Examination of Witnesses (Questions 240-259)|
WEDNESDAY 20 MARCH 2002
240. You say you would like to see some flexibility
in discretion applied by the Revenue in waiving penalties for
such people when they do get up to date, even if they have not
got any reasonable excuse in the accepted sense. How would you
see that working in practice? I know of concrete cases where people
did have penalties waived when they could show that they were
depressed, but if they actually could not give any reason except
that they had not done it, on what basis would this discretion
(Ms Moore) Reasonable excuse, as the Revenue interpret
at the moment, does not include things like your agent letting
you down or you not understanding the form, that sort of thing.
That is the sort of problem that does crop up, unfortunately,
which is a difficult one to solve. A number of our clients are
never, no matter how many times you give them a form to fill in,
they are never ever going to be able to really get to grips with
it, and they cannot afford an agent. To some extent that is a
reasonable excuse, although I know ignorance of the law is no
excuse, but they have a reason. Often they come with a great stack
of returns and documents. They have it all, it is all there, they
just cannot negotiate the forms, and of course there is discretion
with penalties anyway, and somebody who has been late in notifying
the Revenue in the first place will have a penalty which is a
discretionary one, based on the reasons, the degree of cooperation,
the gravity of the offence, the size of the tax, whatever, so
I would not see this as too different a situation. I would have
thought the same approach could be applied.
241. I just see a difficulty once you move out
of objectively verifiable situations such as a medical condition.
I see a difficulty in distinguishing between the case which you
describe and somebody simulating the case which you describe.
(Ms Moore) Yes, well, that is a difficult thing requiring
something of a value judgment, I know. I do not have a pat answer
to that, really. I just feel that it should be looked at more
closely because there is no doubt that the string of penalties
that go onto the Statement of Account when a return is late and
there is interest and so on is one of the things that terrifies
people about filing, and that is a fact.
242. Would it not be better if the Revenue could
form a practical partnership with bodies like yours, so that they
could instruct people to hand over their affairs to an authorised
agent or pay the penalty, so that they offered them a concrete
(Ms Moore) Yes, we do actually get cases referred
to us by the Revenue sometimes who fit into that sort of category,
and a lot of people know about us at the Revenue and know that
we can unblock the situation, and often a voluntary body like
us can succeed where the Revenue cannot because we are independent,
whereas somebody who is not likely to approach the Revenue, no
matter how helpful the reception might be, they are just not going
to do that, it needs neutral territory. There are discussions
going on at the moment which TaxAid and the Low Incomes Tax Reform
Group are participating in, in exactly how the Revenue can work
with voluntary bodies, so it is being looked at, we are pleased
(Mr Williamson) I would just mention there, we have
had discussions right at the beginning with the local offices
in the areas where the Low Incomes Tax Reform Group set up Tax
Help for Older People pilots, and the local tax authority in the
West Midlands was very keen on the idea for precisely this reason,
that it was seen as an independent source which would increase
choice for the customer, and that it was seen as breaking down
the barriers which sometimes exist between pensioners who are
frightened of officialdom and the Department, and this thing has
been taken up. We are working with the Revenue, as Jane says,
243. You acknowledge the improvements that the
Revenue have made to the Tax Calculation Guide, but you note that
people still have difficulty in calculating their tax. What more
should they be doing?
(Ms Moore) I think the biggest problem is that with
the number of tax rates that we have at the moment, and different
allowances given in different ways, there is a limit to what the
Revenue can be expected to do to simplify tax calculation guides.
We have a short version now, but it is 15 pages, and short in
the sense that it is not 36 pages, which is what the long version
is. It is quite hard to negotiate, whereas if you do it on a piece
of paper, probably six numbers and a quick calculation will give
you the answer, but many of our clients just find that hard to
do. There is a calculation guide, I think I mentioned in my report,
linked to the "filing by internet" bit of the Revenue
site which is quite good. It is a spreadsheet. You bung the numbers
in and it completes the calculation, but it is not so well flagged
this year as it was last year, and I think it is a very useful
thing that could be made more of, or tax offices could have it
to help people calculate online in an enquiry centre, for example.
244. You have both referred to your concerns
about the level of processing errors which are occurring on Self-assessment
returns. Can you quantify this in any way?
