Missing Trader

Bureaucracy: a system of administration … designed to dispose of a large body of work in a routine manner (Collins English Dictionary. Copyright © HarperCollins Publishers)

This story is set in a Value Added Tax office of Her Majesty’s Customs and Excise during the earliest years of the twenty-first century. It is an era of new technology and target-driven work practices but perhaps the Department’s management mindset is still stuck in the 1970s when the tax was introduced.

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Dick approached my desk a little tentatively, blinking behind his glasses when I looked up at him.

“I need a report from you” he said.

“I’m here to help” I replied. “What are you after?”

“It’s time my team took a serious look at our pubs” Dick said. “We’ve got quite a lot in our area and their tax performance is surprisingly variable. I think we should start with those that have extended their floor space recently and become more like licensed restaurants; can you provide me a list?”

“Not really, not as such, but it’s likely we would have picked them up already, from their costs; you know, building works, kitchen equipment, that sort of thing.”

Dick frowned and hesitated for a moment. “Turnover then” he suggested. 

I could see that he was struggling to come up with criteria I could use; like most of our management staff he had not yet adapted to the age of the computer and he did not understand the selection process I could use to assist him.

“Suppose I go for a minimum turnover of, say, a hundred thousand pounds and pick out those that haven’t been visited for at least three years. If I list them in reverse order of tax performance you could take them from the top and decide how many you want your team to visit. You’ve got the postcodes in the north and east of the county haven’t you?”

“Yes” said Dick. “That might work. We’ve got a lot of those old coaching inns and village pubs that need to catch the tourists and travelling salesmen these days to survive. How many do you think we’ve got?”

“Only one way to find out” I said. “Let me run the report for you. When do you want it?”

“Oh” said Dick, “there’s no rush; by the end of next week, I should think.”

“Fine” I concluded, “I’ll have it ready for you.”

I could have run the report, sorted the results and printed off a neatly formatted final version in little more than five minutes if asked to do so, but Dick would not have realised that. Dick, like all of his management colleagues still lived in a world where any attempt to compile such a report manually, by trawling through individual sets of traders’ records, would have taken weeks, or months to complete. New procedures, based on improved technology, meant that local offices could now do their own visit selection, instead of having their work priorities set by a single, centralised computer facility; however, our managers mostly lacked the computer skills, statistical understanding and even the visiting work experience that was needed to take advantage of the opportunities provided by a changing world.

Almost all of my colleagues saw our visiting work as the real purpose of their employment and strenuously avoided ‘indoor’ posts that would keep them tied to an office desk; they also regarded the car expenses and subsistence they could claim for travelling around our area as an essential part of their regular income. Personally, I found life as a visiting officer continually stressful, and I had long since realised that using my own cars for work merely caused them to wear out more quickly, while the related expenses only created an illusion of greater opulence. An additional disincentive was that the government no longer increased our mileage payments in line with the costs estimated by motoring organisations (although, of course, the same discourtesy was not extended to Members of Parliament). When a ‘Sift Team’ was set up, to identify and monitor suitable cases for the visiting staff, I had been happy to volunteer for a job that many people saw as an irrelevance, and I settled into a regular office routine.

Dick returned to his lonely office in the management corridor and I returned to the pile of papers in my in-tray. Among the routine memos, computer print-outs and departmental circulars I noticed the distinctive pink colour of an Urgent Reference. With a proper sense of my priorities I pulled the sheet out of the tray and laid it on the desk in front of me. The pink form was used to report a sale or purchase noted by a visiting officer and which they thought should be checked in the records of the other party to the transaction without delay. In this case Kevin, an experienced and conscientious officer, was giving details of the cost of a new factory unit purchased by a company that he had visited. The supplier had charged £1million plus £125,000 VAT. Kevin had not offered any particular reason for wanting this transaction checked; perhaps it was just the value of the supply that had caught his attention.

The supplier was called Alantom Builders. I entered their VAT registration number on my desktop computer terminal to look at our record of their tax returns. In spite of many years’ acquaintance with all kinds of VAT accounting problems, on this occasion I was quite taken by surprise. It was almost three years since the business had last submitted a VAT return and before that it had been regularly reclaiming tax from us, not paying it in. I looked again at Kevin’s reference; the invoice he had seen was dated more than two years ago. Alarm bells began to ring in my mind; it was clear that Kevin had been right to request urgent attention to the case. I jotted the relevant VAT number down on a folder request form which I was going to toss into my out tray but, after a moment of hesitation, I decided to walk down the corridor to the filing room and collect the trader’s folder myself so that I could examine it without delay.

