The HMRC Computer says…

Retrospective computer decisions

The HMRC has recently announced that certain decisions currently required to be made by an HMRC officer will instead be automatically generated by an HMRC computer. This will not apply just to future cases but retrospectively to all open decisions.

Is this a reasonable way for the tax collecting arm of Government to behave? No.

If it was bringing in technology and delegating certain functions to a computer, then like many private businesses, they should have legislated at the time.

Legislating later, once the Tribunals and Courts have basically found it abusing its position, is indefensible. It is as if HMRC is happy to sacrifice the certainty and security of the tax system for individuals in exchange for hitting targets.

Worse, they do this without consultation, breaching policy. A cynic may say that HMRC was taking advantage of Government focus being elsewhere. The move could also be seen as potentially unlawful.

Let’s hope that this is not the way HMRC will deal with matters under its new CEO, Jon Thompson.

Inverclyde

The suspicion is that the decision in the Inverclyde case has a lot to do with this shift.

If Inverclyde is correct (see link below), then HMRC has opened enquiries into tax schemes at which billions of pounds are at stake. HMRC risks losing all extant cases where they claimed that an LLP was not trading – their standard, go to argument – because they did not understand the law and/or did not comply with it.

The list of HMRC errors being covered up by legislation, much of it retrospective, grows. It seems no-one in Government cares. Thankfully, concerns are being raised by an increasingly critical judiciary. Unfortunately, the message is being ignored by politicians.

One can only imagine what somersaults the hierarchy at HMRC perform in meetings with Treasury when such errors are discussed. The failure of successive leadership to think through and understand consequences of its actions must be evident.

Government must act

Perhaps they are not discussed. We already see senior HMRC officers admit to Parliamentary committee that the reasoning behind policy is not always as presented in Budget documents. We also see HMRC briefing MPs and Treasury inaccurately, causing them to perhaps perjure themselves.

Our Government has to take note. It should care enough to call a halt – our preference would be a wide ranging powers review – to prevent any further slide down this increasingly slippery slope. Without action we will end up with a totally unaccountable, out of control and not fit for purpose HMRC.

https://www.rpc.co.uk/perspectives/tax-take/inverclyde-enquiry-into-llp-returns-invalid-as-opened-under-incorrect-statutory-provisions/