HMRC plays the man, not the ball…


HMRC are, as we know, the subject of regular letters of complaint in the press and justified criticism from professional bodies all add to the pressure.  However, scoring an own goal like this simply makes things worse…

As reported in the press recently, former Polish international goalkeeper, Łukasz Załuska and his wife Magda have spent the last three years in a fight with the UK tax authority to try to retrieve £300,000 which was removed (with the help of the Polish authorities) from their bank account.  The issue here is that this money is for tax that they did not actually owe to the British Exchequer.    

Łukasz Załuska was playing for Celtic at the time and the error occurred because Mrs Zaluska made a mistake in stating that her husband had made £500,000 in additional earnings.  The Zaluskas say this was due to their poor English and that in fact there were no such additional earnings. 

Independent tax adjudicators subsequently upheld their complaint. The adjudicators also noted that HMRC had “not considered their Charter commitments in their exercise of discretion.”  The HMRC Charter is a legal requirement under the Finance Act 2009 and relates to the standards of behaviour and values to which the taxman has to aspire when dealing with people.

HMRC then offered the couple some recompense.  To be precise, £100 of recompense which is frankly insulting.  While the UK obviously needs every penny it can get, one accountant described this as “tantamount to theft.” And this is a view we share.

Amazingly (or perhaps not), HMRC refused to budge.  However, following pressure from numerous sources, HMRC has told Mr Zaluska’s representatives that it will now carry out a full review to reconsider its decision.  It’s time for the tax equivalent of VAR!

While we naturally hope that common sense and justice will prevail, this case raises a number of interesting issues.  For a start, there is the fact that HMRC were essentially (with the help of the Polish tax authorities) taking money directly from an individual’s personal bank account, while HMRC’s refusal to accept the judgment of the independent adjudicator and also not follow their own charter are major causes of concern. And of course, this whole sorry story also illustrates the fundamental importance of getting professional tax advice in the first place…

Catherine Sinclair, Director, M&S Accountancy & Taxation Ltd.