online processes just one reason the UK’s tax system is not fit for
purpose, says business group
THE HM Revenue and Custom’s
(HMRC’s) inefficiencies revealed to Treasury sub-committee as
research shows tax administration is the top red tape burden for
The Forum of Private Business has told a Treasury sub-committee that
HMRC is failing in its aim to create a more efficient tax system
because it is bogged down in bureaucracy – including complex and
unwieldy online procedures.
The warning follows the Forum’s latest Cost of Compliance Referendum
survey, which reveals that tax administration has become the main
bureaucratic barrier to doing business for the UK’s small firms –
forming £5.1 billion of their annual £16.8 billion red tape bill.
At a meeting of the Joint VAT Consultative Committee last year, the
Forum’s tax adviser Andrew Needham was astounded when he was told
that a relatively simple change to email alerts to inform business
owners of a change to the deadline for accepting VAT cheque payments
would take 6 months to implement because of procedural restrictions,
too late to warn them in time. Fortunately, following political
pressure, the changes were made.
Speaking in the wake of the weekend’s Treasury sub-committee report
into the ‘administration and effectiveness of HMRC’,
which blasted its poor levels of service and led Chairman Mike
Clasper to publicly apologise, Mr Needham said that problems were
“For example, businesses can be selected for what is called
‘extended verification’ before being registered for VAT. Their forms
are sent to a specialist team in Cardiff and the process is supposed
to take 50 days, but I know of at least one case that was sent in
September 2009. About 18% of applications are selected for extended
verification – so 1 in 5 are taken out of the normal system and
placed in one where it takes a minimum of 50 days to process them.
Often forms go back and forth continually when there are minor
issues, with little common sense employed. There are an awful lot of
business owners who are in no way involved in fraud or anything
dodgy that nevertheless have their VAT registrations delayed.”
said Mr Needham, of VAT Specialists Ltd.
Despite the apparent inefficiency of its online communications and
email services, the sub-committee also found evidence of significant
failings in HMRC’s call handling abilities.
The finding follows figures from the National Audit Office (NAO) in
January 2010 which showed that 44 million calls to the taxman went
unanswered in a single year, including many during busy tax return
periods. In all, HMRC failed to pick up 43% of the 103 million calls
it received in 2008 to 2009.
“That’s beyond pathetic. In fairness, they are trying and things
have improved since then but still there are around one in three
calls are not being picked up, and when they there’s no guarantee
you will get a coherent answer. There’s such a lack of planning –
they knew, for example, that electronic VAT returns were being
introduced so why no staff training or automated systems were put in
place is mystifying.” added Mr Needham.
As part of a root-and-branch overhaul of tax system to free small
firms to grow and create jobs the Forum wants HMRC’s service to be
made quicker and more efficient, with much-improved communication
and simplification of its online procedures.
The not-for-profit organisation is also calling for major reforms to
PAYE – with the sub-committee reporting that many of the unanswered
calls related to National Insurance (NI) and PAYE changes – and to
the treatment of customers in line with its own customer charter.
In particular, there are concerns that HMRC’s sector-by-sector
clampdown on tax avoidance is unfairly focusing on small firms
rather than large companies – the real culprits – because they are
seen a easy targets. The Treasury sub-committee noted that one area
in which HMRC is strong is tax collection.
Despite recognising some improvements – including recruiting 1000
additional contact centre advisers to handle calls during
exceptionally busy periods - the committee expressed concerns that
HMRC’s local tax office closure programme and job cuts could mean
its service declines further, and undermine improvements seen in
voluntary tax compliance.
A recent survey carried out by the Forum suggests that,
surprisingly, business owners would be willing to pay even more in
tax in exchange for a simplified system that saves them money in the
Forum member Pat Cobham, of Cobham Day Ltd in Liverpool, is
particularly frustrated at changes making the administration of PAYE
more difficult and believes HMRC’s targeted investigations are
"Once again HMRC are hitting the little guys. Small businesses are
struggling to keep their heads above water and what does HMRC do to
help? They introduce yet another raft of penalties, Late monthly
PAYE payments now attract penalties at a time when cash flow for
small businesses is the worst it has been in 20 years. In the good
old days tax inspectors actually tried to help the tax-paying public
by providing advice. They used to be called the Civil Service. We
now get no service at all - we are just battered by rising
compliance costs." said Pat Cobham.
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Court is now closed
closure of the Southport County Court has been closed and work to
clear the building is well under way. The closure has been viewed
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cricketers to inspire Lancashire girls at ‘MCC Spirit of Cricket’
FOLLOWING their success
earlier this summer in the NatWest Quadrangular Series against
Australia, New Zealand and India, England Women internationals
Danielle Hazell and Beth Morgan will be coaching local girls at the
MCC Spirit of Cricket Summer Camp in Ormskirk, Lancashire.
Aspiring young cricketers, aged 8 to 14, of all levels of ability
will have the chance to develop their bowling, batting and fielding
skills at the special girls only cricket camp.
The youngsters will also be taught the MCC’s ‘play hard, play fair,
have fun’ message throughout the 2 day event; part of the ‘Chance to
Shine supported by Brit Insurance’ campaign to bring competitive
cricket to two million children by 2015.
The event takes pace over Thursday, 25 August 2011 and Friday, 26
August 2011, from 1000 to 1500 at Burscough CC, School Lane,
Burscough, Ormskirk, Lancashire, L40 4AE
Taking part are World Cup/Ashes/2011 Quadrangular Series winning
pair Danielle Hazell and Beth Morgan.