iXBRL

A version of this article was originally published on Pilrig 74, 18.03.2011

I have no idea what the acronym iXBRL means but with effect from 1st April companies have had to file their accounts & tax returns electronically and in iXBRL format. Apparently iXBRL "tags" data which allows HMRC to process returns more efficiently. In theory a move away from paper filing is "a good thing" but - and some may accuse me of cynicism here - all this appears to achieve is to move the responsibility of inputting data into HMRC's system from HMRC employees to the companies themselves or, more likely, their agents e.g. me.

It used to take me about 15 minutes to complete a company tax return; it now takes about 90 minutes. Now, in one sense I'm quite happy to charge clients for the time it takes me to do the job that HMRC previously did but it seems a tad unfair on the already hard pressed small business sector. And I'd rather spend that time helping clients make their businesses more profitable.

There is one curious exception to compulsory iXBRL filing and that is a company whose "directors are all practising members of a religious society or order whose beliefs are incompatible with the use of electronic methods of communication." I'd be interested in joining such an organisation.

And for those who don't have computers or an inadequate internet connection HMRC's advice is to go to your local library to file the tax return. Aside from the data security issue (never high on HMRC's agenda) there is the irony that many libraries are having to close due to government cuts in funding.

It's all part of the Big Society. But what Disco Dave & George "Ozzy" Osborne don't seem realise is that there is a difference between encouraging people to take responsibility for their own actions & just telling the public to f*ck off and sort out everything themselves. Christ knows what Osborne's going to come up with next. A special tax on religious societies whose beliefs are incompatible with the use of electronic methods of communication would not be a surprise.

How Tax Works Part 1

Originally published on Pilrig 74, 28.04.2011

For the Little People
I was recently contacted by someone who - out of the blue - had received a letter from HM Revenue & Customs demanding £2,335 in tax. The letter was blunt and the calculations attached incomprehensible to anyone without a knowledge of the taxation system. The taxpayer is retired and lives on her state pension & a private pension of around £300 per year. The £2,335 therefore represents about one third of her total income.

It transpired that the £2,335 was tax on the state pension which the lady in question had started to draw while she was still working part time. The paperwork that I have clearly demonstrates that HMRC were aware that she had started to receive her pension but they failed to adjust her PAYE code.

I wrote to HMRC and suggested that in the circumstances they write off the tax. HMRC's own guidelines allow them to do this and, such is the scale of this problem, the Exchequer Secretary to the Treasury, Mr David Gauke MP made a statement to the House of Commons in January saying that all such underpayments would be written off.

7 weeks after writing to HMRC I received a reply. (7 weeks is pretty good, I'd say just under the average response time.) Their response was a complete denial of the facts and they said that they were unable to issue a PAYE code because they were unaware that the lady was in employment. My client worked for the same employer for 25 years. Is it not unreasonable for someone who has been in the same employment & paid tax through the PAYE system for a quarter of a century to assume that HMRC will update their PAYE code accurately? Obviously it is.

For the Big Boys
In 2002 investment bank Goldman Sachs set up a complex offshore scheme to avoid paying national insurance on bonuses paid to their London employees. By doing this they avoided paying tax of £23 million.

In 2005 HMRC took a number of other companies operating similar schemes to court and won. On the back of this an amnesty was offered: a further 21 companies came forward paid the tax but were let off paying any interest.

Goldman Sachs disputed HMRC on a technicality but by 2008 HMRC had taken legal advice and were confident that they would win a court case against the bank. By this time the interest on the £23 million was about £17 million. Goldman Sachs were told to pay or court proceedings would be commenced.

At which point it seems that the Permanent Secretary for Tax at HMRC Dave Hartnett had supper at the Goldman Sachs offices and without any consultation with HMRC's lawyers announced that Goldman Sachs were going to pay the tax but would not be charged any interest. At the time of the announcement it is estimated that the accrued interest was £20 million.

We are all in this together, and we will get through this together.
Rt Hon David Cameron, 7th June 2010

We are all in this together but some of us are more in this together than others.
George Orwell, Animal Farm (1945)