figures are estimates” on the first and last page - that has not stopped HMRC using these figures as one of the principle tools in their investigation.

They bully

HMRC know that accountants are expensive so they drag the investigation out before presenting a settlement offer. The settlement may be unfair, but the option is to go on paying high accountancy fees for months, possibly years. Former enquiry officer and author of Dealing with Revenue Enquiries, Michael Reader says, these are ‘face saver’ tactics and adds, “The accountant should not allow the client to be subject to any form of unfair settlement.” But the reality is most accountants are pragmatic and HMRC banks on this.

The complaints team is an arm of investigation

Whatever you say to the complaints team is noted down, attached to your file and passed back. They make judgements about how determined you are or if you are angry, well informed or well mannered. Notes obtained through the Data Protection Act on my case read, “…he said he is prepared to go all the way - even to his MP.” And “He sounded agitated & frustrated, but well mannered & polite.”

They don’t tell you about their power to scale back

You are the subject of a protracted and stressful investigation but just when you are suitably stressed and scared the taxman will dangle a carrot in your direction. This is a settlement figure that (you believe) will make the nightmare go away. The figure will be a little higher than you were expecting - but it’s possible to pay it at a stretch, say £5,000.

Once you’ve signed on the dotted line real figures start to emerge. The £5,000 is scaled back, normally over five years (the theory is what you did wrong in one year you did in five) making the figure £25,000 then HMRC add interest (increasing the figure by at least another £5,000) and penalties too. So what starts out as £5,000 can quite easily knock a hole in £50,000 - and once you have agreed to the initial £5,000 HMRC have got you.

This happened to me in the early stages of the investigation. After the case had been open for a year (it’s now been open for almost three years) I got a letter saying, “I’m now in a position to settle my enquiry and propose the following…” but the following figures contained no mention of penalties, interest or scaling back. It was only after talking to an accountant that I learned what would happen. He pointed to my letter and laughed, “That figure,” he said, “is just the tip of the iceberg.”

They are getting more power

Stephen Camm says ”Staff cuts have undeniably increased workloads, lowered skill levels and savaged HMRC staff’s morale.” What is the response of the government? Give them more power. Rob Lewis Practice Editor at accountingweb.co.uk says, “HMRC now have the power to bug [only in criminal cases] and from next April [2009] they will have the right to carry out surprise spot-checks. This could result in people like you or me being questioned with no representation or advice.”

HMRC was asked to comment but declined.

If you are being investigated and want to see the documents held on you apply directly to gail.taylor@hmrc.gsi.gov.uk or call the HMRC Data Protection Unit 0191 225-7638. The Low Incomes Reform Group have a useful site at www.litrg.org.uk and TaxAid also has a good website at www.taxaid.org.uk. You can learn more about Nick Morgan’s case and follow the unfolding events on his blog www.tax-hell.co.uk

Ends

Leader or Actor

2008-03-18T09:25:00.003Z

Dave Hartnett has been acting head of HMRC for a while now but any talk of reform is just that - talk. I have emailed him to ask him to look into my case many times, those emails have been ignored. If he was serious about reform his would start by curbing the bullying tactics of his officers in small and petty investigations.

Bad News

2008-03-17T16:28:00.004Z

The head of complaints Fred Chapman is no longer with us.

He has not lost his life (far from it) indeed he may have actually got himself one.

While I'm happy that he's left the job that was making him sad, it puts me in a 'back to square one' position. This is simply because Fred promised me that he'd get to the bottom of the questionable activity in my case (see blog of 13 February 2008).

Of course (on reflection) when he was giving me such noble reassurances earlier in the year he was (no doubt) thinking - hey, I'll be out of here in a few weeks!

His replacement is Cheryl Weeks. We will see if she is willing to take up his valiant offer of - well - investigating a complaint.

For those catching up, I'm a self employed journalist who has been investigated over the last three years by HMRC.

The investigating officer used discovery powers in my case without making a discovery. This was wrong. Hey, that's not rocket science is it?

Penalty cut by 15 % - and hold the flogging

2008-03-14T12:14:00.004Z

On 6 February 2008 Jacqui Lamper said, “Having considered the facts of the case I am planning to submit a recommendation that the penalty for making an incorrect return is 45%.”

Of course what she really wanted was to set it at 100% and throw in a good flogging to boot, but - you know - what with this case getting so much attention she had to be realistic.

On 11 March she said, “The penalty loading has been set at 30%”. So it seems that the investigating officer can’t even agree with her own bosses.

Her letter continues outlining the grounds for the 30% most of which are laughable. Under co-operation Jacqui Lamper sites the number of 19A Notices sent (which are documents sent out when requested info has not been received after 30 days) - three in total - at least one of these was issued whilst HMRC was in possession of the requested documents. They simply hadn’t bothered to check the post!

HMRC investigating officers operate with little accountability and because of this bulling thrives.

But - hey - not on my watch.

Stay tuned for more horrors.

