It’s Tax Time Again In The UK – Unless You’re A Multinational Company:

Have you sent in your tax return yet? If not, you are getting perilously close to the deadline. The final date for submitting it by post was 31st October – so if you didn’t get round to doing it then, you’ll have to submit it online (at hmrc.gov.uk/registration/individual) by midnight on Saturday 31st January. As Tina Riches, technical director at the Chartered Institute of Taxation (LITRG), pointed out to The Guardian, even being just a few minutes late means you’ll immediately be liable to a penalty – irrespective of whether or not you owe anything to Her Majesty’s Revenue & Customs (HMRC).

Any tax due also has to be paid by the deadline – otherwise ( The Guardian journalist Jill Papworth warned her readers on 3rd January) you’ll be hit by an automatic £100 fine which can accumulate by 5% every three months to more than £1600 if the debt is not settled within a year. Her colleague, Rajeev Syal reported on 2nd January that the HMRC was advising people who urgently need last-minute advice to contact them by Twitter – mainly because it can take over 10 minutes to get through to them by phone and often the calls are abruptly cut off. Syal quoted Mark Garnier, a Conservative Party member of Parliament’s Treasury Committee, as asserting in the Daily Mail that this suggestion was “ naïve and stupid ” because only a small proportion of the country uses Twitter and that it’s anyway unrealistic to try to summarize a tax problem, however simple, in just 140 characters.

All this applies to anyone who earned an income in Britain during the tax year 2013-14. According to the “International Tax Refunds” organisation citizens from other countries are “usually entitled to recoup most taxes paid in the UK” and they offer (for a fee) to act on their behalf and arrange for them to get their money back “in the shortest time possible”.

Are there any extenuating circumstances in which HMRC will relent on penalties for late payment? They will accept, so the LITRG indicates, the ill-health of yourself, a close relative or domestic partner as justification if this has genuinely prevented you from dealing with your tax affairs, though this has to be supported by medical evidence from a doctor or hospital. Other potentially valid explanations are the “loss of records through fire, flood or theft” or a “computer crash at a critical time” Proof must again be provided.

The LITRG says that HMRC aims to be “as fair and flexible as the legislation allows” – but this doesn’t extend to the many “bizarre and flimsy” excuses presented as mitigating factors. Examples cited on the HMRC website include a builder who was distraught because his goldfish had passed away, a taxi-driver who claimed that his bad back had prevented him from going upstairs to fill in his tax form, and a man from South-East England who insisted he’d been “cruising around the world on his yacht and only picked up his post when he was on dry land”. As Ruth Owen, the HMRC Director General of personal tax has made abundantly clear, you are highly unlikely to be exempted from a fine even if your pet dog eats your tax forms, you have been “travelling the globe trying to escape from a foreign intelligence agency”, live in a camper van in a supermarket car park, or (as one reluctant tax- payer contended) Barack Obama is in charge of your finances.

So if you can’t escape paying income tax, how can you at least keep the amount to a minimum? The Guardian columnist, Patrick Collinson, has pointed out that: “Just because you do some freelance work from home one or two days a week, but work on an employed basis elsewhere, you can’t offset the entire cost of your home phone, broadband and computer purchases against your tax bill. But you can claim some”. The key, so LITRG Director John Whiting told Collinson, is “reasonable apportionment”. The HMRC “objects to the phone line rental being listed as a tax-deductible expense when the phone is primarily used for private purposes”. Furthermore: “Don’t even try to claim clothes against tax, unless you have to buy special protective clothing for your line of business”.

Exactly who should pay tax –and how much – continues to be fiercely debated. The Irish writer & poet, Oscar Wilde, took the view that “Rich bachelors should be heavily taxed. It’s not fair that some men should be happier than others”. The American politician, Russell B.Long, once lamented that “A tax loophole is something that benefits the other guy” – a complaint these days frequently directed at what Simon Bowers  described in The Guardian on 21st January as “the artificial corporate structures deployed by Google, Amazon and other powerful US tech multi-nationals to avoid tax”. The former Labour Government Chancellor of the Exchequer, Denis Healey, famously proclaimed that “The difference between tax avoidance and tax evasion is the thickness of a prison wall”. The first is legal, the second is not – but as Channel 4 News has commented: “There is a silver-thin line between what could be seen as getting the best tax deal for a company and not paying what might be regarded as a ‘fair’ amount of tax on what are often huge sums of money”.

The Daily Mail is indignant that “One in four of the UK’s top companies (among them, Vodafone, Rolls Royce, Tate & Lyle, Starbucks, G4S and British American Tobacco) pay no tax but receive millions in credit”.Its financial correspondent, Prem Sikka, is similarly affronted that Britain’s “Big four accountancy firms”: Deloitte & Touche, PricewaterhouseCoopers (PWC), Ernst & Young and KPMG, have “escaped retribution for their role in tax avoidance and duff audits of banks“. Their global income is “around £75billion, of which £25 billion comes from tax advice”. They consequently “wield enormous political power” and so are “too big to close down”.

Filed under: Society | Posted on January 26th, 2015 by Colin D Gordon

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