back to article HMRC IT cockup misses nearly 1m Scottish taxpayers for devo PAYE letters

Plans to raise income tax paid by Scottish earners have got off to a rocky start, after a database scan failed to identify 420,000 people who should be paying tax. The UK's National Audit Office found that a selection error meant that HMRC overlooked nearly one million residents in Scotland whose addresses were not already …

  1. jabuzz

    Anyone living in Scotland knows that they live in Scotland. So apart from a small number of people with second homes one in Scotland and one else where in the UK you don't need a letter from HMRC to tell you anything if you are paying attention.

    1. katrinab Silver badge

      Do people who live in Scotland and work in England or Berwick on Tweed know what the rules are?

      If you live in Northern Ireland and work in Ireland or vice versa, your employer deducts tax and NI/PRSI based on where your workplace is, you have to declare it as foreign income based on where you live, and you claim double taxation relief. This is not what will happen in Scotland or England for cross border commuters. HMRC will tell your employer to deduct either Scottish or English tax based on where you live. They will give your employer a tax code such as S1060L if you live in Scotland or 1060L otherwise., So need to have the correct information, or they won't issue the correct code.

      1. Anonymous Coward
        Anonymous Coward

        They will give your employer a tax code such as S1060L if you live in Scotland or 1060L otherwise

        I'd like to offer my garage in Worcestershire as a postal address for Scottish tax dodgers, in return for 20% of the tax they dodge.

        That approach is good enough for countries like Ireland, Luxembourg, or Monaco, so it's good enough for me. And highly respected companies like Apple and Google avail themselves of these services, so they must be legal.

        1. Ken Hagan Gold badge

          "And highly respected companies like Apple and Google avail themselves of these services, so they must be legal."

          I refer you to Margaret Hodge's recent book on the subject. Apparently the requirement is not so much that the scheme be legal but that in the opinion of a QC it is arguable in court. Once that, somewhat lower, hurdle has been crossed, it is safe for a tax adviser to punt the scheme. Their clients then have to decide if it is worth the risk, but since HMRC have such a woeful record of prosecutions, most people decide that it probably is.

          1. Anonymous Coward
            Anonymous Coward

            Apparently the requirement is not so much that the scheme be legal but that in the opinion of a QC it is arguable in court.

            Oh, I won't be bothering with that! My holding company will be straight from darkest Worcestershire to a nameplate in the British Virgin Islands, and my Worcestershire Sandwich (tm) business model means that the English holding company will rent out the intellectual property of its own business model from the parent company (possibly via a Dutch charitable trust). Onshore profits will be zero, and I might even incorporate as a CIC. The "community interest" declared to Companies House would be helping Scotsmen keep their hard-earned groats, thus ensuring that bairns got their daily porridge ration. There's a couple of hundred of pages of turgid shite that the Civil Service dreamt up to try and ring fence CICs, but as nobody else reads or obeys the law, I too will ignore that pile of ordure.

            It will be up to my Scotch brethren to decide whether the scheme is sufficiently legal to meet their needs. No refunds the nooo!

            1. katrinab Silver badge

              HMRC have issued accelerated payment notices in respect of a similar scheme to the one you describe, except that the money was routed via Cyprus.

            2. Roland6 Silver badge

              There's a couple of hundred of pages of turgid shite that the Civil Service dreamt up to try and ring fence CICs

              Much of the CIC ring-fencing only comes into effect when either your business goes bust or is sold (assets can only be sold to another social enterprise), otherwise as long as you can demonstrate 'public good' you can pretty much do whatever you want...

              There was a case of a pre-school in Kensington that passed the test simply by providing places at a 10% reduction compared to private sector operators in the area, which was still significantly higher than those on low incomes and/or benefits could afford.

        2. katrinab Silver badge

          If you earn more than £45,000, the additional tax payable is £322.60, so not really worth the effort to try and avoid it.

          1. Anonymous Coward
            Anonymous Coward

            If you earn more than £45,000, the additional tax payable is £322.60, so not really worth the effort to try and avoid it.

            Why not? Would you walk away from £258 every year (that's net of my 20%)? And you ignore the fact that the Scottish government are just testing the water. The SNP make Corbyn look like a pragmatic liberal moderate, and as soon as they've checked that they can ignore the complaints, the War on Rich People will kick off in style.

            Starting with the current arrangements, if we say that the £322 applies on average across all higher rate tax payers, there's 370k of them in Scotland, and assuming I can capture a 5% market share, then I'll be making £1.1m gross from my garage. I estimate costs of service at only around £12 per "resident" per year, so that's a profit of somewhere around £880k.

  2. JimmyPage Silver badge
    Facepalm

    Hints of what Brexit will bring ...

    If we can't align two systems in the same country, how on earth can we hope to do it across a continent ?

    What's the betting it'll cost .... £350 million ?

    1. Bogle
      Joke

      Re: Hints of what Brexit will bring ...

      Do we not need a new El Reg official measurement for £350 million?

      One ImaginaryBonus = £350m? UnlikelyBusBasedSavings? BorisBull?

      1. Anonymous Coward
        Anonymous Coward

        Re: Hints of what Brexit will bring ...

        "Do we not need a new El Reg official measurement for £350 million?"