(Ms Moore) The Revenue have quantified it in their
Annual Report that came out at the end of last year, that the
number of accurately processed returns was 80 per cent, or the
number of inaccurate returns were 20 per cent, depending on how
you want to look at it, which beat their target which was only
77 per cent accuracy, and was better than the year before, but
still leaves quite a large number of things which are not processed
accurately. I cannot give you a figure for how many cases we get
which contain errors which the Revenue would not have picked up
themselves because I just do not have sufficient numbers to make
sensible statistics, really. I did not get the impression that
processing errors were on the increase, but we do still get cases
through where something has not been picked up in the box and
the taxpayer ends up having £500 to pay, rather than a small
refund. That sort of thing is quite frequent and the unrepresented
taxpayers that we see tend to rely on the Revenue to get it right,
245. You think this is getting slightly better,
but still serious problems?
(Ms Moore) Not that it is getting better. I certainly
do not think it has got any worse, and also I know that it is
for the Revenue to tackle it. It is a little bit hard to say.
We have not seen many problems from last year's tax returns yet.
I imagine they will start coming through in the next few months
leading up to the next payment date.
246. Have you discussed the issue with the Revenue
(Ms Moore) It has certainly come up at various Committees
that I have gone to. I have not discussed it on a one to one basis
with anybody specifically.
247. Mr Williamson, you refer to the difficulties
facing pensioners seeking advice from the Revenue, and you note
that they find the helpline inaccessible, and many find themselves
unable to have face to face conversations about their worries
through mobility problems. When we have put that point to the
Inland Revenue, they told us that people can go to one of their
300 enquiry centres for face to face advice, and that they provide
home visits for those with mobility problems. What more should
they be doing?
(Mr Williamson) The Revenue certainly do provide home
visits. There was a time when this was not widespread within Revenue
offices. I believe it has become more widespread now than it was
then. The question is: "Do people know about this; are the
older people going to sit at home worrying about their tax; do
they know that they can get a home visit from a Revenue office?"
It is not always proactively advertised. We did have a case, which
is mentioned in the written submission of a very elderly lady:
88, cataracts, could hardly see, heart trouble, living in the
very North of Scotland whose tax office was in the South of England.
All her income was in fact taxed under PAYE, but she had to fill
a Self-assessment return anyway because her untaxed income came
to just over the limit of £2,500. We asked for her to have
a home visit. There was some delay getting her a home visit, but
once she had one, it was fine. The two Revenue officers went to
see her in the remote place where she lives in the North of Scotland
from the local office there. The papers were sent and I think
there was tax of about £5.00 to pay. The key here is it is
a question of publicising the home visits and getting people to
know about it. The helpline is a problem. I do not know what the
answer to that is if you are an older person and your hearing
goes. Your confidence tends to go as well, particularly when using
the telephone, and if you are telephoning a government department,
your confidence is right out the window. What is the answer to
that? Maybe here we have to fall back on the help from the voluntary
sector in partnership with the Inland Revenue, which we are working
on at the moment. But again, the help which the Revenue do, we
believe, provide to people who have impaired hearing could do
with being more widely publicised.
248. How would you suggest they could best publicise
(Mr Williamson) Local newspapers. There are a number
of local newspapers, certainly in the areas we operate our Tax
Help for Older People pilots, which older people tend to read
and pass around, and they tend to read them from cover to cover.
There are these sorts of publicity sources which can be identified
and they will carry those sorts of advertisements. Local television,
249. Is there not a form in with the tax form
that tells people?
(Ms Moore) No, there is not. If the tax returns were
to be made more specific to particular client groups like pensioners,
you could then obviously send out with every tax return something
which told them what facilities there were that they might want.
But they do not get it automatically, no.
250. Just for one moment, following this very
interesting issue of pensioners, particularly the older pensioners
of the kind you have rather interestingly described, have you
had any discussions about pension credit in this respect?
(Mr Williamson) We have made a submission in response
to the consultative document on pension credit. We have not taken
an active part in consultations since then, though we understand
that other parts of the Chartered Institute have done, and one
of our members who is a Policy Officer for Age Concern is also
taking an active part in that.
251. You are unable to inform the Committee,
for example, how whatever is proposed for pension and credit matches
with the kinds of tax reforms that people are used to now, because
the intention is that the pension credit will be a tax-like piece
of administration, rather than a means tested benefit-like piece
(Mr Williamson) I am not sure what point the negotiations
have reached on the forms.
252. That might be interesting for the Committee.
Maybe I should not have pursued that particular point.