Affront to natural justice

2008-03-04T17:15:00.009Z

You may not like me - particularly I guess - if you are a member of HMRC. But I’m going to tell you something right now that’s going to make you really dislike me and perhaps even hate me. I’m writing this blog from a Ski resort in France called La Rosiere. Yesterday, I skied into Italy and had gnocchi - which was lovely; and the weather: dream blue skies and fluffy white snow - the sort that skiers dream about.

Now here’s the rub: this is work: I’m here with two friends working on a travel piece for a national newspaper. The whole trip has been arranged through a PR company (and is therefore free to us - yes: free transport, free skis and free lift passes) and more than that when I go out for a meal I can claim the cost back against tax - as I understand quite legitimately.

Hate me? Take a ticket and stand in line.

And I think this is what happened when Jacqui Lamper started to look in to my case. In the year she opened I had been on a cruise around the Hawaiian Islands with my wife and another around Barbados, with my brother. Both were hosted (ie free) trips, and in that year I’d turned over less than 10K!

So naturally Jacqui wanted to know how somebody on such a low income could have such a fabulous lifestyle. It was explained to her but still, it must have stuck in her throat: it was an affront to her sense of natural justice. Because - let’s face it - flexitime and five weeks holiday a year is a good HMRC perk, but it’s not international jet-set.

Additional Note: In a report to her boss in January 2007 HMRC inspector Jacqui Lamper wrote, "The earnings do not appear to be consistent with his lifestyle. For instance I believe he has a holiday each year but so far I have been [un] able to identify any costs just odd purchases of items such as batteries at the airport."

Fan Mail

2008-02-29T11:40:00.003Z

Yo, check this out! It's my first ever piece of fan mail! At the moment www.tax-hell.co.uk and the blog are listed on Google and emails are sent are sent out to HMRC, but obviously I have much bigger plans for the site: I want it to become a campaigning tool for change and also a resource for people being investigated. The Revolution Will Be Blogged! Anyway - before I get too far up myself - here is the mail.

Hi Nick

Well done for fighting back & constructing such an excellent site.

We at Tax Credit Casualties have also discovered that HMRC lie through their teeth and are as incompetent as they are unaccountable!

Please feel free to visit us here http://familytaxcredit.forumco.com/default.asp and at our main site here http://www.taxcreditoverpayment.pwp.blueyonder.co.uk/

if you haven’t already done so.

Kind Regards

Alan

Lamper Gets her Cage Rattled

2008-02-26T11:44:00.000Z

I got a letter from Jacqui Lamper (dated 18 Feb 08) that starts, "I note from your email to Mr F Chapman, 13 February 2008, that you are unable to locate the discovery assessment documents for January 2007."

Ah-ha! This means that Fred Chapman has kept his word and started to investigate the issue of discovery in this case (see blog of 13 February 2008). Who would have thought! I had believed that the HMRC complaints team offered little more than a flack-catcher service, but he now appears to be keeping his word and stepping up to the bar.

Jacqui Lamper goes on, "I enclose a further copy of the assessment notice... and your appeal.. My explanation of the assessment was given on pages 7 and 8 of my letter 10 January 2007, copy also enclosed."

This all sounds very official and all above board. There is nothing like a letter headed with the HMRC logo to make the heart beat a little faster.

But here's the rub: Jacqui Lamper needed to make a discovery to issue a notice of Further Assessment for 2000-01 - and there is no mention of discovery in any of these pages. More than that when I used the Data Protection Act to get hold of HMRC documents there was no mention of discovery in them either.

From the beginning of 2007 the whole issue of discovery became heated with Jacqui Lamper saying - time after time - that a discovery had been made - though she was never really very clear what that discovery was: see here.

Because I'm not a trained accountant I was asking the wrong questions for quite some time but eventually I hit on the right one: I asked for the date Jacqui Lamper raised the discovery assessment documents. Jacqui Lamper replied, "I authorised discovery assment documents to be raised and I signed the resulting notices on 6 September 2007".

This means that there was a gap of seven months between using the discovery powers and filling out the pertinent paperwork. Now in the past HMRC have told me that a "little knowledge is a dangerous thing" [SIC] and I do understand what they are saying - I'm no accountant - but this yawning gap of time between using DA powers and doing the appropriate paperwork combined with an inability to say - exactly - what the discovery was - smells very rat-like to me.

Will Fred and the complaints team investigate this further? I've got a handful of emails from him to Jacqui Lamper (god bless you Data Protection Act) which shows they are on friendly terms - and let's not forget they are colleagues. But Fred Chapman has given me his word that if there has been wrongdoing he will seek it out and hold up HMRC's hand to that wrongdoing - Mr Chapman, I hold you to your word.

Song for Karen

2008-02-21T10:11:00.000Z

I’ve had two long telephone conversations with Karen Culliford (karen.Culliford@hmrc.gsi.gov.uk - 02392 285000) who is PA to Local Compliance Director Carol Mellor (carol.mellor@hmrc.gsi.gov.uk).