The Department’s progress from paper filing to computer based records was still at an early stage and the familiar green folders that had been used to hold the details of each VAT-registered business ever since the tax was introduced were still a necessary part of the system. Back at my desk, I made a quick search of the Alantom Builders’ folder to see what basic information we held about them. The firm was a partnership that had been set up by a pair of builders to carry out new construction work, operating from an address in a small industrial estate. The address was only a few miles from our own office, in one of our larger local towns. Because for some years all new construction work had been zero-rated and the business had made only modest and plausible repayment claims, it seemed that the partnership had not attracted any attention from the Department and had not received even one visit from us to confirm that the records were in order. When the rules changed and the construction of new commercial buildings became a standard rate supply, the ‘repayment trader’ indicator in Alantom’s computer data should probably have been deleted but this had not happened; consequently when the partners stopped sending in their quarterly returns no automatic enquiries had been triggered. As far as we were concerned, Alantom Builders were very unlikely to owe us any money and there was therefore no compelling reason to chase them for their missing tax returns.  

It was obvious that we needed to make some enquiries now and it was my responsibility to initiate an appropriate course of action. Normally I would have passed the folder on to our visit bookers, with the pink Urgent Reference clipped conspicuously on the front and with a feedback form to ensure that the papers would be returned to me after completion. However, it occurred to me that if our visiting staff were heavily committed or the business had moved and could not be quickly found, any delay would leave us dangerously close to the three year time limit that imposed legal restrictions on our ability to take any necessary corrective action. It seemed to me that it would be more sensible to have an officer call at the premises unannounced to discover why returns were not being submitted; a formal visit could then be carried out later if, as seemed likely, there was a problem that required investigation. 

We had an office ‘Enforcement Team’ who spent their time knocking on doors and extracting tax debts from reluctant payers; their way of working fitted my proposed course of action so I took the Alantom Builders folder to Charles, the team manager, hoping that he would agree to help. Charles was a likeable fellow but he had become more than a little cynical and he was something of a stickler for doing things ‘by the book’. 

“Look,” I said “all I need is for someone to knock on the door and find out what is going on. One of your officers could do it on their way back to the office when they’ve been working in the town. There could be quite a lot of revenue at stake and it’s not impossible that the trader might produce the missing returns, and a cheque, on the spot,”

Charles grunted and shifted in his chair a little. “Well, all right,” he said, with obvious reluctance, “leave it with me.”

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It must have been at least two weeks later that I realised I had not received the feedback sheet for Alantom Builders, so I phoned the filing room to ask who was holding the folder. It turned out that the folder had found its way back into filing without the feedback sheet returning to me (as it should have done); I decided to retrieve it and find out what was going on. The folder contents proved to be exactly as when I had last seen them, except that a memo I had attached for Charles’ benefit had disappeared. There was no visit report or even a rough note to indicate what action the Enforcement Team might have taken in response to my request. I booked the folder out to myself and found a moment to take it with me to see Charles and ask what had happened.

“Oh, that” Charles said. “Lindy dropped by about a week ago. She said there was nothing there; it looked as though the place had been empty for weeks.”

“Any chance of a forwarding address?” I enquired.

“Nobody to ask” Charles replied. “Nothing more we can do. It’s a missing trader.”

I suppressed my annoyance that nothing had been reported back to me and returned to my own desk. Strictly speaking Charles was absolutely correct. There was no debt on file for Alantom Builders so there was no procedure for his Enforcement Team to follow and, as the business had vacated its last known address without notifying us, the case did fall to be reported to the ‘Missing Traders’ seat at our regional headquarters. 

I was reluctant to leave matters as they stood. The ‘Missing Traders’ category was something of a black hole: I had a suspicion that it was probably monitored by a single, unambitious officer who would necessarily be following a simple and rigid set of instructions. It was certain that any missing traders’ debts were routinely written off and in the case of Alantom Builders we didn’t even know what those debts might be. I decided that I would make a few more enquiries of my own before abandoning the case as a lost cause.

For a start, I had a proper look through the contents of the green folder. Unfortunately the partners had only given their business address and not their private addresses but it crossed my mind that work relationships in the building trades can be quite fluid and that it might be worth checking whether either of them had a separate, personal VAT registration. This thought led to a small breakthrough: it seemed that Tom Burge had indeed taken out a VAT registration of his own, dating from about the time that the partnership had stopped sending in its tax returns. It was easy to discover from our computer that Tom had an impeccable record of returns and payments right up to date, even though, like the partnership, he had never been visited.

“Well,” I thought to myself, “Tom’s one of the good guys. Perhaps when Tom branched out on his own Alan began to fall short on the bookkeeping front.” 

Tom’s registered address was in a residential street but the computer showed that his latest return had been a final return as he was being deregistered; a letter in his green folder, date stamped in the previous month, indicated that he had retired and was about to leave the area. It looked as if, even if we managed to contact Tom, we would still need to find out what Alan was doing; presumably he had kept the original business going himself even though the partnership had apparently split up.

I returned to the partnership folder. I had noticed that when Alantom Builders registered for VAT they had been assisted by a professional accountant. Perhaps he had just helped them to fill in the forms and had never heard from them again; there was nothing in the folder to show that he had had any further involvement with the partnership. On the other hand, perhaps he could at least supply a possible address for Alan: it had to be worth a try. I didn’t recognise the accountant’s name so I prepared mentally for a fairly formal conversation before calling him on the telephone.

