Have you seen the press release about the ‘Cancer lie tax cheat’? Or the one about the ‘Seasoned tobacco smuggler’, or the ‘Restaurateur sentenced for cooking the books’? All emanate from the HMRC Press Office, with each accompanied by a photo of the offender looking obediently at the camera, unsmiling and downcast.
Stories of this type have become the staple diet of the HMRC Press Office in the recent past as they push out story after story about their success against tax cheats, in a way that we usually associate with tabloid newspapers. The message is always to the effect that HMRC will get you in the end.
My reaction to these cases is not one of “well done boys, you’ve caught another bad ‘un”, but incredulity over the size of the sums involved and a feeling of revulsion that a branch of government feels it appropriate to peddle such stories with such relish, no doubt on the grounds that it will frighten people from offending in future. Why do they need to publicise what they do? Why not just go about their work in a diligent way?
But this is the modern HMRC, one that is so unsure of its effectiveness it has to tell us every time it does something to reduce the tax gap, because the tax gap has become it’s raison d’etre. Compassion flies straight out the window in pursuit of those tax bucks.
A recent case before the tribunal was brought to my attention by Mark McLaughlin, who writes our e-magazine Tax Update and who is a regular writer in this magazine. The case of HMRC v Christina Macdonald caused him to say: “Sometimes HMRC’s pursuit of late filing penalties is shameful.”
I don’t want to dwell on the case in too much detail; suffice it to say that it revolved around £1,300 late filing penalties. The late filing was not disputed but the taxpayer had asked HMRC to drop the fines due to exception circumstances. She had been caring for a period of four years for her terminally ill mother and father, causing great stress. She ended her petition with the following:“I hope this gives an adequate explanatory account on compassionate grounds for HMRC to re-consider in these exceptional circumstances.” HMRC, of course, did not waive the fines, hence the tribunal case. The Tribunal said that it considered it “understandable that during this period the appellant omitted to give proper attention to her tax affairs”. HMRC countered by saying that the appellant was able to continue her business, so there was no reasonable excuse that could allow them to cancel or reduce the penalty.
The Tribunal disagreed. The appellant had to work to support herself, and pay the everyday expenses of keeping her home. The fact that she did that and was able to look after her parents in the way described was remarkable, they said.
Following the death of her parents the appellant was faced with dealing with disposing of her parents’ personal effects and dealing with her father’s financial affairs, including obtaining probate. She continued working beyond retirement age, one of the reasons being that she was conscious that she needed to sort out her tax affairs, which she with the help of her agent achieved by
6 January 2013. In the Tribunal’s view the appellant went through a period of trauma and great personal difficulty. She had then to cope with her bereavements. Once her situation eased she attended to her tax responsibilities without much delay. The Tribunal considers the appellant has established that she had reasonable excuse for the late submission of her return for the period ended 5 April 2011.
Mark is right to call HMRC’s decision to pursue £1,300 as “shameful”, but should we be surprised when we allow them to create tabloid-style headlines to justify their work?
Please look the case up yourself and read the letter Ms Macdonald sent, as well as the comments of her agent, and I’m certain that you will also be appalled that this case was allowed to continue.
Yet in the same week the Evening Standard reported on a case where “a VAT fraudster who was ordered to repay £14 million that he cheated from taxpayers has had his debt written off after striking a deal with prosecutors”. The paper further pointed out that “neither hearing was publicised on the court case list for the relevant date. That meant the public and the media had no notice of the case and were unable to hear the justification for the prosecutors’ decision.” No press release about this then? No, HMRC only reports the good stuff, after all.
If anyone from HMRC is reading this, and hopefully squirming in their chair, maybe they will conclude that for every time they gloat over a perceived victory they ought to be sure that another taxpayer like Christina Macdonald isn’t being hounded for an insignificant amount as if they were a criminal? Or maybe we should insist on a picture of the HMRC official responsible for allowing the case to proceed. Let’s see if he or she is smiling!
- Tony Margaritelli Chair, ICPA
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