Category Archives: HMRC

Tax relief system needs overhaul to prevent abuse, say MPs

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Treasury committee report says tax system is too complicated and finds two-thirds of relief policies are uncosted

Almost £200bn of tax reliefs handed to businesses and individuals each year should come under greater government scrutiny to prevent fraud and abuse, according to an all-party group of MPs.

The Treasury committee said in a report published on Wednesday that “a systematic review” into more than 1,000 tax reliefs was needed after MPs found HM Revenue and Customs did not have the resources to monitor how tax breaks and deductions were used.

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Benefits claimants in UK were underpaid by record £3.3bn last year

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National Audit Office criticises Department for Work and Pensions over its ‘material fraud and error’

Thousands of people in the UK could receive a payout after official figures revealed that benefit claimants were underpaid by £3.3bn last year, the highest level on record.

The Department for Work and Pensions also admitted that as many as 330,000 people, some of whom have since died, may have missed out on as much as £1.5bn of valuable state pension entitlement – a disclosure that prompted some commentators to warn of a new scandal. Steve Webb, the former pensions minister, said: “The scale of these errors is huge.”

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UK’s best known retailers top list of firms fined £7m over pay breaches

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WH Smith, Marks & Spencer and Argos among more than 200 firms that failed to pay workers legal minimum wage

Some of the UK’s best known retailers including WH Smith, Marks & Spencer, Argos and LloydsPharmacy are at the head of a list of more than 200 companies collectively fined £7m for failing to pay the legal minimum wage.

The businesses were also forced to pay out £4.9m to about 63,000 workers left out of pocket after violations of the rules were uncovered by inspectors at HMRC, varying from breaches related to asking workers to pay for aspects of their uniform to paying the incorrect apprenticeship rate.

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Nadhim Zahawi sacked as Tory party chair over tax affairs

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Rishi Sunak fires Zahawi after he was found to have committed ‘serious breach’ of ministerial code

Rishi Sunak has sacked the Conservative party chair, Nadhim Zahawi, after he was found to have breached the ministerial code by failing to declare the HMRC investigation into his tax affairs.

An investigation by the prime minister’s ethics adviser, Sir Laurie Magnus, concluded that Zahawi had made a “serious breach” of the code by not telling officials he was under investigation by the tax body when he was appointed chancellor by Boris Johnson.

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Zahawi should quit as party chair until tax inquiry ends, top Tory peer implies

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Lord Young suggests ministers should feel able to step aside for the duration of any investigation

Nadhim Zahawi should step away from his Conservative party role while the inquiry into his tax affairs continues, a senior Tory peer and former Commons standards chair has appeared to suggest.

Lord Young, who served in several Conservative administrations from Margaret Thatcher’s to Theresa May’s, suggested that ministers under pressure should feel able to step aside for the duration of any investigation.

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Minister unable to say whether Zahawi was telling truth when he first said taxes were fully paid – as it happened

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Labour MP asks whether Zahawi statement in the summer was untrue, with Cabinet Office minister saying he does not know the answer

Nadhim Zahawi, the Conservative party chair, has welcomed the decision by Rishi Sunak to ask the No 10 ethics adviser to investigate his case. “I am confident I acted properly throughout,” Zahawi said.

Zahawi seems to be using a narrow definition of “properly”. In the statement he issued yesterday, he accepted that his original decision not to pay the tax that HM Revenue and Customs subsequently concluded he should have paid was down to a careless error. He said:

Following discussions with HMRC, they agreed that my father was entitled to founder shares in YouGov, though they disagreed about the exact allocation. They concluded that this was a ‘careless and not deliberate’ error.

Integrity and accountability is really important to me and clearly in this case there are questions that need answering …

That’s why the independent adviser has been asked to fully investigate this matter and provide advice to me on Nadhim Zahawi’s compliance with the ministerial code, and on the basis of that we’ll decide on the appropriate next steps.

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Nadhim Zahawi’s future threatened as Labour steps up pressure over tax affairs

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Angela Rayner says Rishi Sunak should come clean about any concerns raised with No 10 about ex-chancellor and HMRC penalty

Nadhim Zahawi’s political future appeared under increasing threat on Sunday night, after Labour pushed hard for answers about his tax issues and government colleagues offered little support for his plight.

After a weekend dominated by questions over the Conservative party chair’s tax position, Labour signalled its intention to pin the controversy on to Rishi Sunak, demanding the prime minister explain if he knew about the issue when he appointed Zahawi to his cabinet.

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Tax collectors lack ambition, say MPs, as £42bn remains unpaid

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Fraud and error have left ‘eye-watering’ amount owed to HMRC, says public accounts committee

The government has been criticised for failing to collect £42bn in unpaid tax from businesses and individuals amid concern over the strain on the public finances as the UK’s economy stands on the brink of recession.

The cross-party Commons public accounts committee (PAC) said that an “eye-watering” amount of tax was owed to HMRC, while also criticising tax collectors for lacking ambition to tackle fraud and error.

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How is Liz Truss’s government challenging ‘Treasury orthodoxy’?

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Sir Tom Scholar’s removal as Treasury’s top mandarin signals attempt to change department’s view of the world

Sir Tom Scholar’s removal as the Treasury’s top mandarin was a brutal statement of intent by Liz Truss’s new government. The message was clear: the days when Britain’s economic strategy would be determined by bean counters were over. From now on, growth rather than balancing the books would be the priority.

That is the theory. In practice, removing what Truss sees as the “dead hand” of Treasury orthodoxy from the running of the economy is likely to prove difficult. The fact that all four deputy governors of the Bank of England are Treasury old boys is an example of its influence on the economic policy-making machinery. There have been attempts in the past to cut Whitehall’s most powerful department down to size. Sooner or later, all have failed.