        A farrago .... ?

    2. SkippyBing Silver badge

      Re: Hints of what Brexit will bring ...

      As far as I know this won't be an issue as tax rates across the EU are set by the individual governments with only minimum rates being mandated by the EU for certain ones, such as VAT. The problem you're imagining would be analogous to all taxes being administered by Brussels but the rates being set by the individual nations. Which still wouldn't be a Brexit problem as we'd be leaving the system

      I'm not saying it won't be difficult, but you do seem to have created a mountain out of a non-existent mole hill.

      1. Anonymous Coward
        Anonymous Coward

        Re: Hints of what Brexit will bring ...

        this won't be an issue as tax rates across the EU are set by the individual governments with only minimum rates being mandated by the EU for certain ones, such as VAT.

        Exactly. Even the most committed eurocrat knows (s)he hasn't a snowball's chance in hell of getting all 28 countries to agree on standard tax rates. Another reason why the whole EU project is a failing fiasco.

  3. knarf

    Good for Scotland

    I don't mind paying a bit extra tax if it benefits others.

    1. This post has been deleted by its author

      1. smudge Silver badge
        Windows

        Re: Good for Scotland

        Yep, that's what everybody says in public. In the privacy of the polling place/station, history tells us they often say different.

        The SNP's record in elections suggests that in Scotland people do indeed put their money where their mouth is.

        Icon: typical Scottish voter. Disclaimer: I am Scottish.

        1. This post has been deleted by its author

      2. Anonymous Coward
        Anonymous Coward

        Re: Good for Scotland

        The rich don't get richer by spending money or returning their "entitlements".

        They become rich and remain rich by being tight.

        Some of the wealthiest people ive ever met (multimillionaires) are usually the last to buy a round or don't buy one at all.

        I save money in the winter by simply flying to Cape Town for a couple of months.

        It costs relatively little to live there, its much much warmer and the quality of life is far better than the UK.

        I work entirely remotely, so it doesnt matter where I am.

        The money I make doing a short term rental on my property covers the flights for my wife, lad and I.

        Renting an apartment in CPT is peanuts, bills are peanuts and dining out is stupendously cheap for a fantastic standard of grub.

        I would encourage anyone with any sanity to abandon ship in the winter.

        Unless you're salaried...in which case...sucks to be you.

        1. This post has been deleted by its author

        2. Doc Ock

          Re: Good for Scotland

          >I save money in the winter by simply flying to Cape Town for a couple of months.

          You forgot to mention to the readers here about the power cuts (load shedding), the massive poverty stricken township right next to the airport, extremely high crime rate, speed trap shakedowns, terrible traffic jams, car parking "minders", very expensive and patchy broadband plus general infrastructure decay.

          Ask yourself why South Africans (who can) are leaving in droves:

          https://businesstech.co.za/news/business/126297/its-not-only-rich-south-africans-who-are-leaving-the-country-young-educated-ones-are-too/

          A country that showed so much promise post Apartheid is heading for a car crash.

          https://businesstech.co.za/news/general/110133/cape-town-is-now-among-the-10-most-violent-cities-in-the-world/

          Oh and if you are connecting at or using Joberg Tambo airport have eyes in the back of your head

        3. Joe 35

          Re: Good for Scotland

          "It costs relatively little to live there, its much much warmer and the quality of life is far better than the UK."

          Quality of life for YOU is, I'm sure. Not for the majority actually living there though.

        4. This post has been deleted by its author

  4. createahandletheysay

    Lloyds TSB failed to do this when they split, so why should the Scottish government be any different?

    Slightly disgruntled still that my local branch is in Carlisle.

    1. Cereberus
      Unhappy

      Slightly disgruntled still that my local branch is in Carlisle.

      Same here for the opposite reason - account originally with Lloyds, then Lloyds TSB, then when they split moved to TSB. Live in Carlisle, nearest branch in Wigton

      1. Anonymous Coward
        Anonymous Coward

        Live in Carlisle, nearest branch in Wigton

        So use the fast switching service to change to one of the range of banks with a branch in Carlisle. Surely if you are being treated as a commodity by your bank you're not going to put up with that?

        A search indicates that there's plenty of other choices in Carlisle.

        1. Doctor Syntax Silver badge

          "So use the fast switching service"

          The fast switching service has a hell of a job keeping up with the speed at which banks shut down branches, especially outside the M25.

          In fact, I anticipate the branch closure programmes getting into difficulties - they're running out of branches to close.

        2. This post has been deleted by its author

  5. Anonymous Coward
    Anonymous Coward

    You say England and Wales

    Wales have a separate system which hasn't had any issues FYI

    1. Steve Davies 3 Silver badge

      Re: You say England and Wales

      Wales have a separate system which hasn't had any issues FYI

      Wales have a separate system which hasn't had any issues that either we know about and/or that the Welsh Government knows about.

      There fixed it for you...

      1. Proud Father
        IT Angle

        Re: You say England and Wales

        Proof that sheep know more about IT than the government.

    2. Doctor Syntax Silver badge

      Re: You say England and Wales

      "Wales have a separate system which hasn't had any issues"

      Yet. Just wait http://www.bbc.co.uk/news/uk-wales-politics-38345168

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