Why governments' attempts to pick winners produce more losers than winners.
Be wary of strong drink. It can make you shoot at tax collectors... and miss. (Robert Heinlein)
When there's a single thief, it's robbery. When there are a thousand thieves, it's taxation. (Vanya Cohen)
HMRC, King Gord's tax collectors, have reached the same level of unprincipled acquisitiveness as under King John. Motivated by his targets-and-incentives regime, which rewards them in proportion to the degree of misery they can inflict on taxpayers, they treat the public contemptuously as little more than cash cows with probable criminal tendencies. So far, there is no sign that King Dave and Prince Nick have improved matters (voting reform being so much more urgent).
A month and a half ago, I was rung up by a highly aggressive woman from HMRC to tell me that I owed £175,000, and that I had better pay up by Thursday or they would begin enforcement. This came as something of a surprise, as it is considerably more, not only than the calculation in my tax return, but than my total earnings.
The accountant who helps me with my tax is an old family friend and old-school. He can do calculations on paper quicker and more accurately than most people can do them with a calculator, and he knows even Gordon's byzantine tax rules like the back of his hand. I have never known him make a mistake, so I was relatively more confident and relaxed than most people would have been, faced with this level of aggression. I told the bully that she had clearly got it wrong. She continued to insist that there was no possibility they could have got it wrong. Had I got that amount in my account? If not, they might have to claim against my assets. She tried as hard as possible to pressurise me to promise to put a cheque in the post by that Thursday, but (knowing that Richard was bound to be right) all I conceded was that I would speak to him and try to get back to them by Thursday if I could get hold of him by then.
Fortunately, Richard was at the office the next day, and had my file to hand. We compared the figures in my tax return with the figures in their assessment, and realised that they had added a zero to the end of my employment benefits figure, so £25,005 became £250,050! Not surprisingly, my tax bill on that amount plus my salary was quite high (though still not as high as the amount they were claiming). Using the correct figure from my tax return, they actually owed me money. Richard spoke to the relevant HMRC office by phone, and wrote a letter to confirm the conversation and error, suggesting that they owed me an apology.
I thought that was the end of it. But today, I got a call from an HMRC officer who was standing at the door of my house, hoping to collect the £175,000. Fortunately, I was at work (what else did they expect on a weekday of someone who in their world got employment benefits of quarter of a million a year?) and my wife was out too. So he rang me, to tell me that the money was due and they were taking enforcement action against me. When I told him the story of HMRC's cockup, he flat denied that it was possible for them to make a mistake. I pointed out that £175,000 of tax was almost double my annual salary, and didn't it sound a suspiciously large and improbable amount of tax? He insisted that most people nowadays do their tax return online, and that any error therefore had to be mine. It did not seem to affect his assessment when I pointed out that Richard had completed the tax return on paper, and that it was therefore not only possible that they had made an error in the transposition, but that this was what had actually happened. He insisted that, even if there were some mistake, it was my responsibility somehow to know that they had failed to correct it following notification, and to ensure that they made the necessary correction (wasn't that exactly what we had done so far as was possible against their total inertia?). He denied that any effort had been made to inform them of any problem. The conversation deteriorated to the point where he was threatening to drag me through the courts, all the way to the High Court if necessary, and I was telling him to bring it on, as something had to expose the abuse of power without responsibility, which HMRC nowadays represents.
My wife arrived home while we were mid-argument, but fortunately he was either sufficiently distracted, or something was starting to ring alarm bells in the back of his mind, because he ignored her, and drove away once we had finished our conversation.
I managed to get hold of Richard quite quickly, and he was able to direct me to the file where he kept the documents, including his letter, the tax return (with the correct figure) and their assessment (with their mistaken figure). No sooner had I found them, than the enforcer rang me again, to tell me that he had spoken to the relevant office, and they had no record of any contact since 3 April (when we had apologised for a late submission). Now confident that we had dotted the i's in terms of notifying them in writing as well as by phone, I was able to ask him if the letter dated 3 May at which I was looking was just a figment of my imagination? He said he'd need to see a copy of that letter and the associated document (by now, his tone was becoming distinctly more reasonable and cautious). He's going to ring me tomorrow with a fax number to send it to, and that should be the end of it, particularly as Richard also spoke to his contact at the relevant HMRC office to get them to put a note on the file with regard to their mistake.
I am extremely lucky that the amount was so absurd, and my confidence in my accountant so strong, that I was happy to (politely but effectively) tell them to get stuffed both times. Even so, they weren't pleasant experiences. I would imagine that many people, less confident of their own calculations and faced with a claim for a smaller amount pressed as aggressively as HMRC pressed their bogus claim against me, would be (at least) very disturbed by a heavy-handed attempt to extort an unexpected tax bill, and some might well pay up in error.
These people are our employees. Up to a point, we submit voluntarily to taxation as our social contribution to provide things that we democratically accept have to be provided by the state. At the point that their demands effectively become extortion, people will not accept the legitimacy of the state's tax demands. I have reached that point. Quite likely, so have many people who have had to deal with HMRC in the last few years regarding business taxation (for example) . Despite their incompetence and the complexity of the rules they apply, they have unshakable confidence in their own rectitude. They are not reasonable. They are not aiming to arrive at a fair assessment. They are aiming to screw as much out of you as they can intimidate you into paying.
In my opinion, it is no longer your duty to pay whatever the taxman judges is your "fair" contribution. For as long as these bastards are like this, the need to civilize them outweighs the need to contribute to essential public services. Tax avoidance (not evasion) is now not a selfish act, but a patriotic duty, to "starve the beast" until the demands of the state become more measured.
"What characterizes our time is the expansion of the sphere of government interference with business and with many other items of the citizenry's affairs. And this results in a substitution of bureaucratic management for profit management", Bureaucracy (1945)