Counter-Avoidance
Freedom of Information Team
S1715
6 Floor
Mr Areen Sea
Central Mail Unit
Newcastle Upon Tyne
By email: request-489325-
NE98 1ZZ
xxxxxxxx@xxxxxxxxxxxxxx.xxx
Email
xxx.xxxxxxx@xxxx.xxx.xxx.xx
Web
www.gov.uk
Date: 26 July 2018
Our ref:
IR2018/01332
Dear Mr Sea
Freedom of Information Act 2000 (FOIA)
I am writing with reference to your email of 26 June 2018 regarding our response of 26 June
2018 to your requests for information under references FOI2018/01125, FOI2018/01126,
FOI2018/01127 and FOI2018/01154.
In your email, you state that you disagree with our conclusion that your requests are similar
and that they have been grouped together and the s12(4) of the FOIA applied. As requested
I have been asked to consider your response as an internal review under FOIA.
Original Requests
FOI FOI2018/01125
“It is my understanding that Contractor Loan schemes were first began being used in 1999
and that at least some were registered with HMRC. With that in mind I would appreciate
answers to the following questions:
-What date (month and year is fine) was the first Contractor Loan Scheme declared to
HMRC?
-What date (month and year is fine) did HMRC send out their first personal communication,
via letter or email, to a scheme user advising them that they considered their scheme Tax
avoidance?”
FOI FOI2018/01126
By HMRCs own accounts it is likely that over 40,000 people will be affected by the 2019
Loan Charge. With that in mind, I would like to know the following:
-Excluding having a page with information on the HMRC website, how many customers have
HMRC individually contacted, through either letter or email, to advise them of the May 31
2018 deadline to register for settlement?”
Information is available in large print, audio and Braille formats.
Text Relay service prefix number – 18001
FOI FOI2018/01127
“It is my understanding that HMRC employs the use of a Behavioural Insights team, or
Nudge Unit, to influence its customers
Can you please provide a list of the following:
-What specific recommendations the Nudge Unit has given HMRC in regards to sending out
Advanced Payment Notices?
-Which of those recommendations HMRC has employed?
-How many customers have been targeted by the Nudge Unit recommendations that HMRC
has chosen to use in relation to APNs?
-What specific recommendations the Nudge Unit has given in regards to how HMRC should
approach the 2019 Loan Charge with its affected customers?”
FOI FOI2018/01154
“Using HMRCs own figures, the likely financial effect from the 2019 Loan Charge wil be
£2.53bn and will effect approximately 40,000 individuals. Based on those estimates, the
average debt HMRC will be seeking to recover from individuals is £63,250. Given the
average UK income is £27,884 gross, this will likely cause significant financial hardship for
many individuals.
Mel Stride has stated publically "HMRC are able to help taxpayers who are not able to pay
their taxes and will work with those who are in genuine difficulty".
With that in mind, my questions are as follows:
-What are the "time-to-pay" time frame guidelines the HMRC debt recovery unit uses?
-What is the maximum "time-to-pay" time frame the HMRC debt recovery unit has allowed in
the past 24 months?
-Are HMRC planning or prepared to take any special and/or specific considerations into
account when working with individuals who wil have difficulty in paying?”
You requested an internal review because you disagree with HMRC’s decision to aggregate
all four of your requests.
I have reassessed your case and after careful consideration I have concluded that the initial
response that was sent to you was compliant with the requirements of the FOIA. An
explanation of my decision follows.
Internal Review
The purpose of an Internal Review is to assess how your FOI request was handled in the
first instance and to determine whether the original decision given to you was correct. This is
an independent review: I was not involved in the original decision.
The Act gives applicants two rights in respect of information held by a public authority:
(1) a right to be told if the information is held (known as the duty to confirm or deny);
and
(2) a right to have that information communicated subject to any exemption or
exemptions that might apply.
Each of these rights is subject to exemptions under the FOIA.
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The statutory deadline for your requests were from 28 June 2018 to 3 July 2018. HMRC’s
response was sent on 26 June 2018. It was therefore compliant in this respect of the
requirements of the FOIA.
In the letter, the FOI team provided some information outside the FOIA in respect of the
number of registrations received from taxpayers wanting to settle their tax affairs.
They explained that in your case, they applied exemption under section 12(4) of the FOIA,
as the four requests are all in respect of DR schemes and made by the same person and
would require an extensive search of numerous case records. Section 12(4) states that
HMRC may aggregate two or more requests made by the same person, when the same or
similar information is requested and where those requests are received within a period of
sixty consecutive days. The response clearly states why they have taken this approach, as
all requests relate to disguised remuneration schemes.
Aggregation
I have reviewed your requests and I am satisfied that the aggregation of your requests was
applied correctly under the FOIA, and that the response explained that The FOIA and Data
Protection (Appropriate Limit and Fees) Regulations 2004 allows for two or more requests to
be aggregated if they relate to the same or similar information, provided that the conditions
under section 12(4) of the FOIA have been met, namely where two or more requests have
been made by the same person and received by the department within a space of 60
consecutive working days. Section 12(4) of FOIA allows that the cost of complying with any
part of the requests is to be taken to be the estimated costs of complying with all of them.