Needless to say Karen doesn’t live to take part in long conversations about tax cases that have gone horribly wrong. She insisted that Carol Mellor - despite being the Local Compliance Director - has no power in this case.

I asked to speak with Carol and was told that she would be out of the office for weeks - then I asked for Carol’s mobile number - we both laughed about that! (Silently of course).

But that then - seriously - raises the question about who is making the decisions. Who - just before Christmas - said, OK if this joker wants to appeal lets more than double his tax liability for no reason at all, let’s just rework the figures! Oh and while we’re at it let’s change the reasons for “Discovery” because frankly what Jacqui Lamper (01273 430011) has come up with is as strong as a wet paper bag carrying a lead balloon (see schedule point 31 and discovery).

I will write to Karen today and asked her to take a good look at the website - particularly the schedule with a view to closing the case down and mounting an internal investigation into what has gone so terribly wrong with this investigation.

You're an errand boy, sent by grocery clerks, to collect a bill

2008-02-16T14:15:00.001Z

I got a letter today form Medium Interventions Team Leader Tim Lintott that made me groan from the bottom of my soul. It’s dated 13 February 2008.

He starts by reminding me that he doesn’t have external email! Come on Tim, we are well into the 21st century now, look HMRC plough millions of tax pounds into promoting online tax returns, the least you can do is start using email.

Anyway, he then goes on, “I am able to make your suggested meeting on 25 February at 3.00pm… [I] shall attend along with Mr Button from this office at the suggested time.”

Now, in the email I sent Tim (via his boss Carol Mellor - who has email - carol.mellor@hmrc.gsi.gov.uk) I said “I I'm trusting that as you are a supervisor you will not feel the need to be accompanied by a second Inspector.” There are two very good reasons for this: they are both previous meetings I’ve had with HMRC, it’s always two against one - why do they need two inspectors? I’m unrepresented, untrained and know little about HMRC’s rules - do I really pose such a huge threat?

Tim goes on, “My expectation is that we shall establish finally whether the hearing is to be made before the General or Special Commissioners.” This has already been discussed in detail (a lengthy telephone call of 10 Jan 2008) and Tim knows my plans. I want to challenge the validity of HMRC’s second set of figures (see schedule) with the General Commissioners and then take the whole case to the Special Commissioners. Tim, himself, agreed to this in the phone call.

Tim goes on, “… we can also discuss in broad terms the contents of the Statement of Agreed Facts. I should point out that I will not be personally drawing up this statement although I shall be actively advising those who will.”

Now this is the deeply depressing bit - what Tim is saying is he has no power or authority in this matter. In the words of Kurtz “You're an errand boy, sent by grocery clerks, to collect a bill.” [there is a small prize for the first person to name the film.]

Sigh, anyway, so what Tim seems to be saying is he’s bringing a friend with him and no matter what happens or what I say nothing will really change. The idea that he will be “actively advising” his superiors is ludicrous - I mean I can “actively advise” HMRC boss Dave Hartnett (dave.hartnett@hmrc.gsi.gov.uk) about how to run a better tax system, it’s meaningless.

Tim goes on to say, “… we will be aiming to bring our own recording equipment.” Even here Tim doesn’t seem able to say he definitely will - and he even seems unwilling to commit to a specific type of recording device.

Oh, on a tangent I’d like to take this moment to “actively advise” Dave Hartnett to tape all interviews, the police do it and HMRC interviews are certainly no less adversarial: tape everything, then there are no disputes later about what has been said.

But back to the letter, the whole thing is ridiculous: here we have somebody with no external email and no power who doesn’t want to venture out on his own and might (or might not) bring “recording equipment” with him.

Who is making the decisions in this case, who is Tim fronting for? Let’s cut to the chase.

Open letter to fred.chapman@hmrc.gsi.gov.uk about discovery

2008-02-13T16:17:00.000Z

Dear Mr F Chapman

I've just been through all the paperwork for this case.

At no point has the issue of discovery or discovery powers dealt with by the complaints team, or indeed any member of HMRC other than J Lamper.

J Lamper used discovery assessment powers in my case in January 2007 but didn't raise discovery assessment documents for at least seven months after that date. A letter sent in late December 2007 reassesses the whole case and J Lamper's reasons for discovery - elusive as they were - now seem to to have been completely removed.

That must put questions in your mind about how legitimate the January 2007 discovery was.

When we spoke on the phone and you promised me that if you became aware of wrong-doing you would hold your hands up to it immediately. I now hold you to that promise.

You can hear J Lamper talking about discovery here: http://web.mac.com/nickmorgan/iWeb/HMRC/discovery.html

An updated schedule of events is here: http://web.mac.com/nickmorgan/iWeb/HMRC/schedule.html

A new blog is here: http://nick-wwwtax-hellcouk.blogspot.com/

And the main site is here: http://www.tax-hell.co.uk

Sincerely

Nick Morgan

PS In the past you have told me the correct course for me to now take is to go to the Adjudicator. However, they have said that while this case is active they will not even look at it.

