INLAND REVENUE

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Anybody who advises a friend to take out an ISA or gives them a similar tax-saving tip risks a £5,000 fine. Innocent victims could include a person who mentions to a friend in the pub that an ISA is a way of saving £10,200 a year tax-free. It will make it an offence to hold any conversation, even in private, with friends, if it offers clues on how to pay less tax. Professor Anne Redston, a tax and legal expert from King's College, London, described the proposed legislation as 'dangerous, disproportionate and an erosion of fundamental freedoms'. The proposed rules are contained in the Tax Agents: Deliberate Wrongdoing draft Bill, which is trying to crack down on any 'tax agent' whose advice leads to a 'loss of tax' for HMRC.

It is the definition of a 'tax agent' which is fuelling much of the controversy as it includes anybody who gives tax advice 'free of charge' and 'otherwise than in the course of business'. This means it is not just tax professionals, such as accountants and financial advisers, but anybody who suggests ways of cutting a tax bill, even though they are completely legal. Tax evaders such as multi-millionaires who do not pay a penny in income tax are targeted, but so is anybody who tries to make use of legal tax-saving tips. The consequences for offering well-meaning advice such as pointing out that saving into a pension attracts tax relief could be extremely expensive, with fines of up to £5,000.

Victims could also be forced to pay a fine worth 100% of the 'lost revenue' that HMRC would have got if the advice had not been followed. Mike Warburton, of accountants Grant Thornton, said, "This is really draconian stuff. It is Big Brother. It means everybody will have to tread carefully before they talk to anybody on any financial matter." Experts accuse HMRC of trying to grab as much tax as possible to help fill the black hole in the nation's finances. An HMRC spokesman said, "The draft legislation is not intended to target anyone giving fair and honest tax advice. "Deliberate wrongdoing" means the same as "fraud" or "dishonesty". Providing advice to clients about how they might best order their affairs, including tax planning and tax avoidance, cannot trigger the legislation in the absence of such fraud." (Source: Daily Mail, May/10)

A taxpayer who paid too much tax to HM Revenue & Customs has been fined £1,400 for making a mistake when he asked for a rebate. The self-employed man from Kent tried to reclaim £3,000 in overpaid tax for the year to April 2009, but Revenue & Customs calculated that he was owed £1,000 and fined him £1,400 for the error. Under new penalty regulations, the Revenue can fine taxpayers up to 30% of tax owed for careless mistakes and up to 100% for errors that it believes were deliberate and "concealed" mistakes.

The taxman fined this taxpayer 70% of the £2,000 difference between the sum that he felt he was owed and the sum that HMRC calculated it would repay him. Phil Berwick, director of tax investigations at McGrigors, a law firm that represented the taxpayer, for no fee, after he was fined, said, “Calculating a rebate can be complicated and the taxpayer in question was unrepresented by an adviser, yet HMRC has refused to take any of this into consideration."

He added, “We believe he made an honest mistake, so for HMRC to be fining him is outrageous. HMRC has charged this taxpayer with a higher penalty than someone committing a serious fraud under the old penalty regime.” Just under 3 million taxpayers claimed a rebate last year, nearly a third of all nine million self-assessment taxpayers, according to HMRC. Mr Berwick added that it was the first time that his client had filled in a tax return as a self-employed person.

A spokesman for HMRC said he could not comment on individual cases, but said no one would ever be fined for "making an honest mistake". He said, "The fines reflect whether a taxpayer has taken due care and attention, and whether the mistake is deliberate or not, and whether records have been kept correctly." Under the new penalty regime a "careless" mistake merits no more than a 30% fine. (Source: Daily Telegraph, Apr/10)

A computer disc stolen from a Swiss bank is to be bought by the British government to help snare tax dodgers. Ministers are poised to splash out thousands to buy a "gold mine" of customer files bagged by thieves last year. The disc names 1,500 secret account holders, many of them rich Brits hiding their money. Revenue and Customs chiefs are bidding for a share of the files, which is in the hands of German tax authorities.

The Berlin government has given the go-ahead to spend £2.3 million to buy the data, stolen from Switzerland's second largest bank, Credit Suisse, from an informant. Germany believes the mass of private info could help recoup £400 million. British officials have now offered to chip in for a share of the data. An insider said, "Some people may raise an eyebrow at paying for stolen material, but tax evaders don't play by the rules and it can take something like this to catch them. It would also send out a powerful warning to those who avoid paying their taxes."

Switzerland is a haven for the world's tax dodgers and costs the UK Treasury hundreds of millions of pounds a year in lost tax. The decision to reward criminals with taxpayers' money has sparked a furious row among German and Swiss politicians. The Inland Revenue is allowed by law to pay for info leading to the payment of uncollected tax. (Source: News of the World, Feb/10)

Tax inspectors who'll soon be threatening millions with £100 self-assessment fines have overpaid themselves £11million in the last three years. Glitches in HM Revenue and Customs own payroll systems saw employees pocket an extra £5million in the last financial year alone. Incredibly, staff who have been overpaid are allowed to pay back cash in instalments, unlike many self-employed people and small businesses. The Revenue, seeming unable to manage its own budgets, will infuriate people who have to file their tax details online by the end of January or face automatic £100 fines.

A Revenue spokesman said, "We take the recovery of any overpaid salaries extremely seriously. The department has stringent procedures in place to ensure that overpaid money is recovered. In cases of hardship, for example, it is necessary to stagger repayment over a period of time." But a spokesman for the TaxPayers' Alliance said, "Instead of jumping to fine ordinary taxpayers for any minor accounting mistake, Revenue and Customs must put its own house in order. When many are losing their jobs or taking pay reductions, this additional burden on taxpayers is entirely unfair and must not happen again." (Source: News of the World, Dec/09)

Government officials have been given access to a vast database of properties, revealing their sale prices and detailed floorplans, under a deal with the website Rightmove.co.uk. The site, run by four of Britain's biggest estate agents, contains information on 800,000 properties, and the contract, which runs until 2008, also gives inspectors access to old records. The Valuation Office Agency, the department of HM Revenue & Customs that allocates a council tax band to every home in England and Wales, will be able to use the data to find out about improvements such as double-glazing and conservatories that may increase tax bills.

Conservative local government spokesman Eric Pickles said, "This is a sinister development. It is several steps beyond Big Brother. We should do our best to limit the amount of personal information the Government holds. That's because they are never able to resist the temptation to use it, and in this case they will use it to raise taxes." The information from the website, used by about 8,000 independent estate agents to advertise their clients' properties, will be integrated into the £40million database the VOA has purchased from US firm Cole Layer Trumble to help it revalue homes nationwide. It is feared this will lead to tax bills rising by up to 400%.

Concerns have already been raised about plans to use satellite and aerial photography as part of the revaluations. Local Government Minister Phil Woolas confirmed, "The contract gives the VOA the right to use property records within Rightmove's current and historic database." But homeowners who have used the website were shocked that their details had been sent to the Government without their knowledge. A spokesman for Britain's Information Commissioner, Richard Thomas, said, "If personal information is involved and the consent of householders has not been expressly given, this could be a data protection issue."

Britain's largest estate agency chain Countrywide launched Rightmove in February 2000. Five months later, Connells, Halifax Estate Agencies and Royal and Sun Alliance also invested in it. Rightmove commercial director Miles Shipside said, "Rightmove publishes details of all property listed by its members on its public website, where the photographs, floorplans and property descriptions can be viewed and saved. The agreement simply allows the VOA access to already published data from the website." A spokesman for the VOA said, "The contract is subject to commercial confidentiality. This is just routine updating, using publicly available material." (Source: Mail on Sunday, Dec/06)