Vir Cantium

I'm right, you know …

It all goes to the schoolz’n’ospitals

Her Majesty’s Revenue & Customs haven’t been blazing a trail of efficiency of late.

Earlier in the year, it came out that the Revenue had spent over £1m on an exercise called “interventions”, which may sound like a polite version of the description that many taxpayers would attach to the tax system. In fact, it was a project where they contacted taxpayers whose returns looked slightly quirky and effectively gave them the chance to own up to mistake or omissions – sorry, that should read “help them to pay the right amount of tax”.

Unfortunately, contrary to the prevailing opinion of the Treasury, most apparently unusual features of people’s tax affairs are not cunning attempts to evade tax, but have perfectly valid explanations. For instance:

“Hello Mr Smith, we have noticed that you are only declaring £4,000 of rental income, yet your rental accounts show £8,000. Would you like to correct your return?”

“No, because I own the property jointly with my wife – haven’t you checked?”

(Pause)

“OK, that’s fine, thank you. Goodbye”.

So for a cost of over £1m, how much extra tax was raised? Err, £664,000.

Better than that, perhaps, is Mark Prisk’s discovery this week that the Revenue have spent over £500,000 in pursuing a landmark case against a husband and wife who had the audacity to want to legally reduce their tax bill. How much did the Jones’s want to cut their liability? £7,000. Hardly Liberia’s deficit, but it was the principle – and the Revenue lost.

Now the Revenue would argue that it was a test case and the tax at risk was far higher than that “owed” by the Jones’. Yet the irony is that, predictably, following the defeat, the Chancellor announced in the pre-Budget statement that the Treasury would now be reviewing the law to ensure that the sort of wicked tax loophole that the Jones’s indulged in (which arose from the independent taxation of husbands and wives) will be dealt with. After all, the government needs these tax revenues to pay for failed pursuits of innocent taxpayers schools and hospitals doesn’t it?

P.S. Yes, blogging has been light and will continue to be over the next couple of weeks while I catch up on some proper work.

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