Thursday, 9 December 2010

An overcomplicated tax system

The Telegraph has an article on Ten ways to beat tax hang-ups.

Useful advice, I'm sure, but the fact that "the taxman has made systemic errors in so many cases" suggests that our tax system is far too complicated.

For example:
Roy-Chowdhury of the Association of Chartered Certified Accountants said: "Check all the items and amounts carefully in any letter you receive, and do not be scared to challenge HMRC. For example, do you agree that you had a company car of a specific value and with the carbon dioxide emissions as stated? Did you have private medical insurance?"
Why should HMRC know or care whether you have private medical insurance? And if the politicians are concerned about carbon dioxide emissions (god only knows why), then why not handle this through fuel duty — the more you burn, the more you pay.

Of course, our complicated tax system is great for accountants (visit and HMRC contractors.

According to,
HM Revenue and Customs spent 44% of its 2009-10 supplier budget on its Aspire IT outsourcing deal led by Capgemini.

Overall HM Revenue and Customs (HMRC) spent £1.75bn on suppliers in the last financial year, but spending was dominated by two outsourcing deals
HMRC's overall budget is in the region of £4 billion [1].

That's about £18 million for every day HMRC works [2].

Great for those who get a cut; not so great for the rest of us.

[1] It's not easy to tell, because their 2009-10 Net Operating Cost of £16,492.8 million includes £12,460.3 million of "Payments of Child Benefit, Child Trust Fund endowments and Health in Pregnancy Grant". The accounts don't show a subtotal, but the difference — chewed up by HMRC itself, rather than redistributed — seems to be £4,032.5 million.

[2] 52 x 5 - 33 days starting holiday = 227;
£4,032.5 million / 227 = 17.76 million

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