--

Nick Morgan

The Site www.tax-hell.co.uk

The Blog http://nick-wwwtax-hellcouk.blogspot.com/

The Schedule http://web.mac.com/nickmorgan/iWeb/HMRC/schedule.html

The Cost of Investigation

2008-02-11T17:35:00.000Z

I do wonder what my case is costing the tax payer - now jokingly known by HMRC as "The Customer".

At the very most HMRC think that they will get about 6k plus interest and penalties - though this figure is currently changing from month to month (see http://web.mac.com/nickmorgan/iWeb/HMRC/schedule.html and weep).

This - rather fanciful figure - is a chunk of cash, but at the same time this case has been going on for almost three years and there is a pile of paperwork three house bricks deep.

I've enquired how much it would cost me to be represented before the Special Commissioners and was given a ballpark figure of 5K. Now as HMRC are using barrister level representation I don't see that their costs will be dramatically different.

I've asked the HMRC supervisors about cost / benefit yields and isn't my case a waste of tax payers cash? And I've always got the same answer, something about, "it's not about money, it's about ensuring the integrity of the system." But of course it IS about cash so I used the Freedom of Information act to find out how much my case was costing you. They replied that they didn't keep cost tabs on individual files - which (I'm sure) is true.

I think this investigation will end up costing in the region of 100k - which is just phenomenal.

HMRC reports suggest that there is a ratio of 2:1 in small businesses Self Assessment investigations that's (two pounds returned for every one spent) and at first this looks good. But it is actually the smallest return in any area of HMRC investigations. If you look at non-business self assessment enquiries the ratio jumps to more than 15:1.

The assumption seems to be that most small businesses are on the fiddle but the figures suggest that this is not the case. So why focus resources on the low yield small businesses when they show - year after year - that they are not the big offenders?

Also see: http://www.accountingweb.co.uk/cgi-bin/item.cgi?id=178896

A reply from Mr Meekings! "I have been asked to delete any future emails from you on receipt."

2008-01-15T17:03:00.000Z

"Mr Morgan

Thank you for your email below. Mrs Lamper will be responding to your comments by letter in the near future.

I have been instructed that from now on, to ensure consistency in our approach and proper confidentiality (for example I am no longer Mrs Lamper's manager), I am no longer to maintain email correspondence with you and that you should direct your correspondence by post or telephone to Mrs Lamper or her manager Mr Lintott at Crown House, 11 Regent Hill, Brighton BN1 8LB. For this reason I have been asked to delete any future emails from you on receipt.

P Meekings
HM Revenue & Customs"

It seems strange to me that he says "I'm no longer to maintain email correspondence..." since he ignored 95 percent of the emails I sent him!

J Lamper, Are you still an Inspector of Taxes?

2008-01-15T16:52:00.000Z

Dear J Lamper

In your letter of 10 January 2008 you say that the issue of ESC A19 will be dealt with in "due course" can you give me a more specific timeframe?

I'm very keen for www.tax-hell.co.uk to be factually correct. If there are errors I urge you to notify me to give me an opportunity to correct them. And I do extend that to all at HMRC.

I notice your work title has changed, are you still an Inspector of Taxes?

Sincerely

Nick Morgan

--
Nick Morgan
www.nickmorgan.com
Mobile 079 7349 8696

Who is really managing this investigation? Open email to peter.meekings@hmrc.gsi.gov.uk

2008-01-15T16:51:00.000Z

Mr Meekings

Who has asked you to do that? Who is really managing this investigation? Because - clearly - it's not been J Lamper for quite some time.

Why do you find it so difficult to answer such straightforward questions, such as: Have you had a response from the Regional Appeals Unit yet?

In the event that this case goes before the Special Commissioners I will certainly call you for questioning as you were managing J Lamper throughout the time she used Discovery Assessment powers without completing any paperwork.

Sincerely

Nick Morgan

--
Nick Morgan

The Site www.tax-hell.co.uk

The Blog http://web.mac.com/nickmorgan/iWeb/HMRC/blog/blog.html

The Schedule http://web.mac.com/nickmorgan/iWeb/HMRC/schedule.html

Email to the Boss

2008-01-07T16:56:00.000Z

Dear Dave Hartnett

I'm a freelance journalist on a low income and for the past two years I've been in dispute with HMRC over the amount of tax I've paid.

After a great deal of investigation all parties now agree I'm on a very low income and (in my view) no discoveries have been made on my case.

I'm finding the investigation very stressful and would like it to be brought to an end. With the high level of costs and low return for HMRC this seems to be just the sort of investigation you want to avoid.

Can we do something about this? Could I meet with you to discuss what has happened and try to come to some sort of resolution?

You can find details of the case on the website (listed below).

Sincerely

Nick Morgan

--

Nick Morgan

The Site www.tax-hell.co.uk

The Blog http://web.mac.com/nickmorgan/iWeb/HMRC/blog/blog.html

The Schedule http://web.mac.com/nickmorgan/iWeb/HMRC/schedule.html

ESC A19 - HMRC Code for "Official Error"

2008-01-07T16:54:00.000Z

Peter Meekings

I would like you to apply ESC A19 to my case.

