Archive for the ‘Blog’ Category

Computer says no

Tuesday, March 20th, 2012

Welcome to our first blog.  The intention of the blog will be to alert you to some of the lesser known developments in the tax world. Some people switch off when tax is mentioned, labelling it as boring. In truth this is probably a defence mechanism as they don’t understand it. Our Tax expert Clive Haworth hopes to make you smile at some of his observations…and experiences

To start with,  let me do “ A Brief History of Tax Time” (with apologies to Stephen Hawking).

My first job was back in the 1970’s. Unable to get a job for some months (it was a long hot summer so I wasn’t trying THAT hard I must admit), my only successful interview was with the Civil Service. How the regulars in my local pub laughed when, after many months of ribbing me about not having a job, I was able to tell them that I had now got a job…with the Inland Revenue.

Back then there was no computerisation, everything was recorded manually on control cards (concards). I was in a PAYE district based in Manchester, dealing with an area of London including Hatton Garden. Almost every week there was a birthday, leaving do or general “it’s Friday” booze up and the trick was to buy the floor Inspector a pint just before 2 p.m. so we could all stay out a bit longer.

In those days there was a real hierarchy within the Inland Revenue and the Civil Service generally. Tax Assistant, Tax Officer, Higher Grade Tax Officer, Inspectors (various grades), District Inspector, Head office Inspectors and so on. How times have changed.

After a few years I realised that for the sake of my career and my liver I should go and work for an accountant and duly found a position with a small firm in Manchester. As very much the junior in the department I had to deal with many menial tasks, but the real shock to the system was having to account for all my time on a timesheet.

It didn’t take me long to realise that my “training” within the Inland Revenue had been very narrow (basic PAYE)and all of a sudden a whole new world was opening up – Schedule D, capital gains tax, corporation tax, VAT etc etc. The complexities involved were considerably greater than now – Apportionment of close company profits and director’s accounts year basis of assessment being just two examples.

Commissioners hearings were a monthly occurrence and almost always “delay cases”. Self employed individuals were usually assessed on a previous year basis and if no accounts were submitted estimated assessment s would be issued, appealed against and ultimately listed for hearing to confirm the assessment if accounts still not submitted.

I remember going to my first Commissioners Hearing and couldn’t find the building. I asked an elderly gentlemen for directions and he shrugged his shoulders and waved me away. Eventually I found the place and waited my turn to go in. When I got in…yes, you’ve guessed it, the same elderly gentleman was in fact one of the Commissioners!

Concerned at the gaps in my knowledge I undertook the Institute of Taxation exams which I passed in 1986. By that time I was now working for what is now one of the Big 4 practices.

Working for a bigger firm gave me an insight into many non-tax issues which need to be borne in mind in tax transactions and I also got involved in presentations and staff training courses. Public speaking comes naturally to some, but not to the majority (like me) and I spent many hours getting myself to what I considered to be an acceptable level. I can’t recall any real disasters, but I suppose that’s not to say there weren’t any! When doing any public speaking, for me at least, the truest phrase is “fail to prepare and prepare to fail.”

After some years I went back to work for a few smaller firms and in 2001 I was asked to become an in-house “adviser” for one of the UK’s richest families. Another eye-opener and glamorous to an extent , as rubbing shoulders with the great and the good would be, but if I’m honest not a very technically stimulating role.

After leaving the world of yachts, planes, helicopters and family squabbles, I was involved with a few firms that offered specialist tax schemes but after a while it became clear that nothing comes with a cast-iron guarantee – more on this in later blogs.

So, up to the present date I’m back doing what I trained for and enjoy doing most…looking at legitimate ways that people can save tax.

So that’s what has happened to me from teenager to middle age, what has happened to the Inland Revenue in that time? Well. Back in the 1970’s we had the Inland Revenue, DHSS and Customs and Excise. Now we have one department, HM Revenue and Customs.

You don’t need the brains of a bishop to work out that such a huge amalgamation has posed many infrastructure problems, particularly in IT systems.

Now that we have self assessment for individuals and companies the onus is on the taxpayer to provide information accurately, on time, or else. This has led to a huge change in how HMRC is staffed. No longer do we have tier after tier of middle management. The structure is in simple terms polarised between data input clerks at the bottom and specialist investigators at the top with very little in between.

My personal experience of HMRC over the past year or so has not been a happy one. Frequently when phoning with a client query I get “computer says no” there records do not show an authorisation, despite one having been sent in months or even years previously. Mistakes from HMRC abound and time has to be spent correcting them and if we could bill HMRC for this time, it might just make them smarten up their act.