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How the UK tax authority has stuffed small business tax policy

Monday, August 19, 2019

Finally, a reaction is happening from ‘the peoples’ parliament

I was in London in early August networking with key campaigners on UK small business tax issues. This included our long-time friends at contractorcalculator and (separately) the Association for Independent Professionals and the Self Employed (IPSE). The reason for meeting up with our friends was to achieve a deeper understanding of the behaviour of taxing authorities internationally.

Certainly there are BIG problems in the UK with how the UK tax authority, HMRC, have (frankly) botched small business tax. What we see from HMRC is similar to the behaviour shown by the Australian Taxation Office. They bully and intimidate to impose their will, frequently trashing any concept of the rule of law. They are overpowering dictatorships making a mockery of democracy.

The UK problem is now a 20-year saga of HMRC’s imposing double taxation on self-employed people. We explained the situation in brief in July and also provided a more detailed history. It’s HMRC that created the problem and made it worse over time.

I’ve posted an 8-minute YouTube post—calmly, I hope—explaining this absurd HMRC-created mess. It’s here. See also this simple IPSE explanation.

The UK’s HMRC problem really has reached a crisis. HMRC have, they say, 150,000 self-employed people in their sights that they are going to ‘get’. They’ve done this by seducing the previous Theresa May government into imposing retrospective tax law to bankrupt self-employed people—the same people being subject to double taxation by HMRC. Madness, hey!

HMRC’s madness has already led to eight confirmed suicides. Here’s the story of one such tragedy from BBC Online and BBC Radio. And the problem is set to become even worse because HMRC are about to roll out their flawed ‘solutions’ more widely across the private sector. I predict that this will have a significantly adverse impact on UK economic activity in and around Brexit.

But there are some possible solutions. Already, some 200 UK parliamentarians are calling for the suspension of HMRC’s action and a major review. The process of UK democracy is slowly starting to work!

I’ve posted a further 8-minute YouTube video suggesting how the problem might be fixed. It’s really a matter of coming back to basic tax policy principles and common sense. Here are my ‘solutions’.

But don’t expect HMRC to listen. The creators of problems rarely, if ever, know how to fix them. It will require a firm focus and courage by the UK parliament and government.

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