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.

Two true stories re: tax planning and the human interest side of things

A tax adviser confided in me recently that one reason she enjoyed her work was the human interest side of things. 

By way of example she told me of the new client who explained his existing trust structure. It had been set up for his future illegitimate children.

This reminded me of when I was a new naive tax senior working with high earning stockbroking clients working in partnership. This meant they had unlimited liability. 

I learned that one of the brokers was the sole owner of his big family home so I advised him to put it in his wife's name to protect it. His response has stayed with me over the years. "Thanks Mark but I'll keep it in my name as there's more chance of me getting divorced than of the firm going under!" 

It was many years later before I realised he might have been having an affair and was worried his wife would find out!

Not so daft questions from junior accounting staff

1 - A trainee was compiling accounts for a sole trader who used to supply Bank Statements with notes written beside each transaction. 

The trainee asked his boss what the client did. The answer was: a motor mechanic. 

The trainee then asked 'So why does he buy so many Drawings'?

2 - An overseas based outsourcer was working on a pub client. They could see fruit machine income beinbg credited, and asked why there was no corresponding purchases of fruit on the expenditure side. 

The client who wouldn't open his post

An accountant told me about one of his early clients who, years ago, never opened any official looking envelopes. 

The accountant had to do this when he visited each month. And he then told the client what action needed to be taken in each case. 

 In an effort to get the client to open letters from the accountant himself he started sending them in distinctive grey coloured envelopes. However the client rarely opening these either. 

On one occasion the accountant wrote: "I'm writing this letter knowing that I'll be the one to open it when I come to visit you next month." He laughed when that is exactly what happened.

On another occasion the accountant sent his bill in a pretty coloured envelope. The accompanying letter started: "I hope you like the envelope. I used it in the hope that you'll have opened it without realising it was from me!"

Sometimes we're not as clear as we might be....

Accountants frequently ask new clients to either bring their passport into the office or to supply certified copies of the passport. 

It's a requirement of the anti-money laundering regulations. 

An accountant told me that a new client once sent him an unusual package. 

On opening it the accountant found a copy of the client's passport. What else? Another one. Same as the first. And another, and another. 

Indeed the package simply contained almost 3 dozen photocopies of the client's passport. None had been certified by a solicitor - or anyone. 

The accountant called the client to acknowledge receipt of the package and to find out why he had sent so many copies - and not had any of them certified. 

The client was pleased to hear the package had arrived safely. 

"I should have checked as I must have misheard you. 'Certified copies' makes much more sense. I thought you asked for 35 copies."

Putting accountants out of business

Fifty years ago, in 1965, the Chancellor (Jim Callaghan) introduced his Budget Speech with the prophecy that he would so simplify the system that accountants would be put out of business. 

The 1965 Budget is particularly memorable as it introduced two new concepts - Corporation tax and Capital Gains Tax. 

At the time, famed (and now retired) tax specialist Adam Broke was a newly married breadwinner. 

He was initially concerned that perhaps there would be no future for tax advisers. 

He recalls that the Chancellor's ambitions were thwarted by the inclusion in his proposals of "small minded concepts such as close companies". 

As a result, Adam said he spent only milliseconds worrying whether he had chosen the wrong career. 

Little has changed over the last 50 years. Each tax change that purports to introduce simplicity into the tax system is similarly bedevilled by undue complexity, oversights and 'small minded concepts'.

My Career Crossroads: CSE Grade 1 in Woodwork

Years after qualifying as a chartered accountant, I met a woodworker whose craftsmanship was beautiful to behold.

While admiring his dovetails, I mentioned, somewhat proudly, that, years earlier, I had secured a CSE Grade 1 in Woodwork. 

Back in the day, we were told that was equivalent to an O-Level. Big stuff. 

He raised an eyebrow. “I used to teach Design & Technology,” he said. 

I confessed I’d failed DT but clung to the woodwork win and still had the table I had made in the exam. By then though it was in the loft as my wife wasn't keen to have it out.

The craftsman asked if I had continued with my interest in woodwork.

I explained that I had not. Instead I went on to qualify as an accountant and that no one in the profession had ever seemed that interested in my CSE Grade 1 in Woodwork. 

Without missing a beat, he replied: “Shame. You could’ve made a beautiful abacus.” 

But the time had passed.

ps: I'm now wondering if it was purely a coincidence that the firm I trained with was called 'Wood & Co'.

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."

Personalised number plates for accountants

Years ago I recall David Winch of Accounting Evidence telling me how proud he was of his number plate that incorporates his qualification initials FCA.

I also recall an auditor whose number plate was AUD 1T and a tax specialist who had TAX 1NG

But my favourite was the ex-Inspector of taxes who had a number plate S99 TMA. He told me loved parking next to cars at accounting conferences and other events, that had VAT or TAX or CA on their number plates just to give them an unsubtle reminder.

What is Cross tax?

