Help, but not as we know it

The writer has always been wary about tax helplines operated by HMRC since an experience many years ago when it took a year for the HMCE (as it then was) to agree that the advice given on the helpline was wrong and that compensation should be paid.

In the light of the most recent ruling in the Corktech case, we may have been lucky to receive the compensation.

The circumstances are simple - a company telephoned the VAT helpline to check what it should do about something. The advice it relied on was wrong and it ended up owing £300,000 in VAT. There was a difference of opinion over the advice given - the notes made by the helpline at the time and the taxpayers notes were different. But that did not make any difference! The tribunal ruled:

"The [helpline] was only held out as a source of "general advice", rather than as a source of binding rulings on the proper tax treatment of specific transactions," such that the unfortunate taxpayer "could not reasonably have thought that [HMRC] had given [him] a fully considered and binding ruling in [his] favour."

What this means is that, even if the helpline get it wrong, it is you, the taxpayer, who will end up paying for the mistake.

What should you do about this? Firstly, don't telephone the helpline, because you can only rely on them when you know their answer is right, and if you know the answer, you don't need to ask!

Any other reasons for paying for advice instead of getting it free (Apart from the old saying that you get what you pay for)? The helplines will only answer the question you put - an adviser can ask you whether you have thought of doing it some other way.

Why will the helpline get it wrong? The helplines are based on HMRC publications and databases which are often interpretations of the law, rather than the law itself. And whatever anyone else may say, tax is complicated - if you get an inexperienced adviser on the telephone, they may not even realise there is a problem.

I could go on, but that is probably enough..