When the taxman chases the recently departed

A few weeks after Bernie died, his sister, Susie, intercepted a letter sent to him by HMRC. It was a request for a tax return.

Susie took the letter to her accountant who, after asking a few questions, suggested she reply as follows and pp the letter 'from Bernie (deceased)':

One of the advantages of having died is that there is no tax in heaven. It's a beautiful place. When I was alive I paid tax through the PAYE system and had not had any direct dealings with the taxman for many years. I can't say I'm that fussed about the outstanding return as I had no unearned income and left very little in the way of an inheritance for my sole living relative, my sister. Also, such matters seem so mundane since my recent demise. I might add that I have not yet met anyone from HMRC up here!

How to persuade the taxman your dog is a tax deductible business expense

Many years ago a publican had a meeting with a tax inspector in his pub. The publican had been claiming tax relief in respect the upkeep of his 'guard dog' but the taxman was unwilling to concede that this was acceptable.

The publican pointed out that upstairs in the pub were both the dog and the lunchtime takings. He invited the taxman to go upstairs, on his own, and if the taxman returned with the takings the publican would agree to add back the disputed expenses.

The taxman refused to go upstairs and allowed the expense in full.

My thanks to Barry Jefford of George Hay, Chartered Accountants, for the story which was told to him by his client, being the publican in question.

HOW strong is HMRC's case?

Years ago a senior official was talking about HMRC prosecution policy. 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."

What do you call HMRC?

His Majesty's Revenue and Customs is typically only ever referenced as HMRC.

Not everyone uses the acronym politely. A couple of variations I have heard are:

HM Mars C - emphasising that negotiations can be warlike (Mars being the Greek god of war)

and

HM Arsy - an equally negative sounding approach.

Any more?

'Last Christmas' as sung by a tax inspector

Last Christmas, I sent a demand

But the very next day, you appealed it away 

This year, to get us some tax 

I'll investigate and ensure you pay 

 (Chorus) 

Once bitten and twice shy 

I want your records, but you just seem to lie 

Tell me, taxpayer, do you recognize 

The mess you've made with your financial lies?  

Last Christmas, I filed a report 

But the very next day, you sent it away 

This year, to save me from tears 

I'll start a COP9 and make you obey  

Crowded offices, filled with paperwork 

Hidden incomes, we'll make it work 

I'll trace the money, follow the trail 

Your tax games won't let you prevail 

Last Christmas, you thought you were slick 

But the very next day, I uncovered the trick 

This year, to save me from strife 

I'll ensure you pay your fair share in life  

Some credit is due to ChatGPT for this. 

Tax inspectors don't tend to believe in magic

A tax inspector arrived at the front door of a magnificent 8 bedroom mansion in the depths of the countryside. 

"How have you managed to buy this luxurious mansion whilst your income is so low?" he asked the market trader who lived there. 

"Well" replied the trader, "When I was fishing last year, I caught a golden fish. When I took it off the hook the fish looked at me and spoke. 

It said: 'I am a magic golden fish. Throw me back in the water and I'll give you the most luxurious mansion you have ever seen.' I threw the fish back into the water and got the mansion." 

The tax inspector looked at the trader suspiciously. "And what proof do you have, to convince me that this preposterous story is true?" 

"Well, you can see the mansion can't you?"

The collective noun for tax inspectors

A retired tax inspector once told me that the correct collective noun was a 'bunch of bastards'! 

I've since been collating other suggestions: 

A grab of tax inspectors 

A menace... 

A conniving... 

A tithe... 

A levy (levee)... 

A Grabble... 

An Inquisition.... 

A Bogy.... 

A Spectre.... 

A Digger..... 

A ruination .... 

An infliction .... 

A calamity .... 

A chill .... 

A pack... 

A frisson ..... 

A vexation .... 

A ravishment .... 

An infestation....

Other income - how to explain this one?

Back in the day when we completed tax returns by hand, an inspector of taxes noted an unusual entry for 'other income' on a tax return she was examining. 

In the space to explain a zero figure the taxpayer had written "F. All." 

The Inspector wrote to the taxpayer suggesting that this was not appropriate language to use on what was a legal document. 

The taxpayer responded by explaining that the Inspector had misunderstood. "I could not fit the words "Family Allowance' in the limited space available." 

The Inspector wrote back pointing out that there was no requirement to enter details of Family Allowance on tax returns. 

