HMRC Staff Get Financial Incentives ! Fact !

If you have asked anyone at HMRC if there are financial incentives and bonuses for HMRC staff you will always find it is flatly denied, at least officially as HMRC staff are not allowed to discuss it!

Various national papers have run articles in the past suggesting that HMRC staff have some form of financial incentive but as far as I know this is never formally being confirmed by HMRC in the past.

Freedom of information act request

Following a Freedom of information request for details of the bonuses, financial incentives and requirements for promotion made by a director of a Tax Publications Limited in 2011 we can now firm that it is indeed true that HMRC staff are incentivised by financial incentives, bonuses and that promotion is dependent on achieving targets.

HMRC Financial Appraisal System

HMRC’s reply to the Freedom of Information Act request confirms that there are for performance marks available in HMRC’s staff appraisal system.

These are, Top, Good, Improvement Needed and Formal Poor Performance.

In order to receive a performance award an employee at HMRC must achieve a”top performance” appraisal marking which is defined as follows:

“Across the year the employee has consistently delivered a high level of performance and behaviour which exceeded the required levels of performance set out in their business, HMRC behaviours or behaviours, skills and abilities framework and development objectives.”

HMRC also confirmed that:

“At the start of each performance appraisal year (April) managers meet with job holders to discuss and agree business and development objectives for the coming year and one of the core business objectives across HMRC is to “maximise revenue flows” which includes raising additional revenue from compliance interventions. Job holders performances against these objectives are assessed at midyear and end of year reviews and a performance marking is agreed”.

“Managers at HMRC use moderation and quality assurance to achieve a fair and consistent approach to performance appraisal across the Department. Moderation provides an assurance that managers:

Understand the standards against which they assess job holders

apply those standards consistently and accurately

ensure that HMRC’s equality and diversity principles are clearly embedded and delivered throughout the process.”

HMRC’s information supplied under the Freedom of Information Act also confirms:

“Guided distribution is designed to help managers spread performance appraisal marks for their team members fairly, across the available box marks and gives a guided expectation that:

 

1. up to 15% are awarded “Top”
2. 80% to 85% are awarded “Good”
3. 5%  awarded “Improvement Needed” and “Poor” combined.

Performance awards are paid as a percentage of the in please basic salary. The percentages for all awards for the last three years have been:

 

2008-09 2.6%

2009-10 2.25%

2010-11 2.5%

 

That means a grade 7 (grade 6 are paid even more) member of HMRC, Inspector level, on between £52,669 and £61,590 who can expect an annual incentive bonus of £1,549 a year.

This is on top of and separate to any annual pay rise!

As if the £61,590 was not already too high for the level of competence of many Inspectors show it totally beggars believe.

HMRC truly live in a world of their own.

HMRC apparently received more complaints than the banks in recent years! And just like the banks HMRC are awarding themselves bonuses for behaving badly.

Of course promotion is very unlikely unless you hit “Top” either.

So in conclusion next time you have an aggressive HMRC member of staff chasing tax you for tax you don’t even agree is legally due you know it is personal for them. Their pockets get lined if they can scare you into paying more. Is see this going on regularly.

Complaints about tax enquiry staff

HMRC were asked in the Freedom of Information Act request how many complaints are made about staff dealing with tax enquiries and HMRC confirmed that no separate records are kept of the number of complaints made about Inspectors behaviour during tax enquiries specifically.

However HMRC confirmed that according to their records in the 18 months from 1 April 2010 to 30 of September 2011 HMRC investigated 212 behaviour related complaints across their “compliance activity streams” which is where tax inspectors most commonly operate.

In 2010 HMRC received a total of 73,455 complaints. It is difficult to believe that there were only 212 complaints about HMRC staff behaviour in “compliance stream” work.

I personally have seen around 10 complaints in the past 18 months about the heavy handed tax enquiry approach by HMRC staff and I am just a small drop in the ocean of the world of tax. So that means I have seen not far off 5% of all the behaviour complaints. From less than a handful of accountants!

That is why I think HMRC’s complaints figures are a little less than honest, in the same way HMRC only confirmed the Financial Incentive structure within HMRC as they were forced to by the Freedom of Information Act.  The vast majority of HMRC staff I questions of the existence of financial incentives flatly denied they existed.

Clearly HMRC staff are TOO ASHAMED to admit or they themselves understand the exceedingly bad light this shines on HMRC.

