What does it mean to be customers of HMRC?

When the Inland Revenue decided in 1992 that taxpayers should be known as "customers", Parliament reacted exactly as you'd hope.

One peer wondered whether customers could now shop around between tax offices for a better deal. Another asked if dissatisfied customers could simply take their custom elsewhere. A third wanted to know whether, in the finest traditions of British retail, the customer would always be right—and if not, whether payment could be withheld until service improved.

Things only got better when someone suggested that anyone leaving the Inland Revenue's "customer base" might soon become a customer of Her Majesty's Prisons instead.

Why do HMRC pursue odd tax cases?

Years ago I recall discussing HMRC prosecution policy with a senior official. 

He mentioned an occasion when he had lost a case and went back to his legal advisers to find out what had gone wrong. 

"I thought you'd told me you thought we had a very strong case", he said. "So why did we lose?" 

"Aha" said the lawyer, "You asked me what I thought and I told you that I felt that we had a very strong case. That was all you wanted to know". 

"Had you asked I'd have told you that I also thought the other side had a very strong case too."

A customer complains to HMRC

Dear Inspector of Taxes 

I see from your website that you regard me as a customer. This makes you my supplier and I am therefore writing to tell you that I have decided to look for an alternative supplier. 

This is your last chance to improve your service. 

Let me tell you why my wife and I are fed up to the back teeth with the way you have looked after us of late: 

 - To help even out our cashflow, when we have surplus funds, we lodge them with you as a pre-payment of part of our forthcoming tax bill. However you hardly ever send us statements that show us where we stand with you and when you do send them, they are quite impossible to check or to understand what they mean; 

- You never seem to answer the telephone; 

- You and your colleagues take an age to deal with the enquiries my accountant has raised with you; and you seem happy to threaten distraint proceedings at the drop of a hat - never a good idea from a customer service point of view. 

If you really were a business you'd have gone bust years ago. You seem to have no idea about how to look after your customers. 

As you can see I have become a thoroughly disgruntled and miserable customer. 

I will never recommend your services to any friend of mine and I long to take my business elsewhere. 

The problem I face is that there doesn't seem to be any other suppliers of whatever it is you supply. 

Yours faithfully.

 ---- 

The above letter was written to the Tax Office by a taxpayer who copied it to his accountant Huw Williams of HM Williams, Chartered Accountants.

What do the initials HMRC really stand for?

 In the UK we recognise 'HMRC' as standing for His Majesty's Revenue and Customs - the body created by the merger of Inland Revenue and HM Customs and Excise in 2005. 

What else might the letters represent?  Officially the answers are:

• Health Management Research Center (University of Michigan) 
• Human Mobility Research Centre (Queen’s University and Kingston General Hospital partnership; Ontario, Canada) 
• Helicopter Multi-Role Computer 
• Hierarchical Maximal Ratio Combining 
• His Majesty's Royal Communications (Jordan)

But let's be more inventive: 

• Help Me Recover Cash
  Hiding My Rewards Carefully
• Holding My Rewards Callously
• How Might Rhianna Cover-up?
• Hold My Rubber Chicken

Can you do better?

Free tax advice?

Years ago I heard a great story that accountant Keith Lawrence assured me was true.

He had taken an initial phone call from someone wanting help with their tax. 

After a brief conversation Keith invited them in to meet with him to see if he could help (and to see if he wanted to take them on as a client). 

On their arrival the 'client' looked around and expressed a little surprise that the office was smaller than he'd expected. He was also surprised to learn that Keith was an accountant as well as a tax adviser. The client just wanted tax advice. 

They sat down together and the 'client' started to explain his tax problem. When Keith raised the question of fees the 'client' was shocked. He'd assumed that tax advice was free. 

After a few moments it then became apparent to Keith why the 'client' was so confused. He thought he had called The tax office. HMRC.

If Pointless asked 100 Tax Inspectors......

Pointless is a popular British TV quiz show where contestants try to find the most obscure correct answers to general knowledge questions. 

The aim is to score the fewest points, with the best answers being those that no one else has thought of. 

Normally the questions are tested on a random group of 100 people.

But imagine if the questions were tested on HMRC staff.

Alexander Armstrong might then have to say:

"We asked 100 tax inspectors to name an obscure expense that qualifies for tax relief"

What might be the pointless answers?