It's unusual to apply ESC A19 to a SA case, but mine is exceptional.

It was reasonable for me to believe that the enclosures included with my return would be read by HMRC - there were only two pages and they were both very clear. Indeed the pages WERE read by a HMRC employe (if only somebody who was imputing data) but no action was taken.

Can you give me a ruling on weather ESC A19 will apply to my case?

Sincerely

Nick Morgan

-

Nick Morgan

The Site www.tax-hell.co.uk

The Blog http://web.mac.com/nickmorgan/iWeb/HMRC/blog/blog.html

The Schedule http://web.mac.com/nickmorgan/iWeb/HMRC/schedule.html

Let's go to the Special Commissioner ASAP

2008-01-03T16:58:00.000Z

Dear J Lamper

I'm confirming that I would like my whole case - all the years opened for investigation - put before the Special Commissioner.

I have updated existing pages and added new pages to the website, www.tax-hell.co.uk. If there is anything you consider to be factually inaccurate please draw my attention to it.

The site is now listed on Google.

Nick Morgan

--

Nick Morgan

The Site www.tax-hell.co.uk

The Blog http://web.mac.com/nickmorgan/iWeb/HMRC/blog/blog.html

The Schedule http://web.mac.com/nickmorgan/iWeb/HMRC/schedule.html

I'm Henry VIII I am, Henry VIII I am....

2007-12-20T17:01:00.000Z

Today's questions, the same as yesterday's questions.... (which are the same as the questions I was asking three weeks ago)

Peter Meekings

Please answer the following questions:

Have you had a response from the Regional Appeals Unit yet?

Can you send me their details? Who (in the Regional Appeals Unit) has been dealing with this case?

If J Lamper made a discovery on my case in January 2007 - why were no discovery assessment documents raised for over six months? Is this normal?

You have said that you support J Lamper and will do all you can to resolve this case, but do you support the actions and the approach of J Lamper in their entirety in this case? Are you prepared - in short - take full responsibility for the handling of this case?

Are you happy that the Code of Practice has been adhered to?

Are you prepared to take this case to the Commissioners?

Nick Morgan

--

Nick Morgan

The Site www.tax-hell.co.uk

it is not appropriate to re-visit individual aspects of your case in isolation

2007-12-06T17:07:00.000Z

Mr Morgan

I can advise you that as and when your case goes to the Commissioners it is normal to agree a Statement of Agreed Facts, but you will receive guidance on the procedures to follow and I suggest we wait until that stage is reached. With regard to other issues you have raised in recent emails, it is not appropriate to re-visit individual aspects of your case in isolation - we need to look at the whole case in total. In her letter of 24 October 2007 Mrs Lamper invited you to take part in a full review of your case but you declined to do so. I believe Mrs Lamper will be writing to you shortly about how this case will now proceed.

Peter Meekings
HM Revenue & Customs
Crown house
Regent Hill
Brighton

" it is not appropriate to re-visit individual aspects of your case in isolation" Errr why is that? The case is the case and the facts are the facts, this case will stand or fall on the facts.

Letter to HMRC officer J Lamper

2007-11-25T22:11:00.000Z

Dear J Lamper

After two years of misdirection, obfuscation and lying, you have offered me a grossly unrealistic settlement figure in the hope that it might be a starting point for negotiation.

I know that you would like me to have a meeting with you but I've already had two unproductive meetings and I'm yet to hear anything to convince me a third would be any more positive than the first two.

Your internal notes show you puzzling about my motivations in this case. They are simple: I want transparency and accountability both in my case and throughout the whole of HMRC.

Yours sincerely

Nick Morgan

Some Top PR advice

2007-11-23T22:10:00.000Z

Dear HMRC

Here is some top PR advice and it's free. Ready? Here it comes: STOP LYING TO THE NATIONAL MEDIA.

You know that you will just get found out and then the whole thing is made so much worse worse. If you get something wrong 'fess-up, apologise and then get things right in the future.

I think we all know what I'm talking about.

On a lighter note I've released the first section of my Self Assessment website: www.tax-hell.co.uk. It's called "Twelve Things HMRC Don't Want You To Know" and you can go right to it by clicking here: http://web.mac.com/nickmorgan/iWeb/HMRC/whmrcdwutkone.html

Faithfully

Nick Morgan
www.tax-hell.co.uk

Let's make it interesting - £2,000

2007-11-22T22:08:00.000Z

Dear HMRC

It's with great sadness that I have to say that nobody has taken me up on my wager - see below. Perhaps it was just not enough money and perhaps (with all the changes this week) there will now be a few more people in need of a bit of easy cash.

I'm now willing raise the wager to £2,000 - come on HMRC if you have faith in your tax inspectors step up and take my cash.