This is public servants at their very worst. Deception about very important facts.

To my mind this is as bad as the scandal about MP’s expenses. It does just feel sometimes as though public servants are primarily interested in lining their own pockets at the expense of members of the public. HMRC are at it too.

Maybe HMRC don’t want to keep the records as the real facts would be too unacceptable to the ordinary public?

Comment

So what is wrong with the financial incentive system at HMRC?

The fact that HMRC have confirmed that it is expected that managers will award a “top” performance award to up to 15% of their staff is a disgrace. Why set out expectation like that? What message is that sending?

It’s ridiculous frankly…

The fact that expected percentages outlined by senior management are that up to 85% of HMRC staff should be in the “good” performance category shows that the whole system is a complete farce.

As the stated key performance target for HMRC staff is to “maximise revenue flows” putting inspectors and staff dealing with tax enquiries in this incentivised situation. No wonder they so often behave so badly.

This is particularly wrong where taxpayers in the UK tax system are presumed  ”guilty until they can prove themselves innocent” and given the extremely complex tax system and very burdensome, red tape system the UK has it is indeed clear why HMRC staff are extremely reluctant to admit that there is a financial incentive scheme in place at all.

HMRC should hold their heads in shame for not being prepared to formally admit it previously. A public disgrace.  If HMRC were not ashamed and know the system is totally wrong they would never have been so keen to keep it quiet!

One HMRC senior management were keen to keep quiet. Thank goodness for the Freedom of Information Act. The FOIA is definitely in the public interest.

Details About HMRC Staff Wages

If you want to work out the % bonuses given to the 15% of HMRC in the “top” performance awards rating who got a 2.5% bonus for 2010 see salary levels at HMRC’s website at http://www.hmrc.gov.uk/jobs/salaries.htm

Freedom of Information Act Requests to HMRC

If you think there is information at HMRC that the general public has an interest in knowing see the HMRC’s FOI page for guidance about making your Freedom of Information Act request.  http://www.hmrc.gov.uk/freedom/foi-index.htm

For HMRC transparency information http://www.hmrc.gov.uk/transparency/

If you make a complaint about an HMRC member of staff’s conduct during a tax enquiry we want to hear about it.  Heavy handed, unreasonable behaviour by HMRC staff is totally unacceptable especially during tax enquiries where they cannot quote the tax law to back up their approach as they so often can’t.

Take Part in Our HMRC Staff Incentive Scheme – Survey

 

The UK Tax Jobs website has now received it’s 2011 new design and update.

The aim of the UK Tax Jobs website is to enable tax job advertisers to post tax job adverts easily online.

As our UK Tax Jobs websites links to a growing number of other tax related websites it is now a great place to advertise your tax vacancies.

The site is aimed at tax jobs in the UK at all levels.

From tax trainees to tax partners positions.

We are adding regional and seniority level pages and sections to the UK Tax Jobs website.

Plus there is a new central jobs search section where tax jobs can be searched by keywords such as town, firm, level and more.

Visit the site at www.UKTaxJobs.co.uk for a look around.

If you interested in advertising tax job vacancies on the UK Tax Jobs website get in touch for more information.

We are currently offering a special offer of the first 30 days of all adds being free.

Posting jobs is quick and easy.

A keyword targeted website.

Part of the growing Tax Publications portfolio of tax websites.

http://www.uktaxjobs.co.uk

 

David Cameron has confirmed in an interview with Andrew Marr in January 2011 that the rise in UK VAT rise from 17.5% to 20% is likely to be “pretty permanent”.

David Cameron suggested that other alternative would be to increase National Insurance, as the Labour Party had previously proposed, but Mr Cameron said that in his opinion this would have a more negative affect on jobs and the economy.

Two minute section of interview is below.

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The UK Government announced on 22 June 2010 in it’s Emergency Budget it will shortly release details of a new scheme to help new businesses in targeted areas of the UK that need it most.

During a three year qualifying period, new businesses which start up in these areas will get a substantial reduction in their employer National Insurance Contributions (NICs).

Within the three year qualifying period these employers will not have to pay:

• the first £5,000 of Class 1 employer NICs due in the first twelve months of employment.
• on each of the first 10 employees hired in the first year of business if
• business operates in selected countries and regions.

The scheme is intended to start no later than September 2010.

