HMRC stretched to breaking point

If this had been brought up 2 years ago i would have agreed with the article, however i now feel that we have come too far down a path that just has to change.

Sadly, now my view is that we should allow the government to reduce staff numbers and play with the tax system as much as they like. This way HMRC will break. Only then will the powers at be start listening to the professionals at the right time and not when it is too late.

Once HMRC has broken, we can then rebuild it to what sort of organisation it should be and not now just tweek it at the edges.

Once again, i say sadly, because i am just fed up with all the HMRC problems that i have to now deal with, whist knowing that a single innocent error on my part will one day destroy me with HMRC's penalty regime/agent wrongdoing rules as well as the MLR.

I was one of those accountants who voiced my opinion on serveral matters 2/3 years ago about staff numbers, but no one in goverment was interested. Now let it fail and then rebuild it.

Once again, this is sad news coming form an ACCA fellow.

The CGT rise is supposed to partly fund the promised increase from April 2011 in the income tax personal allowance. Such an increase 
will hit the Treasury coffers from  May 2011 when the first PAYE receipts arrive for 2011/12. If the CGT rate increase is deferred until
April 2011, the increased yield will not appear until 31 January 2013 - i.e. almost two years after the PAYE yield starts to drop.

A change in the CGT rate from 22 June 2010 will at least have an effect on the yield from 31 January 2012 - still 8 months later than May
2011 but better than waiting until January 2013.

This was Browns tactic and look where that got us!

The way I see it, raising VAT is just a kick in the proverbials for the economy. At the moment budgets are stretched, so if you only have £100 to spend you only have £100 to spend. If more goes on VAT, the less goes in profit to the trader, so IT and CT takes goes down, along with the traders now streched beyond breaking point.

In my view less is more. put tax rates down, profits go up, money cycles round quicker and the net tax take goes up, just need to keep a weather eye on inlflation, but that might give a chance to creep interest rates back up so savers actually get a fair deal (funny how the borrowing rates are going up anyway though!). This is where we had just got to coming out of the pain of the Thatcher recession, with a fit healthy economy, public spending and immigration reasonably under control with room for a gentle easing of the purse strings. Proof of the pudding of how good the Tories had left the economy was the how long it took GB to completely f**K it up, which actually turned out to be a problem as it creaked on just long enough for the chattering masses to buy into a third term.

The only crumb of comfort I have in all this is told you so and I'm just glad I never from day one bought into the spin of New Labour.

Having had other posts come in whilst writing this, I agree with comment 1, HMRC is not fit for purpose. I would caveat this with the point, it is not the employees fault, they are under resourced, under trained, under supported and have an inappropriate framework in which to work. 

 I agree that HMRC is close to breaking point.

I agree to having the doomed feeling that I am spending ages trying to correct HMRC errors but if I make just one innocent error, the new penalty regime could destroy my business.

I already from bitter personal experience know just how much taxpayer time is wasted by the new "compliance checks" - check when the possible loss to the Revenue is zilch - whatever happened to Risk Assessment!

It is very sad when one remembers how efficient and trustworthy HMRC was in the past and how so very different it is now. And I do not blame the individual staff, who are generally polite and try hard, I don't know how they manage to continue to work for such a now disorganised and inefficient organisation that happily takes more than is actually due from so many people.

The less could do far more if they were better organised.

HMRC could, even should, employ far less staff.

Private enterprise would never employ so many to achieve what they do.

Are management, at any level, allowed or able to consider wholesale process improvement? Dare they?

If other departments are anything to go by, I bet it takes at least 200 people just to generate all the reports to ministers,

reports which have to be changed everytime a new minister with new demands comes in to the department. What a waste. Very sad.

And another thing, why the blanket 'remove all temporary staff/contractors' edict, only to see the number of permanent staff grow?

Or round of redundancies, only to see temp staff numbers increase?

No, please no, surely it's all about a living, breathing organisation, that needs root and branch redundancy of tasks, and better skills

to streamline, to improve, and meet the changes/challenges ahead?

Sadly I am in agreement with you both. Sadly, I suspect that a lot of (good) Tax Inspectors are (quietly) in agreement too.

I really think that a some of Schumpeter's creative destruction is called for and maybe we can then get back to the healthier relationship of Rankin' John Major's "Citizens' Charter" days. 

In the meantime, the LibDems' massive personal allowance plus a higher rate of VAT on everything would allow us a break from a broken tax system.

It's a chance to smash it up & rebuild it sensibly.

HMRC need a shake up.

Whilst any good accounting professional knows VAT collection from SMEs remains an ever present challenge, HMRC's approach to dealing with the tens of thousands of sole traders and SMEs with a turnover of Under £5m is draconian and has been having the reverse effect.

Weakness

• Poor communication skills
• Poor operational performance
• Lack of relationship marketing skills

This means higher governance costs; inefficient use of resources and a drain on tax payers money. More action is needed to cultivate a better (more enlightened) tax revenue collection environment, which will encourage small business owners (90% of the market) to comply and support accounting professionals who have to work with them.