(Mr Williamson) It would certainly be an interesting
one to pursue because you have the DWP's publicity organs as well
as the Revenue's, and there is scope we believeOne of the
submissions we did make was for joined up working between the
two departments, particularly in making the services known, which
would enable people to claim the pension credit when they are
entitled to it.
(Ms Moore) Plus, we have made representations for
similar definitions of income and similar sorts of forms and general
consistency in that way in everything we have said on tax credits
and pension credit.
253. If I could turn to you, Ms Moore, you have
suggested a facility to pay by instalments, or for the Revenue
to provide people with suggestions about how much people ought
to put away to meet tax liabilities. How has that gone down with
(Ms Moore) The Revenue are receptive to that. There
is a pilot, or was a pilot in Gateshead, I believe, on paying
by instalments. Stephen Banyard would be able to give you chapter
and verse, but it came up at a Committee meeting I went to at
the Revenue a bit earlier this year. It is a problem for self
employed businesses to put money aside. They know they should.
They have trouble working out how much, and they have trouble
setting the cash aside when there are other pressing demands,
and there is of course this 18 month gap with a new business particularly,
before they have to pay anything, and people get into difficulties.
Particularly this January, because the tax due at 31st January
this year has been increased because the National Insurance has
gone up and the Married Couple's Allowance had gone, so there
are some quite big tax hits at 31st January. So we have always
felt that it would be a good idea if they could pay somehow on
account. I realise that there are practical difficulties with
this, not least because it would, to some extent, under current
legislation, be a voluntary payment. Until there is a liability
crystallised, of course the amount that people might pay on account
at the moment would be essentially voluntary, and the Revenue
are concerned that if they take the money, they would be asked
to pay it back again, and they do not particularly want to act
as a bank. So there would have to be legislative changes or it
would be a voluntary scheme. I do not have the easy answer to
254. Why could they not have a system as with
gas and electricity bills, where you pay a certain amount each
month, and then if it is out of line with the assessment in the
end, you top it up, or it is evened out next year. If the gas
and electricity organisations can cope with that, why can the
Inland Revenue not do so?
(Ms Moore) I think it should be looked at, but as
I understand it, and you would need to speak to the Revenue, but
one of their problems is that if, for example, somebody's Self-assessment
liability does not actually fall due under the legislation until
31st July, say, if they are paying on account in advance of that,
at the moment, they would be paying it to the Revenue, but there
would be no liability to set it against. The person could ask
for it back again.
255. That is true of a gas bill.
(Ms Moore) I am not sure how the mechanics work with
gas bills, to be honest.
256. You just pay on standard arrangement, and
then settle up at the end of the year.
(Ms Moore) I do not know the answer to that, but I
have understood, perhaps I have misunderstood that that is one
of the issues.
257. Could I say, being somebody who, obviously
before I became a Member of Parliament, had several different
sources of income, I left money lying with the tax from year to
year. I did use them, I suppose, as a sort of bank. In fact, they
paid quite a reasonable rate of interest, I recollect, which of
course is not taxed. Is that extremely unusual? It seemed to me
to be quite a logical way.
(Ms Moore) At the bottom end of the market, which
is what we deal with, that is very unusual. Somebody who has profits
of £5,000 or £6,000 a year and has to pay their living
costs tends not to have money sitting with the Revenue, or anywhere,
and because they are not having tax deducted from it under PAYE,
they spend it sometimes. The children need shoes, you know, they
need to pay their rent, to keep their house. So with the best
intentions, they do not necessarily set the money aside when they
258. I think I shall move on, because I am now
left with the feeling that my children were deprived of shoes
while I left the money with the Inland Revenue, and that will
(Ms Moore) Only you can know the answer to that.
259. Even in this age of presbyterian virtue,
I do not think that would be right. Ms Moore, you say that a scheme
for allowing payments by instalments wasthat you have discussed
this with the Revenue, but they have not really pushed this idea.
Is that still the case?
(Ms Moore) It did, as I say, come up at the Operations
Consultative Committee which I went to earlier this year, and
we asked what had happened to the pilot scheme and nothing much
had happened to the pilot scheme. I would be interested to know
what the basis of that was and what the findings were. The Revenue
are receptive to suggestions as to how payment by instalments
could be made to work because they do appreciate that there is
difficulty there, but the matter was rather left at that, as I