Any new business set up from 22 June which meets the criteria set out in the forthcoming announcement will benefit from the scheme.

The countries and regions which will benefit will be:

• Scotland
• Wales
• Northern Ireland
• North East England
• Yorkshire and the Humber
• North West England
• East Midlands
• West Midlands
• and the South West

The main areas that will not benefit from the new scheme will be London and the South East of England

The UK Government announced on 22 June 2010 in the UK’s Emerency Budget that it will be taking action to prevent efforts to avoid tax and National Insurance Contributions (NICs) on earnings provided through the use of trusts and other vehicles.

Targets are: Employers and employees are entering into arrangements using trusts and other vehicles that seek to avoid, defer or reduce liabilities to income tax and NICs on earnings or that seek to avoid restrictions on pensions tax relief.

Arrangements in some cases seek to rely on the use of complex intermediary structures, some of which may be offshore.

The Government is considering options for tackling these arrangements, including those which seek to avoid the restrictions on tax relief for pension schemes.

The UK Government intends to introduce anti-avoidance legislation in due course to take effect from 6 April 2011.

George Osborne accounced in the UK’s Emergency Budget on 22 June 2010 that the annual Investment Allowance (AIA) is to be reduced.

The AIA allows most businesses, regardless of size, to reduce their taxable profits by the full amount of their annual capital expenditure on most plant or machinery (apart from cars) up to a maximum amount, which is currently £100,000 a year.

The maximum amount of the AIA will be reduced to £25,000 a year with effect from April 2012.

The UK Government announced that details of transitional provisions will be published in good time before the reduction takes effect.

For more details see the Budget Presss Release at: http://www.hmrc.gov.uk/budget2010/bn04.pdf

The UK Government announced on 22 June 2010 in George Osbornes UK Emergency Budget that the rates of writing-down allowances (WDAs) for new and unrelieved expenditure on plant and machinery will be reduced:

• from 20 per cent to 18 per cent per annum for expenditure in the main rate pool

and

• from 10 per cent to 8 per cent per annum for expenditure in the special rate pool.

Expenditure on long life assets, thermal insulation, integral features and cars with emissions of 160g/km or more (in the case of cars purchased on or after April 2009) is allocated to the special rate pool.

These rate changes will take effect from 1 April 2012 for corporation tax purposes OR

or 6 April 2012 for income tax purposes.

For businesses whose chargeable period spans 1 April (corporation tax) or 6 April 2011 (income tax) Mr Osbornes announced there will be a hybrid rate for unrelieved expenditure in any pool, including single asset pools.

There will be two hybrid rates,

• one for expenditure previously relieved at 20 per cent and
• the second for expenditure previously relieved at 10 per cent

George Osbourne announced that he intends to make the UK one of the most competitive places from which to operate business by reducing the the Corporation Tax rates in the UK.  He commented “The UK is open for business“.

Corporation Tax – Rates To Reduce from 1 April 2011

 

• UK legislation will be introduced to reduce the main rate of corporation tax (CT) to 27 per cent for the Financial Year (FY) commencing 1 April 2011;

 

• the small profits rate of corporation tax for FY 2011 will be 20 per cent  and

 

• there will be further cuts in the main rate in future years to:
• 26 per cent in 2012-13
• 25 per cent in 2013–14
• 24 per cent in 2014-15

The furnished holiday lettings rules (FHL) will not be withdrawn from 6 April 2010 (1 April 2010 for companies).

Since 22 April 2009 (Budget 2009)  HM Revenue & Customs (HMRC) has applied the current FHL rules to UK taxpayers with qualifying holiday lettings situated elsewhere in the European Economic Area (EEA).

Such businesses can currently choose whether to be taxed under the FHL rules or under the normal rules for property businesses. These arrangements will continue to apply for the tax year 2010-11.

The Government will publish a public consultation over the summer about plans to change the tax treatment of furnished holiday lettings from April 2011. The consultation will specifically look at a proposal which would:

• ensure the FHL rules apply equally to properties in the EEA;
• increase the number of days that qualifying properties have to be available for, and actually let as, commercial holiday letting; and
• change the way in which FHL loss relief is given.

Full details about the proposed changes will be published by the UK Government during  the summer of 2010.

The UK Government will publish draft legislation in the autumn with a view to including new rules within Finance Bill 2011.