“Sorry to trouble you” I explained, after the introductions and having said that I was phoning about Alan Carter, “but we seem to have lost contact with him and the only address we have is an empty set of business premises. Do you happen to know where we can get in touch with him now?”  

I expected the accountant to either say: “Yes, no problem, let me just get out the file” or: “Haven’t seen him for years, I don’t think I can help you.” It was rather a surprise when he replied in a somewhat nervous voice: “I think it would be best if you met with him here. Can you come to my office?”

“Well,” I said “I don’t do the visiting myself these days. I can arrange for a colleague to make an appointment. but we wouldn’t normally want to come to your…” 

“It would be best if I’m present when you see him” the accountant interrupted. His tone was confidential rather than demanding and, as I was grateful for any positive response at this point, I decided to accept his implied offer of assistance.

“Very well,” I said “I’ll pass the case on to one of our visiting teams and ask them to give you a call. Thanks for your help.”

The Enforcement Team still seemed to me to be the best option for ensuring prompt action, but first I went through the folder contents again to make sure there was nothing that Charles could pick on as a reason for refusing to help. As it happened, this last minute check did reveal a complication that I had overlooked previously. Among the oldest papers in the folder I spotted not one but two of the simple worksheets that were used to check the progress of new applications through the registration process. Once a registration had been completed, the worksheet really had no further significance and, even though I was being thorough, it was only the slight oddness of seeing two worksheets together in the same folder that caused me to bother looking at them. 

Only one of the worksheets belonged in the Alantom Builders folder. The other had not been fully completed; it had somehow got separated from an application for registration sent in by a Mister Alan Carter… 

Suddenly I realised why we had not received any returns from Alantom Builders for nearly three years. The partnership had been dissolved and both partners had applied to be registered individually. Tom’s application had been processed correctly but Alan’s had become separated from its worksheet, the worksheet had been misfiled and without a worksheet the Registration staff had failed to realise that they had an unprocessed application. Alan Carter’s registration forms were probably still lying unattended and forgotten at the bottom of a cupboard, lost in the backlog of registration work.

Alan must have been puzzled by the absence of contact from the VAT Office. Eventually he may have decided to take advantage of the situation. It was possible that he had spent the tax charged to his clients as if it were his own income but it was more likely that he was holding it in a deposit account and enjoying the benefit of a modest but welcome flow of interest from his investment. I could imagine him saying to himself: “Don’t they want it? They’ve only got to ask…”

Later that day, choosing what I hoped would be an opportune moment, I took the Alantom Builders green folder back to Charles, with the pink urgent reference form and a new feedback sheet attached on the front. 

“Not that again!” he said. Patiently I described the progress I had made since he had last seen the folder, and explained that we now had a convenient opportunity to meet Alan with his accountant, collect the missing returns and receive any tax payment due. I emphasised that we knew the business owed us at least £125000 in output tax as I hoped this would give Charles a good reason to act on my unorthodox approach: accepting a payment of that size could give a worthwhile boost to the Enforcement Team’s monthly statistics.

“Oh, all right,” Charles said eventually. He waved a hand vaguely in the direction of his in-tray. “Leave it there. I’ll look into it later.” He didn’t sound very enthusiastic but I had learned not to associate Charles with enthusiasm. “I suppose I could do it myself,” he added a little more positively, “it would be an excuse for me to get out of the office for a change.”

“Thanks” I responded, hopeful that I had finally completed my part in the progress of the case.  

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A month or more passed by without my feedback sheet being returned. I couldn’t help wondering what had happened, so during a spare moment I phoned the filing room and asked them to check the current location of the Alantom Builders folder; apparently it had been sent to the Deregistration seat. This at least suggested that some definite action had been taken to finalise the case but, if so, the feedback sheet should have found its way back to me for my own records. Once again I made my way to Charles’ desk, curiosity narrowly winning over irritation in setting my mood.

“It wasn’t really one for us,” said Charles, rather testily. “If Registration had handled it correctly, he could have kept the same number when the partnership broke up, but because of the delay they’ve had to cancel it and set up a new back-dated registration. I think his first return won’t be due until next month. Right now he doesn’t owe us anything, so it isn’t a job for Enforcement.”

“Any idea how much he’ll have to pay us on that return?” I asked.

Charles muttered his reply through gritted teeth: “About £250000” he said.

After a moment of silence I nodded an acknowledgement and turned to go. I could empathise with Charles’ annoyance. We were working in an era of management targets and objectives, and he had helped the Department to secure an undeclared quarter of a million pounds that, because technically it was not yet owed, he would not be able to include in the Enforcement Team statistics. 

“Never mind,” I thought to myself, “it’s eligible for my own statistical return and being able to tell a story about how I pursued the case through to the end may stand me in good stead one day, if I ever get a chance to apply for a job somewhere else…”      

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