Concur?

Julian Rowe, Accountant Now, 

www.accountantnow.co.uk/ 

HMRC have plenty of staff. But they are being asked to do too much.

• Simplify the tax code. Get rid of the complexity. Less effort required.
• HMRC should stop giving advice, leaflets and software. HMRC should be the policemen. If people want advice that is what accountants and software suppliers are for - and that should be tax deductible.

It strikes me as logical and just that if there is minimum wage, this should be tax free on a standard week of 40 hours, which by my reckoning would be @ £12,500 http://www.direct.gov.uk/en/Nl1/Newsroom/DG_178175. I would be quite happy for the basic rate to rise to up to 25% to offset this, as long as the higher rate threshold was raised to say £50,000. Even fairer, IMHO, would be to slide this down to around the current level , say £6250 by reducing it by £1 for every £2 earned in excess of the average wage, which is I believe around £25,000 http://www.statistics.gov.uk/cci/nugget.asp?id=285 .

Funny how the figures came out, a nice symmetry to them!

Its regretable that some HMRCs staff, or anyone for that matter, may lose their jobs. Although I'll believe it when I see it. Before Left blames Right and visa versa, lets not forget that this is the human cost of failed global capitalism by the financial sector. Their greed or business strategy failures now carries a price to be paid for by every last one of us. They have all our money and we dare not upset them for fear of a second great depression etc. So obviously the jobs created in the public sector by the last government cannot now be fully sustained because the well healed banking spivs lost all the money. As professionals we face the risk of the sack daily for all our decisions and know full well that this world does not owe us a living. We strive for feedom albeit more ideally than realistically. That is why it is hard for us to have empathy with HMRCs. Or banks for that matter. Both can be our enemies. HMRCs from the outside is a priviledged and bloated organization, which from time-to-time has wasted billions on computer systems; lost all our personal details; and malicously treated anyone in business like a criminal. The good times are over. The State in the form of HMRCs for one, just had our money to burn. Now the capitalists banks have it all to invest or burn again. Tweedle Dee, Tweedle Dum. There has to be a change in attitude people. Something is seriously wrong with our Society. The signs are all around us. Only the drug dealers and criminals prosper it seems. Is there a lesson there for us all perhaps? What are the priorities? Its time to move on and its going to be painfull. Like Thatcher one day we may thank the banks for making us take the medicine.  

In the meantime they will:

Raise Vat. The ultimate consumer Joe Public hardly notices, it yields a lot of tax, and no one can seriously avoid it.

Tax cuts for all; lower business taxes and higher personal allowances

Only people can get us out of the rut and once more like in the 1980's those able enough will step up to the plate. Only this time we will not be paying a huge social price. No one dares repeat that folly.

... but whats behind the door, Judge Dredd or a Brave New World?

How about simply reducing the work load - drastically.

Raising the tax threshold to £10,000 will take a lot of people out of tax (pretty much all pensioners & part-time workers) thus reducing HMRC workload.

Why not also drastically raise the VAT registration threshold by a factor of 10.  Lets say £1/2million turnover?

This would save small businesses an administrative nightmare.

It would make small companies more competative - we've all had the quote with and without VAT from small builders etc.

And would there really be that much loss to the Revenue when you offset it against the savings in administration - particularly since on the same turnover there would be 17.5% more profit, which would then be taxed.

Finally, we need a move away from the current HMRC obsession with fining everyone for everything.

From my comment earlier. The problem with HMRC is that the senior civil servents are more interested in getting their CBE's/OBE's/ etc and more concerned with their own nest egg that they really are not interested in the real world.

If HMRC was a NHS trust, they would seriously have blood on their hands by now and it would be headline news all over the country. Sad fact is that no once really cares about the failures at HMRc because nobody died from their failures.

While most of the discussion here picks up on John's point about HMRC morale and efficiency, a couple of you have responded to his suggestions on the Emergency Budget.

In particular, Normande makes a very good point about the government's cash flow if it carries through its proposed tax reforms. Rebecca Benneyworth has discussed the practicality of a mid-year rate change in our Budget discussion group. I've taken the liberty of adding a link to this thread over there and hope some of you come and join us for a more detailed examination of the Emergency Budget measures..

I made a mistake and failed to submit my anual P35 back in 2007. I do payrol for one person and made a trading loss that year. HMRC took 11 months to notify me and hit me for £1100 Penalty determination. I sent them a cheque for £100 pointing out that they should have let me know as soon as I incurred a penalty. I also pointed out that my taxes were paid and the chancellor was not owed anything. Their reply was that the are under no obligation to notify me of a penalty determination! I am still fighting it to this day three years on. I know of no other company that could trade in this fashion and escape trading standards. A true shower devoid of common sense given absolute power. Crazy!!! But who can help fight the monster that HMRC is?

............ and can escape the issue of HMRC for a week.

But i will ask this question:

What would happen to me if:

1) I did not employ the correct number of staff at the correct level of experience.

2) I was constanly underperforming and not meeting my customers needs.