You'd be forgiven if you've never heard of 'cross tax' although it's been referenced in HMRC's compliance handbook for many years.

Does it mean: 

a) What you get when HMRC staff are overstressed and unhappy? 

b) A big balancing payment that a client wasn't expecting to have to pay? 

c) How clients will describe the additional fees accountants charge for quarterly MTD returns? or 

d) 'Across the taxes’ as opposed to applying to just one area, such as corporation tax? 

The correct answer is (d)

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.

Popular Google searches about tax

Listed below are some of the suggestions from Google based on popular searches 

Why is tax.... 

                 ... so high in the uk? 

                 ... year April to April?

                 ... important? 

                 ... law so complicated?

                 ... reform needed?

                 ... deducted at source?

                 ... theft?

                 ... avoidance legal?

                 ... avoidance unethical?

                 ... going digital?

What is tax...

                 ... deductible?   

                 ... planning?

                 ... residency?

                 ... relief?

                 ... on savings?

                 ... on capital gains?

                 ... on gifts?

                 ... for self employed?

                 ... avoidance?   

                 ... evasion?   

True story about an ex-chartered accountant

True story - An accountant in his sixties sells part of his practice. He keeps a few favoured clients and stops paying his Institute subs.

He tells a friend that "My clients don't care whether I keep paying my subs etc and I don't need the pressure of prospective visits from the Practice Assurance team - or anyone else." 

The friend reminds him that he won't be able to describe himself as a Chartered Accountant any more or to give references that rely on that description.

A few weeks later the accountant meets his friend again. "I remembered what you said about references so last time I was asked for one I simply put "Ex-Chartered Accountant".

"How did your client respond?" asked the friend.

"Oh - I think he was pleased. He didn't say anything but I heard him later telling someone I was an EXcellent accountant."

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.

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.

What does 'certified' copies mean?

Accountants frequently ask new clients to either bring their passport into the office or to supply certified copies. It's a requirement of the anti-money laundering regulations.

An accountant told me recently that a new client recently sent him a package. 

On opening it the accountant found a copy of the client's passport. What else? 

Another one. Same as the first. 

And another, and another. 

Indeed the package simply contained almost 3 dozen photocopies of the client's passport. 

None had been certified by a solicitor - or anyone.

The accountant called the client to acknowledge receipt of the package and to find out why he had sent so many copies - and not had any of them certified.

The client was pleased to hear the package had arrived safely.

"But I still don't know why you asked for 35 copies."

Are some tax advisers paying more than they need to?

Some years ago on my first visit to Penrith, Cumbria, to present a talk to the local CIOT branch, I took a cab to the venue. 

The driver asked me what I was doing in Penrith and I explained: “I’m here to give a lecture to a group of tax advisers”. 

For a moment I was thrown as he seemed very miffed. 

It then became clear from his reply that he had misheard me: “It would be nice to have been invited. I’ve been a taxi driver here for over ten years!” I was unable to keep a straight face! 

I shared the story during my talk and at the tea-break one of the delegates came over to explain she’d had a similar problem recently. 

When arranging her car insurance by phone, she was astonished by the premium quote. It was more than 8 times what she had paid the previous year. 

She queried the figure and was told this was due to her profession, and the risks inherent in this. “What are the inherent risks of being a tax adviser?” she asked. 

At which point it became apparent the insurer had thought she said she was a ‘taxi driver’.

"Morton's Fork" - the rock and a hard place options for taxpayers

The expression "Morton's Fork" originates from a policy of tax collection.

It was devised by John Morton, who was Lord Chancellor of England in 1487, under the rule of King Henry VII. 

Morton's approach was that if the subject lived in luxury and had clearly spent a lot of money on himself, he obviously had sufficient income to spare for the king. 

Alternatively, if the subject lived frugally, and showed no sign of being wealthy, he must have substantial savings and could therefore afford to give it to the king. 

These arguments were the two prongs of the fork and regardless of whether the subject was rich or poor, he did not have a favourable choice. 

The phrase is rarely used these days as there is a more common analogy when someone has a dilemma and has to choose between two equally unpleasant alternatives. 

We tend to say that they are either "Between the Devil and the Deep Blue Sea" or "Between a rock and a hard place".

Are all accountants....?

When you start searching in Google you may have noticed that it often offers to complete your search string. 

In effect the system recognises and offers you the rest of what other people have searched for even if the words are in a different order. 

Here are some of the suggestions Google offered me recently by reference to the few words I typed in each case: 

Are all accountants.... 

.... the same?

.... boring?

..... alcoholics?

Why are most accountants.... 

.....female? (a surprisingly common question it seems, possibly related to the film industry where the accountants named in the credits are indeed invariably female)

....quitting?

Why don't accountants....

....make much money?

....have unions?

....get paid overtime?

Can accountants....

....certify documents?

....sign passports?

....get rich?

....work from home?

....be replaced by AI?

....have tattoos?

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."