Apparently, Mr. Hartnett has a “waspish sense of humor”, his hobbies include Philosophy and he lists other hobbies such as food and wine. So presumably he can still is a funny side and is quite philosophical about his predicament. Loving food and wine will also have helped with the 107 dinner invitations within Whitehall in recent years. With a “waspish” sense of humor, he will also be able to deal with the sting in the tail that could end up being the outcome of all this and be philosophical about it.

He could go on to be a StandUp Comedian perhaps. To my absolute dismay, I received a phone call today out of the blue. The guy had found me through one of my Professional Institutes (nothing to do with my blog posts) The timing is ironic. For six years HMRC has operated a Basic Rate, “BR” code commonly referred to as “emergency tax” on the person that called for some help and advice. He has never been asked to complete a tax return, his employer has sent in P60 forms (P14s are HMRC’s copy) and P11Ds to HMRC every year.
He thought that under PAYE HMRC would collect the correct tax. He has now received a demand out of the blue for around £50,000 for underpaid tax. I think the idea of PAYE as a collection method is in principle a good one. However HMRC has to issue the correct coding notices and it seems clear in this case HMRC has failed dismally to do any work at all, year on year on year.

It has to be one of the worst cases I have come across so far and far exceeds the reported “averages” in the press of around £1,400 across around 1.4 ordinary families. How on earth did it take HMRC, with all the computer systems they have SIX years to figure out the code was wrong? It truly beggars belief.
It is a disgrace that HMRC computer systems cannot highlight and spot these types of cases before the problem gets so bad. It is a total disgrace. In fact, it is a disgrace with all the money HMRC has to spend on software and systems that so many errors or problems are not picked out.

It’s not difficult. It’s just very poor planning and administration from the top. For staff at HMRC to have not spotted this error six years running is in my opinion “neglect” on the part of HMRC. If I had made that sort of mistake six years running I think an employer with give me a P45 or a client sack me and probably sue me. Accountability? HMRC needs to be accountable. That is one of the solutions. The stain this has now put on this taxpayer, who had no idea there was a problem and has never received a tax return to complete, is a disgrace.
The call today is just one example of the regular poor work I see examples of from HMRC. You can’t blame those at the bottom of the chain at HMRC. Many of these staff are doing their best, with the often inadequate training they have been given. The degree of technical knowledge in HMRC has shrunk dramatically over the last ten years in my experience.

I wonder if Mr. Hartnett has received any bonuses over the last five years? A Freedom of Information request could be interesting. I have not done one before but maybe it is time. Exactly what financial bonus incentives are there for HMRC staff? I have had it confirmed a few times, once by what used to be called “District Inspector” they exist but they are sworn to secrecy about the arrangements. Sworn to secrecy by who exactly?
Based on the extremely aggressive way I see Tax Enquiries being undertaken time after time, when often nothing is found wrong or materially wrong I personally think the financial incentives are part of the reason Tax Inspectors often behave like bullies. Mr. Harnett knows all about this. As the Inspector in charge of prosecuting Ken Dodd, the famous comedian, in the 1970s.

With regards to the uncollected tax. One of the reasons for this is targets. HMRC aims at meeting short-term (short-sighted targets). HMRC collectors often spend most of their time and efforts collecting taxes from people that have a history of paying but are just behind often as they are struggling financially. However, this person will pay up they just need time.

The reason the figure is so large at £40 Billion is that HMRC reacts far too late and after the horse has bolted and doesn’t tackle persistent payers quickly enough to encourage them to pay tax and get into the tax system. By the time HMRC catches up, it’s too late. They had all the information to take action but fail to act on it.
Local Collectors also have records from central collectors that are often weeks or months out of date so a lot of time is completely wasted on chasing people who have already paid or are in the process of doing so, or just need a gentle nudge rather than a “we will seize assets” letter often over relatively small amounts too.
As the system is so poor and HMRC focused so badly on these issues in the wrong direction it’s no surprise that the £40 Billion is uncollected. I forecast it will be worse in the next five years. Not because of the recession but because of poor HMRC systems and practices. HMRC will no doubt hide behind the recession though and it is part of the problem for tax collection for sure and for the families HMRC is hitting so hard.