The taxpayer then responded, that as regards his other income, this really was F*** All!"

Rudolph and the Revenue

Rudolph the red-nosed reindeer 

Hated paying NIC 

Went to a sharp adviser 

Paid the man a hefty fee 

He told the other reindeer 

You should do the same as me 

Go and see my adviser 

Get yourself a PSC 

Then one foggy Christmas eve

the taxman came to say: 

"Your idea was not so bright 

You owe tax, you're banged to rights" 

So all the deer were bankrupt 

Didn't have a bean they said 

Now taxman's after Santa 

He'll be really in the red. 

 Written by Chris Williams and first published in Taxation magazine 20 December 2007

The 12 days of Christmas or Taxmas (a reworked xmas carol)

 First line: On the first day of Taxmas the taxman sent to me:

- A rejection of my time to pay plea

The second verse:

On the second day of Taxmas, the taxman sent to me
- Two demand notes and
- A rejection of my time to pay plea

...and so on.
The last verse is:

On the twelfth day of Taxmas, the taxman sent to me
Twelve months to pay my debt
Eleven penalty charges
Ten confusing statements of account
Nine booklets on 'How to complain'
Eight explanatory leaflets
Seven website links
Six excuses for the delay
Five more queries
Four VAT returns to file
Three blank tax returns
Two demand notes and

One reluctant acceptance of my time to pay plea.

When I had the idea for this I checked online and found there was an old US version of the 12 days of Taxmas. Mine was developed independently.

Inspectors of taxes and alligators

A man walks into a restaurant with his pet alligator under his arm. 

“Do you serve inspectors of taxes?”, he asks the barman. 

“Of course”, says the barman. 

 “Well,” replies the man, “I’ll have a beer, and my alligator will have an inspector taxes".

The Beatles - taxman

"Taxman was when I first realised that even though we had started earning money, we were actually giving most of it away in taxes." 

- Gerorge Harrison 

  Lyrics 

 Let me tell you how it will be 

There's one for you, nineteen for me 

'Cause I'm the taxman, yeah, I'm the taxman 

 Should five per cent appear too small 

Be thankful I don't take it all 

'Cause I'm the taxman, yeah I'm the taxman 

 If you drive a car, I'll tax the street, 

If you try to sit, I'll tax your seat. 

If you get too cold I'll tax the heat, 

If you take a walk, I'll tax your feet. 

 Don't ask me what I want it for 

If you don't want to pay some more 

'Cause I'm the taxman, yeah, I'm the taxman 

 Now my advice for those who die 

Declare the pennies on your eyes 

'Cause I'm the taxman, yeah, I'm the taxman 

And you're working for no one but me

How the post was shared out at the tax office

 This take dates back to the days of the Inland Revenue, before they became HMRC, when there were local offices each headed by a District Inspector (DI). 

One such DI went for a drink with his assistant to mark the DI's imminent retirement.

The Assistant DI took the opportunity to ask his boss to clarify something:

"It's always puzzled me how you were able to so often leave the office to play golf at 3 o'clock each day. 

In the mornings you always divided the incoming post into three piles. You and I took equal sized piles of post and left the third one for the next day. 

Even though you seemed to distribute the post randomly as between us, your desk was always clear at 3 o'clock whereas I often had to stay until 5 or 6 o'clock to clear all my post. 

How did you manage it?"

The District Inspector replied:

"Simple. When it got to 3 o'clock each day I put any answered post back on the pile that we'd left for the next day!"

Thanks to Richard Mannion who related this tale to me a while back. Not sure if he said it was a true story or a joke!

Taxing everything - the tax poem

Tax their land, Tax their wage, Tax the bed in which they lay. 

Tax their tractor, Tax their mule, Teach them taxes is the rule. 

Tax their cow, Tax their goat, Tax their bras, Tax their coat. 

Tax their ties, Tax their shirts, Tax their work, Tax their dirt. 

Tax their cars, Tax their drink, Tax them if they try to think. 

Tax their booze, Tax their beers, If they cry, Tax their tears. 

Tax their bills, Tax their gas, Tax their notes, Tax their cash. 

Tax them good and let them know That after taxes, they have no dough. 

If they holler, Tax them more, Tax them 'til they're good and sore. 

Tax their coffin, Tax their grave, Tax the sod in which they lay. 

Put these words upon their tomb, 'Taxes drove me to my doom!' 

