by Bill Jamieson
article from Wednesday 21, January, 2015

NOTE THE NUMBER in this headline. It’s a personal reference number. Many have been given one. It’s to hold and keep for ever. You’ll need to write it down and put it somewhere safe because you will be required to quote it in all future correspondence – every one of its 32 digits. In perfect sequence. 

It’s the new reference number from HM Revenue & Customs. It runs near the top of the tax assessment form – the one that tells you the amount you’ll have to pay by January 31. 

 I’ve made this one up as an example. But it’s accurate to the extent that it reflects the surreal 32-digit length sent in letters to my wife and myself – different digits of course. 

There’s no name contained in this sequence, or even half a surname, or a birth date or geographic region that might give a clue  to help ensure the Revenue are dealing with the right person and the right assessment in the right country. 

Thirty two digits! That’s enough for the Revenue to give a tax assessment number for everyone on the planet and with billions still left over for the inhabitants of Tharg. Late payers on Outer Centurii shouldn’t consider themselves immune.

If it was a number for the National Lottery you wouldn’t much fancy your chances.

The digits are far from illustrative or random. They’ve been spewed out by the new system at HM Revenue & Customs. The same HMRC system that has fabulously overrun on costs and which, only in the past week, admitted a tax code blunder with millions having to give money back to the government after inadvertently paying the wrong tax. Mistakes by HMRC left around 5.5 million underpaying or overpaying their tax through the Pay As You Earn System (PAYE). Around two million people are thought to have paid too little and will now have to pay the money back over the coming years. 

Tax officials estimate the average error is around £350. The 5.5 million errors for 2013-14 are higher than the 5.2 million in the previous year, despite the introduction of a £270 million scheme designed to make the tax system more accurate.

So, despite the investment and despite the new 32 digit reference numbers, there’s no guarantee that your tax coding will be accurate. Best just to hope for the best and pay the tax that HMRC says is due. If you can. 

For my other problem with HMRC this month is that they have sent out details of how to pay your tax through a bank or post office simply by filling in the payslip. Only this year my assessment has arrived – without the payslip. And I am not alone. 

You can always pay online, of course – providing you have all the relevant reference numbers and protocols to hand – and that your internet connection is not liable to intermittent breakdown. There’s nothing worse than being half way through an online transaction and feeding in complicated numbers and codes only for the connection to break half way through. Did the transaction go through? Do you have to start all over again? Will you be debited twice?

Now these are everyday hassles, minor in the greater scheme of things. HMRC is more responsive than it was to taxpayer problems and complaints. Such problems can be quickly disentangled. But setting out to comply with HMRC can be one thing. Receiving an accurate assessment is another. And final settlement something else again.

Now imagine what it will be like with a separate Scottish HMRC, the title of course suitably de-royalised for nationalist sensibilities. 

For many it is unlikely to pose a problem. You simply send your tax assessment to the tartan Revenue and Customs and settle outstanding tax on the date due. As most are on PAYE there should be little to fear. 

But for a company or partnership it is set to prove a different matter. What happens when you have staff working across the border? And offices across the UK? You may be registered in Glasgow but most of your invoicing and revenue is done south of the Border. So what tax rates apply – English or Scottish? And to whom is the tax due?

The problem with a separate Scottish tax system is not just that a different tax setting, assessment and payments system lies just over the border. It is that for many businesses the simple process of buying and selling, production and delivery, invoicing and dispatch have always been closely intertwined. There’s never been a need before to have a separate accounting system for Scotland and for England and Wales. And while residence issues for individuals may be easily reconciled on the basis of place of domicile for most of the tax year, for companies it is altogether different and more complicated. 

For a tax system to function well and to minimise evasion, compliance should be as straightforward as possible. And it should not be necessary to deal with two separate tax authorities. 

We should be hearing a lot about this as detailed debate on “more powers” develops in the coming months. It is vital that the voice of small and medium sized businesses is heard – not just those itching to drive up taxes on “those with the broadest shoulders”. We do not have legions of super-rich in Scotland – just 13,000 were liable for the top rate of tax in 2010-11.

SME concerns must be heard and respected. As it is many now fear extra levels of administration, book-keeping, time and cost – and of course the Orwellian nightmare of them all - not one but two of those wretched 32 digit tax reference numbers. Perhaps we can retaliate with references of our own. 

Here’s mine for HMRC, to quoted in all correspondence from now on:    “LKMBVQ3C8P493ZLPQS4PMB98720KZML2” 

Don’t forget the extra digit. 


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