The depths of financial depravity

Were you cross at today’s news that HSBC, the UK’s largest banking group had, for years, assisted UK taxpayers in moving large sums of money offshore into secret Swiss bank accounts?

Or spittingly angry that our tax inspectorate, the HMRC, unlike inspectors in most other western countries, had merely washed its hands of the entire affair, prosecuting just one out of 7,000 individuals in respect of an estimated £135m in avoided tax?

I’ll confess to both. Fleetingly.

Especially as this comes just a month after i received a finger-waggingly self-righteous letter from HMRC last month about why it was only fair that i should pay a penalty in respect of a couple of hundred pounds of tax paid, through misunderstanding, some four months late.

Here is what HMRC wrote to me in January.

Thank you for your letter.

We want customers to be generally confident that the tax system is being operated fairly. The purpose of charging interest/surcharges on amounts paid late is to encourage prompt payment and to provide a measure of fairness between customers who pay on time and those who do not. It also provides a measure of restitution to the Exchequer for the delay in payment. I am sure you will understand that if we did not do this then there would inevitably be a temptation for some people not to pay on time.

My crime!

OMG! What did she do? Was this the attempt to pass off the cost of an illicit massage as some form of business expense? Had i forgotten to pay my tax for five years, only now discovering the thousands i should have handed over? Or had i – horrors! – been salting every other invoice away in a hidden Swiss bank account.

No. Nothing so interesting. I had failed fully to understand how tax rules apply to the self-employed.

Each year, i must pay tax for the preceding year. The amount due is usually based on an HMRC estimate of what i owe, and must be paid in full by July 31. If i overpay, then when we work out what i should have paid, the overpayment is returned, plus a little interest.

If i underpay, providing i have paid what HMRC estimated, there is no penalty. However, if i provide my own estimate of what is due and subsequently it turns out i underpaid, then interest is due on the difference.

This is what happened last year. The original HMRC estimate was too high by a couple of thousand. I asked them to reduce this estimate, because i did not wish to tie up £2,000 with government – even if i knew i would eventually get it back.

Unfortunately, my estimate of what i would eventually pay was £200 too little.

Result: when i eventually filed my final return, they charged me interest on the £200.

My bad. I knew such a penalty system operated in the first year of self-employment: was unaware it continued to operate in subsequent years.

I told them as much and the rest is history. Or at least the somewhat pi letter that i received about a month later

Compare and contrast

What more is there to say? There is nothing complicated about this process. HMRC send me an estimate and if i fail to provide evidence as to why i should pay it, the money is owed. With penalties, including prosecution, if late.


But not, apparently, if you place LOTS of money in a Swiss bank account.

There is lots of froth emanating from highly placed privileged people today about what is the most effective way to set about dealing with these high ticket fraudsters.

And we are all very aware of just which way the froth blows when it comes to individuals who fail to meet the very exacting rules set by our Benefits Offices.

Which is why, for a moment this morning, that brief flicker of anger.

Replaced, equally swiftly, by a sadness at the sheer corrupt inevitability of it.We pretend, and keep pretending that there is something high-minded and special about British institutions.

There is not. They are corrupt to the very core, designed to protect the rich and punish the poor. For a moment, in the 1960’s and 1970’s, we might have believed it could be different.

We know better now.

That is all.


About janefae

On my way from here to there
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