And when they've gone, We won't relax, We'll still be after Inheritance TAX!!

Author unknown. Updated to make it gender neutral by Mark Lee

50 ways to please the taxman

 Accountant Nigel Hughes has crafted this topical variation on the Paul Simon classic. It's a fun ditty in itself and even cleverer if you can recall the original tune as you read it!

Your problem is all inside your head she said to me
The answer is easy if you do it digitally
I'd like to help you in your struggle to be free
There must be 50 ways to please the taxman

She said I hate to see you blundering in this fog
Tax really doesn’t need to be such a slog
I’d like to end your love affair with analogue
There must be fifty ways to please the taxman

Fifty ways to please the taxman

Just get on the web Fred
Click on your mouse Klaus
Get up in the cloud Howard
Just zap it to me
This is the key, Lee
You don't need double entry
Do it on line Brian
And set yourself free
It's a new day Ray
Just think what you'll save Dave
Take a quick pic Rick
And listen to me
You'll never believe Steve
What you can do if you trust me
Just take a quick snap Jack
And set yourself free
She said paper records are really such a drag
In cardboard boxes or a Tesco carrier bag
I said I appreciate that but don't you think some clients might just gag

On the 50 ways

She said I think you should just leave it all to me
I know very soon, you’ll fall in love with MTD
And then she kissed me and I realised I could charge a quarterly fee
There must be 50 ways to please the taxman

Ogden Nash - economics and tax

 "Abracadabra, thus we learn the more you create, the less you earn. 

The less you earn, the more you're given,

the less you lead, the more you're driven,

the more destroyed, the more they feed,

the more you pay, the more they need,

the more you earn, the less you keep,

And now I lay me down to sleep.

I pray the Lord my soul to take,

if the tax-collector hasn't got it before I wake."

Ogden Nash, American Poet, 1902-1971

It's too easy to misunderstand HMRC

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.

A while back an Inspector of Taxes explained 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?!

Is Dr Who liable to pay UK income tax?

 The Editor in Chief of Taxation magazine speculates on this question in the 14 Jan issue.

He wonders how she would fare under the statutory residence test as she seems to have spent a lot of her time in the UK.

Perhaps in the next series her deadliest enemy could turn out not to be a dalek but someone from HMRC's anti-avoidance unit. 'Dr Who and the follower notice'. You heard it here first.

The answer to the question though is clearly: No, Dr Who is not liable to pay UK income tax.

The character has no permanent home here, was not born here and earns no money here. Plus, and we should keep this in mind, she's a fictional character allegedly from another planet. HMRC have no taxing powers over such people, real or not ;-)

A dodgy client reacts.....

Last year I saw an anonymous report from an accountant whose client was being interviewed under caution by HMRC. The conversation warrants recording on this blog

HMRC were alleging that the client had been buying ‘childrens’ clothes from a wholesaler who was zero-rating them. But upon inspection, these were quite clearly adult clothes. 

In the first interview, when the client was asked if his business had ever acquired clothing from said wholesaler, he answered "No. Never heard of them".

When presented with photographic evidence of his van entering and leaving the wholesaler’s premises, the client suddenly remembered that he had collected a few samples of clothing from them, but had decided against entering any supply agreement. 

HMRC then presented a further set of photographs that showed the same van in the same warehouse again, seven days later. 

“It was probably to return the faulty clothes!” claimed the client, panicking under the pressure. 

After another two sets of photographs were proffered onto the table, showing a further two weeks worth of evidence, the HMRC officer asked the client for a final time: 

“Has your company ever bought 'childrens’ clothes from the said wholesaler?” 

To which the client replied: “How many more photos have you got?”

Customs & Excise were always the toughest!

Before everyone was merged into HMRC, the Inland Revenue, Contributions Agency, and Customs & Excise were all trying to prove they were the best at extracting confessions from taxpayers.

The Chancellor of the Exchequer decided to give them a test. He released a rabbit into a forest and each of them had to catch it.

 The Contributions Agency went first. They placed animal informants throughout the forest and questioned all plant and mineral witnesses. After three months of extensive investigations, they concluded that rabbits do not exist.

 The Revenue went next. After two weeks with no leads they burned the forest, killing everything in it, including the rabbit, and they made no apologies. The rabbit had it coming.

 Finally Customs went in. They came out two hours later with a badly beaten bear.

The bear was yelling: "Okay! Okay! I'm a rabbit! I'm a rabbit!"