Just Because You’re Paranoid…

Got home the other night to this message on my answer phone:

This is to inform you that HMRC is filing a law suit against you.  Press one to speak to a police officer.

Then I got an email ostensibly from HMRC to inform me I was a due a considerable tax repayment, which I could claim by accessing a certain web site.  The email looked very convincing and cited a London address, in “Parliament Street”.

I didn’t press one and I didn’t access the web site.  I did let my accountant know.  He said I did well to ignore both messages as they were clearly scams.

Then promptly on April 6th HMRC sent me forms SA100-6 and SA101 2017 with a notice I am required, by law, to file a tax return.  It’s that dismal time of year again.  Might this be a scam also?  I think not.  I’ve also received from them my latest tax code for the New Year.  This is a combination of letters and digits with an explanation as to how the code was arrived at, and an accompanying set of notes to help me crack the code.  Now in an amateurish way I’m rather fond of codebreaking.  Crosswords and the like.  But this particular conundrum has me stumped.

The explanation starts out promisingly enough with a tax free personal allowance to which is added Gift Aid.  I’m having second thoughts about Gift Aid.  I recently sent some money to the Disasters Emergency Committee but I didn’t gift aid it.  DEC promptly sent me a form with a polite request that I consider it.  It made me wonder, why have I gone off Gift Aid?  I don’t intend to claim any tax relief on my gift either for myself or anybody else.  I think the tax system is too complicated and needs to be grossly simplified.

Anyway the rest of the procedure for working out my tax code involves a series of deductions such as “adjustment to rate bands”, “higher rate tax adjustment”, “underpayment restriction” etc. etc. which not only reduces my personal allowance to zero but turns it into a considerable negative quantity.  What can it mean to have a tax free amount that is a negative number?  I presume it must mean that I must pay tax not only on all of my income, but on all of my income plus this not inconsiderable amount that is expressed as a negative.  I will not weary you with the arithmetical convolutions that arrived at this sum, but proceed to Note 9, “Tax-free amount”:

To create your tax code, we’ve removed the last digit of your tax-free amount and included a letter…  We tell your employer(s) or pension provider(s) your tax code but we do not tell them how we worked it out.

This Bletchley-like utterance is reminiscent of the rubrics you come across above the 12 x 12 crosswords in the Sunday broadsheets that take you (or at least, me) all week to solve.  I’m thinking of compiling one and sending it to The Telegraph:

Enigmatic Variations No 666: “Gimme a break.”

Solutions to clues are a combination of letters and digits.  Prior to entry to the grid, solvers must remove the last digit to each solution and include a letter.  Solutions should reach The Telegraph by Oct 31st (Jan 31st if filing on line).  Do not tell us how you worked it out.

Incidentally, HMRC didn’t, as far as I can see, remove the last digit at all; they removed the second last.  It’s a nice point.

It’s enough to make you chuck your hand in, take their word for it, fill in the form and keep your fingers crossed you haven’t inadvertently made a mistake.  This is why I get an accountant to do it and I pay insurance against being investigated.  The professional fee protection blurb says:

HMRC are coming.  Even innocent taxpayers are caught out… a visit from (HMRC) can deal a severe blow to anyone… Nothing to hide?  Unfortunately even innocent taxpayers get caught up in the process and are under threat of investigation… It is an unfortunate fact, but it is often impossible to second guess when a tax investigation will take place…

It’s positively Kafkaesque.

I know I sound like a barrack-room lawyer but I think the whole tax system should be simplified on to one side of a sheet of A4.  If you need more than one sheet of paper to explain it, it’s too complicated.  You have an income tax rate at x%.  You pay x% of your income per annum to HMRC.  How hard can it be?

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