Yours faithfully

Nick Morgan

PS I watched the ITV news yesterday - the story was that you had lost the bank information because a junior member of staff had made a mistake. No doubt that was what your press office put out. The ITV report relieved that actually the data loss part of a systemic breakdown due to staff cuts. It seems to be that HMRC is habitually bending the truth.

Goodbye Paul Gray

2007-11-21T22:07:00.000Z

Dear Paul Gray

Thank you for taking responsibility for losing the personal and financial details of 25 million people.

I think we both know that this is the tip of an iceberg of incompetence and bullying.

It is becoming increasingly clear - in my case - that the investigating officer who claimed that a ‘discovery’ had been made was engaged in wishful thinking.

When your complaints team examined the case the claim that a ‘discovery’ had been made (when there was no discovery paperwork) did not flag up any concern - indeed the complaints officer told me that the investigation had been run correctly and warned me that a “little knowledge is a dangerous thing.”

When the issue of ‘discovery’ was brought to the attention of the supervisor he backed the investigating officer up - despite the evidence. See the schedule of events here: http://web.mac.com/nickmorgan/iWeb/HMRC/schedule.html

HMRC appears to have a culture of bullishness and cover-up. When I used the Data Protection Act to read the HMRC internal notes they were full of comments like - we haven’t heard from Mr Morgan for a while, let’s hope he’s given up.

In your goodbye speech you say that you are sorry that many of your staff had to hear about your resignation through the media and that - of course - is because even though we are now almost eight years into the 21st century - half your staff still don’t have email!

My hope is that your replacement will be more honest, more accountable and take more responsibility while in office.

Sincerely

Nick Morgan

Things fall apart, it's scientific (or why zealots always get to rule)

2007-10-30T21:05:00.000Z

Dear Juliet Roche, Paul Gray and HMRC

The world would be a much better place if we all listened to more Talking Heads: “Things fall apart, it’s scientific.”

So here's the question, why is HMRC making so many bad judgements with some of the cases now being investigated?

My own case - now going for more than two years (and riddled with the most terrible mistakes) continues apace. Then there was the Neil Martin case last week: looking at the reported facts you have to scratch your head and wonder - what was HMRC thinking when they decided to peruse that case with such vigour? Really, when common sense would say that the error was on the part of HMRC, filling out a form incorrectly (and unsolicited)!

The good news is that I think I know what's happening and I think I could have the answer.

Let’s start at the beginning.

Let's assume the people employed by HMRC to investigate tax have a natural adversarial leaning. And let us also assume that some are more adversarial than others. Let's call the less adversarial workers 'moderates' and the more adversarial workers 'zealots'.

The moderates are good and competent workers who play by The Book and get results. They - frankly - don't live for the job and when they finish early on Friday (thank god for flexi-time) they don't think much about the job for 48 hours.

The zealots are a different breed altogether. They eat, sleep, work and breathe HMRC. And when the week finishes they take their work home with them. The zealots know The Book as well as the moderates (if not better) but they also know that in order to get results - well sometimes - a few rules have to be bent and a few arms have to be twisted. Hey: whatever gets the job done!

A case is opened, it looks simple and it's managed by a moderate investigator and a moderate supervisor - all good. But time passes and the enquiry turns out to be not such an open-and-shut case. In short negotiations are not being as successful as they should be.

Enter the zealot: the new investigator takes over with a "No More Mister Nice Guy" approach to see if results can be got quickly.

This is all fine and good, because the zealot has a moderate boss and that boss is checking the progress every six months. And when that time comes the zealot gives a convincing report, "I know we're about to get something big, it's just a matter of time!" And then a few more strong-arm tactics are employed.

Now there are two outcomes, the first is that the zealot might get a result and the case is closed. After all the accountant is on the clock and who really needs all that stress? Let's agree and move on! When this happens nobody gets to hear about the case and the zealot feels very good about their work.

The second outcome is that the tax payer sees HMRC digging its heals in and decides to adopt a similar strategy.

After time passes the zealot (frustratingly) fails to get the results needed and so bends the rules to breaking point. Zealots can justify a lot to themselves. After all - remember - they may have bent the rules in the past many times and got good results.

It’s at this point that the moderate boss gets a bit jittery - he sees guidelines and perhaps even laws being broken on his watch, he senses that there is trouble ahead. He knows that there is no talking to the zealot investigator so he hands the case to somebody else. And who will touch this case - which is now starting to look a bit hot and smell a bit bad? Not the moderates, because they are all a bit scared by the rule bending. It is only a zealot boss who is willing to now step in.

So what started as an easy looking case with two moderates has now become a difficult case being handled by a zealot investigator and a zealot boss. Both of them agree that it’s OK to bend the rules and perhaps even break a few. Both take a view that “Being right all the time means you never have to say sorry.”

The HMRC guidelines are ignored and the case just becomes more and more difficult, protracted and expensive.

This is why - I believe - hundreds (if not thousands) of poor judgments are being made across the entire country. They are not unfortunate or random: there is a traceable organic process whereby zealots get to influence the very cases that should be handled by moderates.