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Covid fraud: how bounce back loans paid for cars, watches and even porn

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As details emerge, concerns grow about Treasury’s efforts to recover almost £5bn wrongly claimed

When Keith Hamblett, a fruit and vegetable seller from Tyne and Wear, asked his bank for a government-backed loan in the autumn of 2020, the economy was still in trouble after lockdowns, and coronavirus cases were rising.

The Covid bounce back loan scheme was a welcome relief for many smaller companies, and Hamblett received £28,000.

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UK faces large EU bill over Chinese imports fraud

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Court rules government failed to fulfil obligation to collect correct amount of customs duties and VAT

The British government faces paying a hefty charge to the EU after the European court of justice ruled it had been negligent in allowing criminal gangs to flood European markets with cheap Chinese-made clothes and shoes.

Publishing its final ruling on Tuesday, the court concluded that the UK as member state had “failed to fulfil its obligations” under EU law to combat fraud and collect the correct amount of customs duties and VAT on imported Chinese goods. The failures by HMRC date from 2011 to 2017.

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Firms handed £1.3bn in Covid contracts claimed £1m in furlough grants

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Dozen UK companies given VIP fast-track contracts to supply PPE to NHS paid idled staff at taxpayers’ expense

Companies handed a combined £1.3bn in controversial fast-track Covid contracts with minimal scrutiny also claimed at least £1m in furlough grants, it can be revealed.

Analysis of the accounts of companies that won lucrative emergency contracts to supply personal protective equipment (PPE) to the NHS during the height of the pandemic shows 12 also claimed funds to put staff on furlough at taxpayers’ expense.

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HMRC to relocate to Newcastle office owned by Tory donors via tax haven

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Exclusive: Deal is part of north-east regeneration scheme developed by property tycoons David and Simon Reuben

HM Revenue and Customs has struck a deal to relocate tax officials into a new office complex in Newcastle owned by major Conservative party donors through an offshore company based in a tax haven, the Guardian can reveal.

The department’s planned new home in the north-east of England is part of a regeneration scheme developed by a British Virgin Islands (BVI) entity controlled by the billionaire property tycoons David and Simon Reuben.

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Cryptocurrencies could lead to ‘limitless’ losses for UK government

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Experts warn of danger of untraceable funds if companies accepting payments in cryptos go bust

The government could face “limitless” losses as a result of businesses that accept payments in untaxed and untraceable cryptocurrencies going bust, an insolvency expert has warned.

A growing number of companies, including the ethical cosmetics firm Lush and office-sharing firm WeWork, have begun taking payments for goods and services in cryptocurrencies such as bitcoin, alongside debt, credit or cash.

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UK dairy firms try to count the cost of churn in post-Brexit trade

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Country Milk’s trade with the EU has nosedived with the dairy industry particularly badly affected by new customs rules

A small error in the paperwork – a box ticked by mistake – and the tanker of butter oil was held at French customs for five days, with veterinary authorities at the border threatening to destroy it. The debacle nearly cost the tanker’s exporter, dairy company County Milk, a six-figure sum. After fraught negotiations, the cargo was eventually repatriated.

“You don’t need too many of those to be destroyed and you are in dire straits,” says Phil Langslow, trading director at County Milk, the UK’s largest privately owned dairy ingredients business.

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Brexit: trade survey finds 74% of British firms hit by delays with EU markets

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Brexit red tape and disruption to global trade from pandemic leaves businesses ‘severely strained’

Three-quarters of British manufacturers are struggling to cope with delays in moving goods in and out of the EU amid continuing disruption caused by Brexit and the Covid pandemic, industry figures said.

Two months after the UK left the EU on trade terms agreed by Boris Johnson’s government, research from the manufacturing trade group Make UK has shown that 74% of firms in a survey of more than 200 leading industrial companies are facing delays with EU imports and exports.

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Brexit: consortium of companies led by Fujitsu wins £200m Irish Sea contract

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Deal is the first concrete implementation of the special arrangements for Northern Ireland

A £200m contract to implement Brexit checks on goods in the Irish Sea has been won by a consortium of companies led by Japanese company Fujistu.

HMRC announced on Friday that a two-year contract for the new trader support service (TSS) had been awarded to a consortium led by the tech company and its partners, the Customs Clearance Consortium, an organisation run by customs expert Robert Hardy and the Institute of Export and International Trade.

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Up to £3.5bn furlough scheme cash may have been wrongly paid out

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Error and fraud rate for scheme estimated at between 5% and 10%, says HMRC chief

The government believes it may have paid out up to £3.5bn in wrong or fraudulent claims for the furlough scheme.

Jim Harra, the top civil servant at HM Revenue & Customs, said that his staff had calculated for the possibility that as much as 10% of the money might have gone to the wrong places.

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UK to open 10-12 Brexit border customs sites in EU trading shake-up

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New border checks in Kent and elsewhere reverse 47 years of removal of trade barriers

The UK government is to build “10 to 12” new Brexit border customs and controls sites across the country in a move that Michael Gove has said cements the mission to “take back control” from the EU.

In the biggest shake-up to trading with the EU for 50 years, the chancellor of the Duchy of Lancaster announced the £470m programme for facilities to process freight going to and from the EU, along with a 206-page document detailing new border controls.

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UK races to find extra 50,000 staff for post-Brexit paperwork

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New recruits needed to process millions of extra declaration forms from 1 January 2021

A race to hire 50,000 people in the next six months to process Brexit paperwork is under way after the government confirmed they would be needed for border operations.

But experts have warned it will be a challenge to train enough people in time to be competent in the complexity of customs declarations and the second layer of red tape involving entry and exit declaration forms that are mandatory for trading with the EU.

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