Other questions that might be asked of the same group of tax inspectors include:

"We asked 100 tax inspectors to name their favourite Chancellor"

"We asked 100 tax inspectors to identify their least favourite tax loophole?"

"We asked 100 tax inspectors to name their favourite tax case"

What might be the pointless answers in each case do you think? 

Leaked conversation between Rachel Reeves and Jim Harra

Ahead of the 2024 General Election, The then Shadow Chancellor, Rachel Reeves met with the Head of HMRC, Jim Harra.

"You will understand" said Rachel "that we are under pressure to simply our complex tax system. What can we do?’ 

"I can help you there" said Jim. "I recommend you legislate one simple new tax law".

"It should make clear that from now on everyone, especially the bankers, accountants, lawyers and tax avoiders must stop focusing on the precise wording of tax laws". 

"Instead  they should act in accordance with the Government's intentions when making those laws. No one need bother about the written laws ever again! We could call this concept 'the spirit of the law'."

Rachel smiled. "That sounds good, except for one point that's not obvious to me. How do I know what my intentions were?" ‘I just pass on the laws you give me." 

That's easy" replied Jim. "I shall be more than happy to tell you what your Government’s intentions were, should the need ever arise". 

The King and HMRC

It is not well known that the King is a keep fit enthusiast and insists on all of his gym equipment being laid out in exactly the same way ahead of each training session. 

When he can't make it he pays a small fine. 

The sign on the palace gym door reads: HM Customs and Exercise.

Best ever reason given to HMRC for late paid tax

Long before HMRC introduced a 'time to pay' system through the Business Payment Support Service, Inspectors kept track of the more extreme excuses given for late payment.

My heart went out to the taxpayer with the best reason I ever heard. He asked for time to pay because:

"Just recently the drains were blocked and the bungalow was flooded, We had 6,000 gallons of effluent all over the inside and out.

Please consider all the things we've been through."

A crazy excuse from HMRC

I once heard about a lady who received a letter from HMRC threatening her with fines if she didn't produce a certain document.

In fact she had sent them the document in question a month before and it had got lost within HMRC's office. She explained:

The (perfectly nice) lady I spoke to said that apparently my original letter had contained an all-important blue slip. The internal mail system only recognises blue slips, rather than, say, people's names. My failure to include the blue slip had resulted in my carefully packaged 35-page document entering a postal abyss, never to be seen again. While I recognise that not understanding the importance of the blue slip was negligent, I had called HMRC and asked exactly where I should send the package and to whom. The package had my tax and NI numbers on it.

This got me wondering how – in the absence of the blue slip - I could have got the document to the right person. Clearly sending something registered post is no use. I suppose I could try delivering it in person, but I've just googled East Kilbride and it's a really long way away. Plus, if HMRC's internal posties can't find someone in their own building, I'm not sure I'd have more luck. Maybe the person in question is very difficult to find – her desk is in an air-vent or something.

The reason first given to the lady was that her letter had failed to reach the person in question because it's 'a really big building'.

Imagine an Inspector of taxes with this name!

I heard a lovely story recently about an Inspector of Taxes whose name was Mr Millions.  I'm assured it was true. 

Mr Millions worked for the Inland Revenue - in the days before it was rebranded as HMRC.

Many years back before the self assessment system started, Inspectors would 'list' appeals against estimated assessments for hearings before the General Commissioners. And then accountants would routinely call the Inland Revenue to ask for the hearings to be postponed.

This Tax Inspector often had to handle these calls and adopted a standard response when answering his phone. He said: "Millions, no jokes please!"

After 2 years, it took just 2 minutes to resolve this HMRC query

 This is a true story about a tax dispute that went on for two years before the underlying issue was clarified. It made me smile.

An Inspector of Taxes was explaining to me that the owner of the small business had been refusing to co-operate. As a result a relatively straightforward tax dispute about a tax scheme was heading towards the first tier tax tribunal.

It was when the case was reviewed and a new Inspector contacted the taxpayer that the REAL issue became apparent. The taxpayer had misread a letter from HMRC which referred to his involvement in an abusive tax arrangement. 

