HMRC Should Remember They Are Not The Secret Police Says Libby Purves

 In HMRC Investigation

Guest post from Libby Purves, originally published in The Times.

I once met a suavely senior Whitehall mandarin who had served briefly in the upper echelons of HM Revenue and Customs. He said that it was a relief to leave because of the culture. “They have two beliefs,” he said. “First, that they own the tax system; second, that everyone is on the fiddle. Neither belief is true.”

At this time of year, freelances, contractors and one-man bands, busy fuelling the recovery with ramshackle diverse income sources, shudder at the postman’s knock. Having scrupulously paid carefully worked-out and formally demanded tax by January 31, we are braced for repeated, baffling and imperious communications from HMRC. Mine asked for £2,648.98p extra and, while the accountant puzzled over this, along came a final demand for a completely different amount with a claim that they had asked for it before — which they hadn’t.

My husband, Paul, had a bill for several hundred, followed almost immediately by a refund of £1.35. In dusty corners of my office nestle many such asymmetric requests from years gone by, plus a leaflet they once sent, explaining which are the goods that bailiffs can distrain on. You’re allowed to keep the tools of your trade and enough chairs and bedding for everyone in the household, which is nice, especially if it’s only £239.20 they want. Alarmingly, where income tax and VAT debts are concerned, there are “no protected items”.

Of course, HMRC usually follows the rules and rarely executes extreme action, and most of the weird demands get sorted out by patient accountants (for a fee, which of course the payer can’t claim back from the Revenue even if it was entirely its mistake). After nearly 40 years in the Schedule D wilderness, Paul and I are used to all this, but when your child is attacked, you lose your rag.

Ours — the leftiest, most conscientious taxpayer you could wish for — was thrown into panic lately when the Revenue, having only just sent demands for two confusingly different supplementary amounts, zapped her with a private debt-collection agency letter for yet another sum, threatening “further escalation”.

As I say, we sad old workhorses are used to this sort of thing, but rage boiled over. Not just on her behalf — she’s fine — but at the thought of young people in this ever more precariously freelance world who have no tax-experienced parents to ring and no savings yet, and who can’t afford accountants.

The age of almost universal PAYE is long gone: only HMRC has failed to wake up to this social change. Politicians pretend to applaud an entrepreneurial society and love people who bravely invent themselves an income, but still the Revenue hates and mistrusts them.

There are tens of thousands of people, many wet behind the ears and financially vulnerable, struggling to work freelance in a tricky economy offering ever fewer staff jobs. There are writers, performers, artists, decorators, yoga teachers, window cleaners, jobbing builders and consultants, and most of them will undergo moments of disorienting panic, caused not by the tax regime itself but by the weird, discourteous, scattergun epistolary habits of HMRC. A speciality is sending out demands in the wrong order: I’ve lost count of the times I have had threats about non-payment when the original bill never arrived, or did only the day before.

On one occasion, I made the mistake of phoning up to point out that I had actually paid a month ago, and could show the debit (they don’t bother with receipts; why would they?). The response from a grating virago was: “You should be aware that tax evasion is a criminal matter.” And no, you’ll never get an admission that such calls happen, or an apology. Ill-tempered official savagery is clearly not “recorded for training purposes”. Some people have had letters claiming that “our field agents” will “call at your home to remove your possessions and sell them at public auction to clear the debt”, though in fact HMRC field agents themselves have no bailiffs’ powers.

As for the “public auction” sneer, note that the Administration of Justice Act 1970 says that it is an offence if anyone, “with the object of coercing another person to pay money claimed from the other as a debt due under a contract, harasses the other with demands for payment which, in respect of their frequency, or the manner or occasion of making any such demand, or of any threat or publicity by which any demand is accompanied, are calculated to subject him or members of his family or household to alarm, distress or humiliation”.

Well, HMRC probably stays just about within the law. And most threats are more discourteous than dangerous (my daughter recovered her nerve, paid up the latest sum rather than worry, but rang the debt company to ask what “escalation” meant. “Oh,” said the woman, “just another cycle of letters.”)

But how wonderful if my thoughtful mandarin had stayed on at the Revenue, to explain with force to his staff that it is a public service, not the secret police, that the majority of citizens are both honest and anxious, and that their going freelance is more often a necessity than an artful fiddle. He might even suggest that tax demands carry a little sentence at the bottom saying: “Thank you. Your work contributes to our society.” All we ask is a bit of civility.

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