Wednesday, May 14, 2008

HMRC‘s Kafkaesque tactics

I used to run a small telecoms consultancy with a couple of friends which was moderately successful for a few years until we all decided to do something else. We are still Directors as we want to keep the company name so we have to file annual accounts even though turnover is zero. About 3 month's ago the Company Secretary received a call from HMRC saying they were outside is home and looking to distress his goods to the value of 5 figures to cover the tax bill. As you can image he was straight on to the rest of us to see what, if anything we knew. There had been no communication with any of us and this was straight out of the blue.

HMRC claimed they had been sending us letters and we had been ignoring them. Our accountant knew nothing about the tax bill and was just as perplexed as we were. Anyway to cut a long story short we managed to persuade HMRC they had made a mistake and they accepted we didn't owe anything. Despite our please they wouldn't show us how they got their figures and we couldn't get a letter from them acknowledging we didn't owe anything.

Last week our Company Secretary, who is also a Director and good friend, received another call from HMRC this time they were a bit more cheerful and were ringing to raise concerns about our unpaid bill which had now increased by another £15k and was increasing by £11 per day. As one the 3rd Director has a young family and tends to get a bit excited the CS started to deal with it his own. Despite pleas they wouldn't (couldn't) explain how we had made a mistake with our tax calculations only that we owed the money. We went through 3 years of accounts with the accountant, checking back balances and all was in order. These were presented back to HMRC with a request they tell us where the error was.

Yesterday we received another call from them telling us that we didn't owe them any money and in fact they owed us a tax rebate, but they couldn't tell us how much on the phone but also they wouldn't tell us how they got their calculations so wrong.

This is very worrying, our CS is a diligent guy, which is why he took the job on, and we have always been open and scrupulous. I wonder, though, how many people would have been scared witless and paid or worse still been driven to illness with worry as was a significant sum we are talking about? Surely they have a duty to tell us how they calculated the tax bill?

Have our national accounts got to such a parlous state that the bureaucracy is under instructions to extort as much money as they can and not to care about the consequences?

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