But how do you fix the system and keep the zealots in check?

Well, I’ll have to save that for another day and another email.

Nick Morgan

Please email this on to all the HMRC members in your address book. The more people know, the quicker the system can be improved.

Go somewhere warm this winter: www.tax-hell.co.uk

Letter to Paul Gray (HMRC Boss) 4

2007-10-29T21:03:00.000Z

Dear Paul Gray

I'd like to pick up where I left off yesterday: dealing with the COP and playing fair.

Just before J Lamper sent out her final demands for payment she consulted a senior colleague D Thomas who, in a confidential email of 8 August 2007, wrote the following:

“I think you might have a problem with the 2003 rent in that we’ve allowed it for 2004. I don’t think we can disallow rent simpley because the ‘landlord’ hasn’t returned it, so there will probably be some rumblings from Morgan. Good luck! … Regards Dave"

Despite this red flag from D Thomas J Lamper refused to accept that the 2003 office rent as a legitimate expense. So here's the sincaro: the investigating officer asks a superior officer for advice then ignores it, disallows a legitimate expense and puts the whole thing down in email - which she knows the client can gain access to under the Data Protection Act.

This is both unfair and unprofessional on many different levels.

The Special Commissioner will have no truck with this.

Nick Morgan

Go somewhere warm this winter: www.tax-hell.co.uk

A Schedule of Events detailing unfair instances can be read here http://web.mac.com/nickmorgan/iWeb/HMRC/schedule.html

Let's make it interesting - £1,000

2007-10-26T22:02:00.000+01:00

Dear HMRC
It's been another tough week, hey who likes to loose in the Court of Appeal? (details here http://business.timesonline.co.uk/tol/business/law/article2737778.ece)
Let's end the week on something upbeat! For those not in the know: over the last two years HMRC has been investigating my income (I work as a freelance journalist). They have now sent me their final notices: it's a grand total of £4,800.
The investigating officer Jacqui Lamper (01273 225465) seems convinced that she has a rock-solid case, her direct boss Peter Meekings (peter.meekings@hmrc.gsi.gov.uk) says, "I fully support Mrs Lamper" and the complaints' officer, Dave Thomas (dave.p.thomas@hmrc.gsi.gov.uk) is also giving J Lamper his full support. Your overall director Paul Gray (paul.gray@hmrc.gsi.gov.uk) has been made aware of the case too.
J Lamper says the figure of £4,800 is being offered, "in order to resolve this without recourse to the Commissioners" and so the suggestion is that the final figure will actually be higher if indeed it does go to the Commissioners.
I believe J Lamper has handled this case poorly and that her figures are based on little more than wishful thinking. And I'm so convinced by this I'm willing to put my money where my mouth is: I'm willing to bet any single member of HMRC £1,000 that when this case is finally resolved it will be UNDER J Lamper's figure.
So step up to the bar, email me and take my money!
Nick Morgan
Go somewhere warm this winter: www.tax-hell.co.uk
You can read a summery of events here: http://web.mac.com/nickmorgan/iWeb/HMRC/schedule.html

Letter to Juliet @ CenPol Powers Review

2007-10-25T21:59:00.000+01:00

Dear Juliet

I'm looking forward to meeting you late November.

Here are a couple of thoughts, I think neither will come as news to you.

Firstly, we are all driven by incentives and penalties - often called carrots and sticks. My experience suggests that the incentives and penalties for investigating officers are not set at the correct levels.

For example, it's now becoming clear that J Lamper used Discovery Powers without having made a Discovery in my case. I suspect that the practice of claiming Discovery when no Discovery has actually been made is not uncommon amongst HMRC officers. Because J Lamper is being robustly defended (today I got an email from her supervisor stating "I fully support Mrs Lamper’s efforts") a message is now being sent out to other investigating officers that it is safe to "bend the rules".

Without the correct penalties (or deterrents) in place the system breaks down (or becomes corrupt).

Secondly, HMRC has no competition and so operates within an extremely privileged environment. I feel - if you want to reform and improve - HMRC needs to look at big business as a model.

There are many examples of this - but I think email is a good one to look at. Many in HMRC have email, but (still) many do no not. There seems to be no effective firewall against group emails and HMRC officers seem to have no ability to 'bounce' emails that arrive unsolicited. Big businesses had this problem ten years ago and they have dealt with it. The luxury of a non-competitive status may have allowed HMRC to lag behind.

Another example is that HMRC don't read their own SA tax returns! More than that they don't think they should. This - again - is a practice that could only exist in a non-competitive bubble.

Once again I'll say, I'm sure that I'm reinventing the wheel for you, but I truly hope this is useful.

Sincerely

Nick

--
Nick Morgan

Letter to Paul Gray (HMRC Boss)

2007-10-25T21:56:00.000+01:00

Dear Paul Gray

I have now seen strong evidence to suggest that J Lamper used Discovery Powers without having made a Discovery and that she habitually told untruths throughout the entire two-year investigation.

Will J Lamper now be suspended pending further investigation? If this is not the case what action will you be taking?

