Thursday, September 18, 2014

The taxman, as always, cometh (though, I notice, dragging his knuckles along the ground). Trouble is I don’t have the dosh to buy Dave Hartnett a spiffing lunch*

OK, so I might be going on 92 - oh, all right then, 103 - but I still cross my fingers that I have not yet become one of those irritating jeremiahs who blight all our lives and have done so since Adam and Eve first bonked.

For the record, I don’t think the world is now going to Hell in a handcart and haven’t done so since I was 14. I think, most probably, it always has been going to Hell in a handcart since man first crawled out of the primordial swamp and invented television. Nor do I think there was ever a golden age of anything (except

perhaps a Golden Age of Golden Ages - golden ages just aren’t what they used to be. Which doesn’t actually make sense, but it is well past 6.30am and I’ve been up for several hours.) I’m always accused of having a loud laugh, and I do laugh quite a bit, mainly because I am alive. And I laughed again very loudly this morning courtesy of the office of Her Majesty’s Revenue and Customs, more commonly known as ‘the taxman’.

The ‘taxman’ (and the ‘taxwoman’, of course) doesn’t enjoy much of a reputation in Britain these days, or rather its reputation which was already very low - no one likes paying taxes - has sunk a good deal lower over these past few years.

Given that every single vast and wealthy corporation - for example Vodafone, eBay, PayPal, Google, Starbucks and all manner of outfits with really dodgy names to fit really dodgy business practices - can afford to hire clever tax accountants and run rings around the taxman several times before breakfast, the taxman is in a perpetual bad mood. It doesn’t help that anyone with any nous who works for the taxman very soon ups sticks once he or she knows enough about the workings of HMRC, goes freelance and starts earning ten times the pitiful wage paid by HMRC by helping those vast corporations keeping their tax liability to a bare minimum.

That means that there is a steady flow of the very good brains leaving HMRC and, not to put too fine a point, those who stay have a great deal less nous. And they are the ones you and I - or you and I here in Old Blighty - are obliged to deal with when we contact the taxman.

The ruses the good brains who jump ship to assist the wealthy corporations come up with are beautifully simple. For example, the BBC reported in October 2012 that eBay paid just £1.2 million in tax on UK business of £800 million (for the thickos out there, that’s just £200 million short of £1 billion). The same report claims that Starbucks paid just £8.6 million in corporation tax over 14 years. The kind of ploy they use is, for example, to set up wholly owned, but autonomous, companies with which they do business and can thus write off various ‘business expenses’.

For example, I understand that Starbucks rents all its coffee mugs from Starbucks Coffee Mugs Gmbh which is based in Lichtenstein. The tables in its empire of stores are all leased from Starbucks Tables Gmbh of Vaduz. And so on, and every transaction is a tax write-off. It’s all perfectly legal, I am bound to acknowledge, but from where I sit these ruses and ploys are as close to con tricks as it is possible for me to claim they are without getting some lawyer up my arse serving me a writ for tortuous malfeasance and libellous promalgamation under the Let’s Nail All Smartase Bloggers Acts of 1991, 1993 and 2007.

Naturally, HMRC is very put out that it it obliged to start every week of the year holding its dick and looking like a prize prune. And equally as naturally it seeks out every way to get revenge. But as the numbskulls which staff the agency know they can’t lay a finger on the real culprits, week in week out they come down very heavily on what socialists like to call the ‘little man’. And HMRC isn’t above coming up with would-be smart ruses of its own.

Knowing that daily several billion pounds are slipping through its fingers, it most recently announced that, in order to claw back some of that cash, it has granted itself powers to dip into each and every bank account in the land to claim tax it think it might be owed, all without our say-so. Obviously that has led to an enormous row, but to date the British government has done nothing to stop the practice except to get awfully huffy about it, officially declare that ‘look, it isn’t on’ and set up various parliamentary committees to look into the possibility of writing to HMRC to tell it in no uncertain terms that ‘look, it isn’t on.’ ‘He’s making it up’ I hear you declare. Well, no he isn’t: take a look at this BBC report.

. . .

My encounter with HMRC this morning which had me laughing out loud and reflecting for the umpteenth time this week that the world is indeed totally bonkers came about thus.

At the ripe old age of 122 I have become rather better at managing my money than I ever was when I was younger. I learned the hard way. So now I pay several of my bills upfront: as soon as my wage hits my bank account, a substantial portion of it goes off to the electricity company, the water company, the folks we buy our oil from and HMRC.

This means that when the bills eventually arrive they are - depending upon the time of year - often already paid. And once I have paid upfront I can happily live on my overdraft limit without the fear of getting yet another bill which will push me beyond what I and my several banks have agreed is my overdraft limit. Because cross that ‘agreed overdraft’ line and they really hammer you. (Oh, and I have several banks accounts because that is the only way this financial ingenue can keep an overview of what is going on. One for car-related expenses, one for utility-related expenses and the last for spending money.

It also means that if one is getting horribly close to going over the top, I can top it up from another. And let me stress I don’t regard myself as clever. I do it this way because, in all honesty, I regard myself as rather stupid.)

Years ago, I bought a very modest house in Birmingham. I only lived there for four years before life took me elsewhere, but I kept it on and eventually paid off the mortgage. It is now rented out and the meagre rent - it hasn’t gone up in 24 years because the house is so modest, anything higher than what the agent thinks I can charge would mean I wouldn’t get any tenants at all. I don’t mind giving figures: after the agent has taken his cut, I receive £377 a month, which works out at £87 a week.

