Big state-owned bodies are in the wars. With one institution gone from “trusted brand to monster” in the words of a Post Office/Fujitsu victim, another, HMRC, is being lambasted for incompetence and under fire with regard to other controversies.
As to the first charge against HMRC, customer service at the tax office has deteriorated to the point where some believe the economy is being harmed.
You, reader, might be feeling the effect of the decline as the 31 January deadline looms and access to the self-assessment helpline is blocked. Shutting down helplines is one of the Revenue’s favourite firefighting fixes, and they’re not always temporary – the VAT helpline has been closed for good. But appalling service extends to professionals who use dedicated adviser helplines. They too are frustrated in their efforts to get issues resolved or even understood, and it makes little difference whether their clients are trying to pay tax, secure a refund or register for VAT.
In short, says accountancy firm Blick Rothenberg, “nobody can get to talk to anybody and when they do it’s very unsatisfactory”. Failings cited by partners include long call wait times; calls frequently being terminated; requests for information already submitted; a lack of able or qualified people to discuss tax law; callbacks that never materialise; explaining the problem then being asked “to send all this in writing”; turnaround on post, which often exceeds six months even for simple reference number requests; poor accountability (never speaking to the same person); departments that do not communicate with each other; badly designed disclosure forms and letters mysteriously vanishing.
The situation is so bad, says Blick, that companies’ valuable capital stays tied up in HMRC’s bank account waiting to be repaid, sometimes for years on end, which means it cannot be ploughed back into a business, or used to aid cash flow. Businesses waste hours on simple tax matters such as VAT and PAYE reference numbers, and adviser fees as they battle to get through to HMRC. It is, says Blick, “a disaster for companies trying to set up in the UK and offputting for international firms who want to do business in Britain”.
HMRC’s slow processes meant one client paid VAT unnecessarily on a transfer of property. Another spent months trying to register their company for VAT, several more months trying to find out why the application was rejected. Under threat of legal action, the tax office finally responded – with a request for a new application to be submitted. One client has been waiting for three years for a decision by HMRC before they can settle a tax bill worth several million pounds.
In March last year, leading UK professional bodies wrote to the chancellor pleading with him to invest properly in HMRC with a focus on improving customer service and effectiveness “to help boost productivity”. The National Audit office too has heaped criticism on the office’s poor performance.
The main problem is that HMRC wants everyone to switch to a fully digital system. Cuts in staffing numbers were implemented in advance of an ambitious plan to digitise tax, but the programme has been hit by delays, setbacks and glitches. Tax expertise was badly eroded in an earlier programme of local office closures.
Simon Rothenberg, partner at Blick Rothenberg, says process is an issue too: “Even if the IT system worked perfectly and could ensure that all correspondence is held in the same place as used to happen with paper files, working practices still mean HMRC would not work efficiently. Multiple people pick up the same case and long delays between responses mean that every time something is looked at, it needs to be looked at fresh.”
Disclosure forms should be amended to include space for explanations, says partner Fiona Fernie. She argues that if the nation’s revenue system is to run on fewer staff and to rely on computers and automatically generated letters, then “we need an uncomplicated tax system that can be maintained in that way”, although she has reservations about over-reliance on a digital system. “There are occasions when queries just cannot be resolved online.”
HMRC, which in the last tax year hauled in revenues of £814bn, boasts that 80 per cent of customers are happy, but Alan Pearce at Blick is dismissive. “It’s delusional,” he says. “The remaining 20 per cent is a huge number of dissatisfied people.”
HMRC costs around £7bn a year to run but it seems that spending more on resources is the only solution. Perhaps the chancellor could earmark some of the record receipts coming in from inheritance tax (IHT) to address the problem.