Sincerely

Nick Morgan

I fully support Mrs Lamper’s efforts

2007-10-24T17:09:00.000+01:00

Mr Morgan

Mrs Lamper’s letter, referred to below, is being sent to you today and if, having considered it, you still do not wish to have further discussions to get a settlement of this case then the latter will be referred to the Regional Appeal Unit and you will be advised accordingly. I fully support Mrs Lamper’s efforts to determine your true tax liability in this case.

Peter Meekings
HM Revenue & Customs
Crown house
Regent Hill
Brighton

"Mr Meekings says, " I fully support Mrs Lamper’s efforts" but he is not willing to endorse her "discovery" in this case - well who would?"

--

Nick Morgan

The Site www.tax-hell.co.uk

The Blog http://nick-wwwtax-hellcouk.blogspot.com/

The Schedule http://web.mac.com/nickmorgan/iWeb/HMRC/schedule.html

Letter to David Thomas

2007-10-23T21:51:00.000+01:00

David Thomas
I'm still mystified by the area of discovery.
The strange thing is that when I asked first asked J Lamper if she'd made a discovery in December 2006 she said somewhat cryptically “I am unable to see where I have referred to discovery" and she seemed very reluctant to give a clear 'yes' or 'no' answer, but she did eventually say that she had indeed made a discovery.
Then, when you listen to the clip at http://web.mac.com/nickmorgan/iWeb/HMRC/discovery.html - recorded in February 2007 J Lamper categorically states that she has made discoveries and she attempts to list them. However there are parts of the conversation where J Lamper appears to be struggling to breath - she is clearly very uncomfortable.
Yesterday I received a letter from J Lamper saying, "I signed the resulting [discovery assessment] notices on 6 September 2007." That date - of course - is well after J Lamper used discovery powers.
I'm not a trained accountant so I don't know exactly what's gone wrong here (and we both agree that a little knowledge can be a dangerous thing) but I know enough to see all is not as it should be.
Are you in a position to state for the record - categorically - that as far as you and HMRC are concerned there has been no wrongdoing regarding discovery and the use of discovery powers?
I'll be frank: you can either answer questions now or you can answer them before the Special Commissioners.
Nick Morgan
Go somewhere warm this winter: www.tax-hell.co.uk
See http://web.mac.com/nickmorgan/iWeb/HMRC/schedule.html for the full Schedule.

dave.p.thomas@hmrc.gsi.gov.uk

Letter to Paul Gray

2007-10-16T21:45:00.000+01:00

Dear Paul Gray

When this investigation was opened - more than two years ago - I was given a Code of Practice. In broad terms the COP promises that HMRC will play fair (and within its own rules). There is the assurance that HMRC is not seeking for the customer to pay too much tax: just the correct amount of tax.

I have found this not to be the case. Throughout the entirety of the investigation HMRC has sought to deny me many of the legitimate expenses I’m fully entitled to.

HMRC has certainly not ‘played fair’ with me and has not confirmed to its own code of practice.

In my opinion this constitutes a breach of contract.

Is there any precedent where HMRC has been sued for breach of contract? Do you think I have a case?

Nick Morgan

Go somewhere warm this winter: www.tax-hell.co.uk

A Schedule of Events detailing unfair instances can be read here http://web.mac.com/nickmorgan/iWeb/HMRC/schedule.html

I am also keen to avoid increased stress for both sides

2007-10-16T17:17:00.000+01:00

Mr Morgan

The question of taking your case to the Special Commissioners is being referred to our Regional Appeals Unit and in the meantime can I suggest you let us have your response to Mrs Lamper’s letter of 8 October 2007.

I wonder if I could also just take this opportunity to suggest that in future all your emails on this case are directed to me and not copied to other members of HMRC. I appreciate that you probably wish to obtain as wide an audience as possible for your case, but in practice the continued extended circulation of your correspondence is causing a lot of administrative expense and, I fear, distracting key staff from progressing your case. I am also keen to avoid increased stress for both sides in this case as I am sure you will appreciate. I am also very willing to discuss this further with you should you so wish.

Peter Meekings
HM Revenue & Customs

01273 431370
01273 225464

I find it amazing that Mr Meekings wants to avoid stress in BOTH sides! When has HMRC ever worried about the people it investigates? They are renowned for their ruthlessness and belligerence. I can only assume that when he says BOTH what he means is ME.

Letter to Peter Meekings

2007-10-11T20:45:00.000+01:00

Dear Peter

In a confidential email from J Lamper on 30 July 2007 the HMRC inspector admits that she has become lost with my case.

She said, "I'm feeling a bit lost in all this... [it's] not a large settlement."

J Lamper feels lost because she has spent thousands and thousand of pounds of tax payers' money to discover that I didn't pay much tax because I didn't earn much money.

Nick Morgan

A Schedule of Events can be read here:

http://web.mac.com/nickmorgan/iWeb/HMRC/schedule.html

also see www.tax-hell.co.uk