UK Finance News

Revenue and Customs are losing £2.8bn a year in tax, through people not filling in their tax returns correctly and it is not economic to get the money back.

The admission comes in a report by the Commons public accounts committee into the failure of Revenue & Customs to meet best business practise.

The report is scathing in its accusations that the Revenue & Customs does not have a user friendly website, fails to meet standards in answering calls, give incorrect information and have amassed 200,000 complaints in two years.

The report suggests that the self assessment of tax is not working and is need of overhaul.

David Gauke the shadow treasury minister blames Gordon Brown, saying “The man who led HMRC for ten years, has to take responsibility for the mess he left behind.

Bank of England Governor Mervyn King has warned that “the nice decade is behind us” as inflation could hit 4% this year as the economic growth slows severely.

The gloomy governer  spoke this morning of house prices falling and house prices to earnings ratio’s etc, but spoke as a man with little confidence, giving the impression that you and I, probably know as much as he does.

While the bank reported several weeks ago through it’s Financial Stability report that the worst of the credit crunch may be over, King  suggests that the ‘Pain was only starting for households.’

The depression is likely to continue for everyone, with soaring fuel charges blamed for inflation growing at its fastest pace in six years last month, and today’s forecast likely to halt any chances of a further cut in interest rates this month.

Since allowing carry over of deceased spouses’ IHT allowances from last October, the HMRC has also had to review how this is assessed.

The IHT allowance - currently £312,000 - can effectively be passed over to a spouse
where it is unused or partly unused.

Qualification for the extra entitlement, up to £624,000 maximum, is reliant on survivors proving that they inherited all or the bulk of their partner’s estate.

This could prove problematic where the partner died many years before. However, most documents required are a matter of public record - death certificate, marriage certificate,
will, the grant of representation or confirmation in Scotland and any deed of variation.

On this basis the HMRC is taking a ‘lighter touch’ in monitoring this area and to date reports no major issues with applicants.

Pensions specialist, Scottish Life, has issued a stark, if very logical warning over the mechanics of auto-enrolment to the pensions Personal Account scheme from 2012.

A quick survey of 277 IFAs estimates that up to 10,000,000 employees will not get anything other than generic advice before enrolling, with millions more potentially adrift looking for advice.

The survey revealed that on average IFAs thought they would be able to deal with 125 members.

With 20,000 IFAs in the UK set against a workforce of 29 million - with 10 million employees set to auto-enrol with generic advice - IFAs can only hope to serve 2.5 million. 

Unless of course, the regulator sees fit to encourage training and careers in financial advice?

Figures from the Office for National Statistics show growth in the Finance and Business Sector -.’The City’ - to be just 0.4 per cent for the first quarter of 2008.

The City is responsible for over 30% of UK output and has brought the whole economy to its own level  - a far cry from Alistair Darling’s budget predictions of 2 per cent growth, followed by 2.5 per cent next year.

Confusion amongst analysts is driven by conflicting messages from the retail sector; consumers are fleeing the high street, yet in fact the spending downturn has not been as severe as predicted.

The IMF predicts UK growth at around 1.6 per cent, whilst comments from David Blanchflower of the Bank of England’s Monetary Policy Committee - they who set the interest rates - were that house prices could fall by 30% before stabilising.

Other pundits state there is currently a 1 in 3 chance of a UK recession during the next two quarters.