Regulation 5(2) of the Fees Regulations requires that the requests which are aggregated
relate “to any extent” to the same or similar information.
I find that there is an overarching theme to your four requests. All four requests relate to the
disguised remuneration loan charge and were all made within 60 consecutive working days,
fulfilling the criteria at regulations 5(1) (a) and 5(2) (b). I therefore find that HMRC was
entitled to rely on section 12(4) of the Act to aggregate your four requests.
Section 12(1) – cost of compliance exceeds the appropriate limit
I am satisfied that the section 12 cost limit exemption was applied to your request correctly.
The estimated cost of complying with your requests aggregated under the Fees Regulations
was based on the department’s view of the resources that would have to be committed to
answering all four requests. On this occasion this meant that it was calculated that the
appropriate cost limit of £600 would be exceeded and therefore under the terms of section
12(4) of the FOIA the department was not obliged to comply with your request.
I have set out below the information/ questions that will exceed the cost limit to provide.
(1) FOI FOI2018/01125 – providing information for this request will exceed the cost limit.
(2) FOI FOI2018/01126 – HMRC contacts customers via various methods. To confirm
how many have been contacted via email and letter will involve detailed examination
of our records.
Information about specific taxpayers is held in individual case files, both manual and
electronic which are held by operational teams across the UK. As at 2010-11, to the extent
that HMRC still holds records, it had over 5,000 open enquiries into Contractor Loan scheme
users. To review these cases in order to find the information requested, HMRC would need
to locate all the taxpayer folders, which were spread across a number of locations, manually
review each, extract relevant information and collate it. Even if it took an officer no more than
20 minutes to review each of 5,000 case files and extract any relevant information, whether
it manual or electronic, the cost of the review would significantly exceed the cost limit as
specified in the FOIA.
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Where section 12 applies to one part of a request we refuse all of the request under the cost
limit as advised by the Information Commissioner’s Office.
Refinement Advice
Although HMRC cannot provide information requested due to cost considerations, the
original response suggested a way to refine the request so that it could be answered.
Please note that the Department will continue to aggregate requests in accordance with the
conditions laid out in the Fees Regulations. However, HMRC may be able to answer a
refined request within the cost limit if you request the following information provided no other
exemptions are applicable.
(1) FOI FOI2018/01126 – information about the recent activity to alert customers about
the Loan Charge.
(2) FOI FOI2018/01154 – information about the total number of Time to Pay
arrangements is publicly available in HMRC Annual Report and Accounts 2017-18.
Link to the information is provided below.
(3) FOI FOI2018/01127
Additional Information outside of the FOIA
It may be helpful to know that
at the end of 30 June 2018, HMRC had recorded 22,386
registrations in settling under the disguised remuneration settlement terms published on 7
November 2017. However, this figure is subject to change as users may still come forward
to register an interest in settling with HMRC, but the likelihood of reaching an agreed
settlement will become increasingly difficult the nearer users leave it to 5 April 2019 to
approach HMRC.
Further information regarding DR avoidance schemes and the loan charge can be found in
an Issue Brief published last week. This can be found on GOV.UK at:
www.gov.uk/government/publications/hmrc-issue-briefing-disguised-remuneration-charge-
on-loans/hmrc-issue-briefing-disguised-remuneration-charge-on-loans
You may be aware that since your request HMRC has published details of simplified
payment terms on GOV.UK which are designed to help those who want to settle but need to
pay by instalments;
https://www.gov.uk/guidance/disguised-remuneration-settling-your-tax-
affairs
HMRC has recently published the latest information about the total number of Time to Pay
arrangements in place in our Annual Report and Accounts 2017-18 (pg 26). This is available
on GOV.UK at:
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_da
ta/file/726849/HMRC_Annual_Report_and_Accounts_2017-18__web_.pdf
Accelerated Payment Notices are part of HMRC’s approach to tax avoidance and it
publishes information about them in its Annual Report and Accounts. Further information
about the Government’s approach to tackling tax avoidance, evasion and non-compliance
was published in November 2017 and is available on GOV.UK at:
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_da
ta/file/661531/tackling_tax_avoidance_evasion_and_non-compliance.pdf
Outcome
In conclusion I am satisfied that the response you received on 26 June 2018 was correct
and compliant with FOIA.
If you are not content with the outcome of an internal review, you can complain to the
Information Commissioner’s Office (ICO). The ICO wil not usually consider a case unless
you have exhausted the internal review procedure provided by HMRC.
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If you are not content with the outcome of an internal review, you can complain to the
Information Commissioner’s Office. The following link explains how to do this:
https://ico.org.uk/concerns/
Yours sincerely,
Freedom of Information Team
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