Lucky sod, you might think, but in fact that just about covers my petrol bill for getting to London and back from Cornwall every week. So not such a lucky sod, really. And because I like to sleep at nights and in the past have always come unstuck whenever I tried to pull a fast one, I declare that rental income to the taxman every year.

Then there’s the dosh I make a month from my sideline of placing the puzzles on the quiz pages of the paper I work for. I have done that for more than four years now and it has helped pay the bills. But I am not paid an enormous sum for doing the work, and I also declare that income. The tax I owe for both income streams comes to just under £2,500. But I have got into the habit of paying upfront so I am not embarrassed by a tax bill I can’t pay.

In fact, I pay more upfront than I need to so that I am always in credit. It’s a form of saving, and not such a daft one when currently the interest paid on savings is around 0.5pc - if you are lucky - while inflation is around 2pc. So I am building up, slowly, a small surplus which might come in handy if I faced with a very unexpected bill.

To add a little more context, I am not a big spender and have only twice paid more than £800 for a car. And I only did that on those two occasions because I was nagged into doing so (by you know who).

When I got home last night and looked through my post, I was very surprised to find a letter from HMRC. I shall give some it verbatim. It was dated 10 September, 2014:

Dear Mr Powell,

 Thank you for your repayment claim dated 8 August and the 2014 self assessment tax return.

I cannot make a repayment now because you are making regular monthly payments to your Self Assessment account. So that I can deal with your claim, you will need to stop your payments. You can do this by:

  • going to our website at if you have registered to use our online services
  • phoning our Payment Helpline on 0300 200 3822
  • contacting your bank.

Once you have stopped your regular payments and your last one has cleared, I will be able to deal with your repayment claim. You can restart your regular payments again one your have received your repayment.

Yours sincerely,
M E Parker,
Assistant officer.

I was baffled. I was thoroughly baffled. I was completely and utterly baffled because I had made no such claim. And as no letter from the taxman is ever good news, I rang HMRC the first thing this morning to find out what the bloody hell was going on.

Why, I asked, were they thanking me for making a repayment claim when I hadn’t made any such claim? 

Because, the dimwit I spoke to at HMRC replied, that’s how our letters are written.

But it doesn’t make sense, I said. I haven’t made any such claim.

But, she repeated, that’s how our letters are written.

But why, I asked, why do you write them like that?

Because we do, she replied, implying that I was being completely unreasonable.

Well, you should rewrite them, I told her.

We can’t afford to, she replied. Nonsense, I told her, it would take less than ten seconds to rewrite the letter.

But we can’t afford to, she repeated. And that was that.

The rest of the conversation wasn’t very long, and I have to confess it descended into argy-bargy. (I am not proud of the fact that I am rather good at argy-bargy, especially if I am in the right. The trouble is I am not always in the right, although on this occasion I was.)

Argy, in fact, became so much bargy that she finally informed me that she was inclined to ‘terminate this phone call’. That means you are going to hang up, I told her, so I’ll save you the trouble, I added, and hung up.

We little men who do not have the apparently unlimited resources to hire clever-clever tax gurus to ensure we screw the state as legally as possible have no option but to trust the taxman and trust that he gets things right. We like to think, the rings vast and wealthy corporations run around them notwithstanding, that they do know their arse from their elbow. But, dear reader, I really, really, really have my doubts. For example, a week earlier I had received a letter saying my tax code had
been changed, with the result that my annual tax-free allowance was being reduced by £2,750, from £10,000 to £7,250. So, my dear employers would be taking more tax from me. When I got the letter, I rang to ask HMRC exactly why my tax code had been changed (and my tax-free allowance reduced). I was told that the taxman calculated that that would be the amount I owed in tax on my extra earnings next near.

But, I protested, why are you doing that? I have always paid my tax bill on the button because I already pay upfront and am in credit. Just look at my account and you will see that there’s more than enough to pay what I shall be owing. Ah, said the HMRC wiseacre, but that’s what we have decided to do. On that occasion, having very little stomach to charge head-first into a brick wall, I gave up. I reasoned that at least I would have fully paid my tax bill even before it was due and that as the tax bill would have been paid, I would have saved up that much more to fall back on if and when I unexpectedly found myself on my uppers.

Dealing with the taxman is an act of faith. We like to think that despite the sage advice we are given, in this case, to ‘check our tax code if you think we have got it wrong’, they haven’t actually got it wrong. Because unless you are some boring nerd who has chosen to follow an accountant’s path to Nirvana, all tax speak, all tax affairs and everything to do with tax are about as comprehensible to 99pc of us as are the ramblings of a mawkish alcoholic in confessional mode after a four-day bender. They are goobledegook.

So getting a letter thanking me for a claim for repayment I never made from the folk who have granted themselves the powers to dip into my bank account whenever they choose to do so is, to put it mildly, not at all reassuring.

Mind there are worse things at sea: Chelsea only managed a draw in the season’s first Champions League fixture, against, out-and-out no-hopers Schalke 04 after leading 1-0, and after holding Bayern Munich to 0-0 for 89 minutes, thanks to several spectacular Joy Hart saves, Manchester City were pipped at the post 1-0. To put that last comment into perspective: I support Manchester United. (And I bet they have a few clever-clever tax gurus on the books.)

*This reference will be very obscure. And I’d be well advised to leave it that way. Hint: under Dave’s watch Vodafone really took the tax piss.

No comments:

Post a Comment