What has HMRC ever done for us?

29 November 2016

Andrew Hubbard 

If we want to encourage workers from abroad to come to the UK – and it still seems to be government policy to do so – we have to ensure that they are properly treated. But take a look at this quote from a recent Tribunal decision:

‘The Appellant was born in Hungary in 1985. He probably cannot remember life there before the collapse of the former Communist regime in 1989. He has, however, doubtless heard tales from his parents and grandparents about the faceless and stifling government bureaucracy operating in Hungary before the restoration of democracy. He arrived in the UK in 2012 to work. He probably thought he had left those family memories well behind. Little did he know; his problems with Kafkaesque officialdom had only just begun.’

So begins the tribunal decision in the tale of Mr M and his struggles with HMRC. Mr M (who is not named in the judgment) came to the UK to work and made a claim for tax credits. He had an exemplary approach to his tax affairs: he kept copies of all official correspondence (more than can be said for HMRC) and duly notified HMRC of a change in circumstances when he moved from being self-employed to employed.

But then the system appears to have gone into complete meltdown. For reasons which were never explained, and for which there was no evidence, HMRC decided that Mr M was cohabiting with another of the four other people sharing his accommodation and therefore owed over £2,000 in overpaid tax credits.

Mr M then faced a nightmare as HMRC’s systems generated meaningless documents: the tribunal judge called the whole situation a hopeless mess. Mr M lost his first appeal to the tribunal – largely because that tribunal never got to grips with what had actually happened, but Mr M, to his great credit, persisted and obtained a rehearing. Thankfully at that point the new Judge finally went through the whole sorry saga and came up with the proper answer: HMRC had not even begun to make a case that Mr M was cohabiting. He didn’t hold back on his anger at what had happened to Mr M. Particular scorn was directed at the following passage of what he called bureaucratic gobbledegook:

‘I would ask Tribunal to note that the decision of 13 September 2013, was notified to [the Appellant] on a “Statement Like An Award Notice” (SLAN) which is not a decision carrying appeal rights. Instead it is a notice issued in the period after the tax credits year has ended and showing the change has been applied to the tax credits computer system pending the final decision for the year being made. However, as HMRC have previously accepted this date as the date of appeal, we cannot now say the appeal is not valid.’

His comment will surely be a contender for the tax quote of the year – at least for those of us old enough to remember Monty Python:

‘This passage makes little if any sense in English. I can only imagine what it sounds like when translated into Hungarian. It is probably no more coherent than “my hovercraft is full of eels”.’

If that were not enough there is also a passing mention of the fact that Mr M had received a series of demands for payments of tax, including action from debt recovery agencies, for another taxpayer with the same surname but a different first name!

Paraphrasing one of Monty Python’s best lines Mr M and his fellow householders would be quite justified in saying ‘What has HMRC ever done for us?’

There is of course a serious point here. If we want workers to come here, they need to be treated fairly and to play by the rules. Mr M did precisely that and found himself in a nightmare which has already taken more than three years to resolve and which may well still be continuing.

Mr M’s persistence in keeping up the struggle for what he knew was right is admirable: a lot of people, even with English as their first language, would have given up much earlier. Let’s hope first of all that this sorry saga is a one-off and not the tip of a very unhappy iceberg of other cases (though I fear my optimism might be unfounded) and secondly that lessons have been learned. HMRC’s response should surely be ‘and now for something completely different…’

If you would like to discuss any of these points further, please contact Andrew Hubbard or your usual RSM contact.

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