The taxpayer thought that HE personally was being accused of ABUSE and he resented this. In the event a simple apology from HMRC for the misunderstanding enabled negotiations to commence properly and the dispute was later resolved without the need for a formal hearing.

I didn't find out whether it really was the taxpayer who had misunderstood or if the original letter from HMRC was poorly worded. Who knows?!

How to make HMRC 'Quite Interesting' (QI TV prog)

BBC TVs QI comedy panel show once focused on the 'Inland Revenue'. (Series I Episode 10)

Some of the stories are worth repeating on this blog:

The world's most exotic tax inspectors are in Pakistan. If you refuse to pay your tax you are shamed into paying it by receiving a visit from a team of tax inspectors who are all transgender. They would then sing and dance in your place of business until you paid up. 

In Andhra Pradesh, India, tax inspectors use drummers to get people to pay tax, by standing outside the place of business and banging on the drums loudly until they pay up. The comedians on the show considered how the 'Inland Revenue' might achieve a similar outcome here. The favoured conclusion was to send in the Morris Dancers.

Sandi Toksvig once spent three days with a tax man who investigated all of her accounts. In the end he did not find anything and the taxman said: "To be honest Miss Toksvig, I just wanted to meet you."

Dara O'Briain recalled an actor who tried to claim his carpet against tax because of the wear and tear he caused when he walked up and down while he learnt his lines. He did not get away with it. 

Dara himself once tried to claim for a bed but failed, while Sandi attempted to claim for some paintings in her office, failing as well. She told the tax inspector that no-one could possibly work in an office which had no art in it. Sandi looked around the inspector's office and saw that it had just one poster in it, which explained the Heimlich manoeuvre.

NB: This episode was first broadcast in 2011 and clearly no one had told the researchers or producers that HMRC took over from the Inland Revenue 6 years earlier in April 2005. 

The episode was hosted by Stephen Fry with Alan Davies and guests Al Murray, Dara O'Briain and Sandi Toksvig.  

Alternative names for HMRC

Back in 2004 the FT asked its readers to come up with a name for the merging departments of the Inland Revenue and Customs & Excise. The merger took effect from April 2005 since when the organisation has been known as HMRC or HM Revenue & Customs or simply The Revenue. Plenty in the media and in Parliament have also continued to refer to the body, incorrectly, as the Inland Revenue - as if the last 7 years had never happened).

The winning entry in the FT's competition was suggested by Ed Troup, who is now Director General Tax and Welfare at HM Treasury. He suggested: Finance Collection UK though it would have been known by its initials, were they not already in use by the retail chain French Connection.

 Other suggestions included:

• iTax 
• Taxes R Us

With the benefit of 7 years experience, what abbreviations or names might be more appropriate now if The Revenue was to go for a rebrand?

Those I've seen suggested recently include:

• As an acronym HMRC is HoMewReCker!
• Department of National Financing 
• Department of National Funding 
• Department of Social Financing
• Duties, Income Levies, Deductions, Operations (but that might have some initial problems)
• DRC = Department for Revenue Collection
• P I N C H - Processing Income Now Creates Help (...for tomorrow) 
• Crown Revenue Service 
• British Revenue Services 

Any more?

A disgruntled 'customer' of HMRC

To the Chief Tax Person at HMRC 

 For some time your website has stated that you see me as a customer of your services. This makes you my supplier and I am therefore writing to tell you that I have decided to look for an alternative supplier. 

This is your last chance to improve your service. 

 Let me tell you why I am fed up to the back teeth with the way you have looked after me of late: 

- To help even out my cashflow, when I have surplus funds, I lodge them with you as a pre-payment of part of my forthcoming tax bill. However you hardly ever send me statements that show where I stand with you and when you do send them, they are quite impossible to check or to understand what they mean; 

- You never seem to answer the telephone; 

- You and your colleagues take an age to deal with the enquiries my accountant has raised with you; and 

- You seem happy to threaten distraint proceedings at the drop of a hat - never a good idea from a customer service point of view. 

 If you really were a business you'd have gone bust years ago. You seem to have no idea how to look after your customers. 

 As you can see I have become a thoroughly disgruntled and miserable customer. I will never recommend your services to any friend of mine and I long to take my business elsewhere. 

The problem I face is that there doesn't seem to be any other suppliers of whatever it is that you supply. 

 

Yours faithfully,

An acronym that didn't catch on

Following the merger of the Inland Revenue and Customs & Excise in 2005 we should be used to references to Officers of Revenue and Customs. Surprisingly though no one ever referneicnes them using the releated acronym ORCs. Taking this a step further, when we talk about ORCs using their powers, we could use the acronym: PORCS This could lead to ORCs using their PORCs to identify when taxpayers have told Porkies. Shame it didn't cvatch on!

A sole practitioner accountant and the minimum wage

Andy Atkins is an elderly accountant operating from offices above a shop in a small town. 

One day he received a letter from HMRC, stating that they suspected he was not paying his employees the National Minimum Wage and they would send an inspector to interview them. 

On the appointed day, the inspector turned up. "Tell me about your staff," he asked Andy. 

"Well," said Andy, "there's my accounting trainee, I pay him £240 a week, and cover the costs of his training. 

Then there's my PA. She gets £190 a week, along with free board and lodging in the flat above the office. 

There's also the half-wit. He works a 16 hour day, does 90% of the work, earns about £25 a week, along with a bottle of whisky, and as a special treat occasionally gets to sleep with my wife." 

"That's disgraceful" said the inspector, “I need to interview the half-wit." 

"That'll be me then," said Andy.

12 things HMRC will never say....

12 things HMRC will never say:

1. “After reviewing your contract, I consider you’re self employed.”
2.  “Considering the length of time it has taken me to reply to your letter it is only fair that I give you 18 months to reply to mine.
3. "I like you. On this occasion I’m going to let you off and chalk it up to experience".
4. “Given the complexities of the legislation that is a mistake anyone could have made so I won’t be looking to charge a penalty.”
5. “Following the recent Tribunal decision confirming that we have been incorrectly applying tax legislation to your circumstances, we can now concede that we are wrong and have accordingly charged ourselves a penalty for our carelessness in failing to take advice from an appropriately qualified tax professional.”
6. “That might be what the legislation says but it seems incredibly unfair so we’ll take a pragmatic view”
7. "You're right, we don't have unlimited powers to ask for anything we feel like"
8. "It looks like we were wrong after all. Please accept our apologies and a payment of £50 to cover any distress and inconvenience caused to you and/or your business".
9. "Let’s be pragmatic about this"
10. "It's OK we'll reimburse your clients costs as this was a training exercise and we found nothing"
11. “You’re right, in this instance the Opinion given had no legal authority underpinning some of the claims, and some of the facts we asserted also had no cogent evidence to support them. We were winging it in the hope you would not notice and just pay. We are sorry and the matter is now closed.”
12. "We have just received your letter and will reply within a month, which is well ahead of our target of 121 days".

With thanks and credit to Philip Ridgway for starting this discussion and seeking further suggestions on Linkedin

How to explain away that Holiday Villa you bought using undeclared income

During a tax investigation an inspector from HMRC asks the taxpayer how he managed to afford such a luxurious holiday villa with such little income.  The taxpayer responded with this story:

"While out fishing last summer, I caught a large golden fish. When I took it off the hook, the fish opened its mouth and said that he was a magical fish. This magical fish promised me that if I threw him back into the sea he would reward me with the most luxurious villa I had ever seen. After thinking about it for a moment, I said "OK" and threw the magic fish back into the sea. When I walked back up from the sea I could see the villa, just as the fish had promised."

The Inspector laughed and asked how the taxpayer expected to prove such an unbelievable story?

The taxpayer said "Well, you can see the villa, can't you?"

What do different people dislike HMRC?

• Chiropractors don’t like HMRC because they’re always after back taxes 
• Police officers object to the extra duty 
• Cardiologists find them heartless 
• Podiatrists hate having to foot the tax bill 
• Gym owners don't like have to pay exercise duty 
• Fairground owners struggle with their tax dodgems 
• Librarians hate the HMRC for all the extra bookkeeping required 
• Detectives say that HMRC send them figures that just don't add up 
• Pet shop owners just hate perch's tax 
• Post Office workers don’t like Stamp Duty 
• Headline Writers hate Capital Gains Tax 
• Newlywed grooms pay more when they carry their brides over the threshold 
• Musicians don’t like HMRC because they always want too many notes