3) I constantly issued wrong invoices (HMRC equivilent to penalty notices and incorrect tax assessments).

4) I then sort to collect these invoices at any means, even through the courts if necessary.

5) I alienated my suppliers (Tax agents).

6) I refused to give refunds to my customers, when refunds were rightfully due.

7) All my incoming telephones were constantly engaged.

8) you can all name some more items here if you want.

Answer (my opinion):

At best i would now be unemployed owing money and being made bankrupt or something similar. At worst i would be properly be hauled infront of the courts for some from of Fraud/Deceptions and possibly money laundering charges before HMRC slap a wrong doing charge on me as well and to top this off i would be struck off of the ACCA.

I mentioned earlier about letting HMRC fail and then we can rebuild it. Once it has failed i think we should seek to place criminal charges on the various heads of HMRC, in line with the calls for criminal charges on the heads of the banks a couple of years ago and the directors of companies such as Enron!

Are you sure you wrote that list?

It looks like HMRC's business plan to me.

Most HMRC workers are not brilliant academics or economists etc. So when they are asked to step up a gear to modern technology and take on the mantle of all business are crooks and lets look for the mistakes so that we can impose fines galore something has to break.

It doesn't matter how many staff you have, if they are not trained to the standard that the job requires mistakes will happen.

While the tax payer is fined heavily for mistakes and HMRC are allowed to get away with making life changing errors eventually we will either have a perfect tax system or stagnation. OOPs sorry we are already near stagnation.

Lets have an amnesty. For one year no penalties, no fines, no investigations. Every tax payer has a chance to put all their affairs in order and get their act together. HMRC has a chance to look at themselves and sort out their problems. If nothing else it will give both sides a breathing space because it cannot carry on like this.

Regarding the tax code mess how is it that the Revenue can get aeawy with making some fairly horrendous mistakes Scot Free whilst the remainder of the human race will get fined for making genuine mistakes? After all the Revenues "mistakes" were not just errors but down to incompetence.

And has anybody tried ring in g the Revenue PAYE Helpline recently and actually got through to anybody? I rang one evening at 1945 and got "all lines are busy", really? That would be like Busy as in gone home would it?

Dealing with tax evasion would be the best and fairest way of collecting more tax for the deficit rather than bleeding the best customers dry.

An amnesty on penalties for a short time may be an effective way, as the penalties are probably also a deterent to coming clean.

Members of the public that have engaged in cash jobs to save vat could also be given an amnesty for their part in the crime if they report those concerned. Perhaps even a crimestoppers reward £50, recharged to the culprit.  A national TV campaign could be launched.

The level of penalties for paye form filling have in most cases become completely disproportionate to the amount of tax at risk. The taxpayer should also be informed when the 1st paye penalty is due ! HMRC wait nearly a year to maximise paye penalties (many of which are not actually due). This is not a fair way of dealing with these matters.

HMRC should indeed concentrate on being the policemen and leave the advising to the advisers. Tax evasion has got out of hand and continues to get worse as more honest taxpayers fall or give into temptation to survive.

I agree that the penalty regime has reached the point where it is actually a disincentive to people to "come clean" over even minor fiddles.

But (theres always a but), HMRC itself MUST be made accountable. I am sick of correcting their errors, most of which are basic, and then having to fight to get paid for the costs caused by HMRCs inompetence.

At its simplest level - if a return is submitted late they issue a £100 fine.  We have a letter admitting that HMRC received a return, marked it as received, then sent it to Ipswich for capture and "lost" it.  Now they want a copy, so why cant WE charge a £100 "fine" for having to do so?  That would be equitable - but HMRC will tell you that supplying a duplicate return is not considered sufficiently expensive to warrant any claim being considered by them.

One rule for the peasants and another for them" ?

Why do the Revenue persist in calling tax payers “customers”?

One has to wonder what levels of Orwellian dysfunction are necessary for the management of any organisation to indulge such comprehensive levels of self deception as means of denying it’s own failures.

Revenue & Customs is not failing, it has failed. Don't believe me? Try telephoning any of the following and see how long it takes to get an answer:

The VAT Helpline.

The Accounts Offices.

Any local Corporation Tax Office.

Any local PAYE office.

NICO.

FICO.

etc. etc.

Write a letter, then another, then another , then complain, then complain about your complaint.

Then hopefully you will get a reply.

much more cost effective than waiting for hours on the phone.

I do that anon, sometimes it works, currently I am waiting for HMRC to respond regarding a comensation claim I made to Centre 1 some weeks ago now.

Also did it with a couple of CT loss claims we were waiting for and ended up having a conversation with an exceptionally cynical manager who told me there is no central complaints register, so nothing will ever be done about the complaints we make other than to deal with them on an individual basis.

CW

Just a quick point about HMRC and letter writing.

Why bother?

i)   Unsolicited correspondence is rarely answered by HMRC.

ii) Complaints rarely go answered unless followed up by a telephone call to the complaints department.

iii) If a response to your attempts to contact a complaints department is obtained the original correspondence is invariably "mislaid" or lost.

iv) The HMRC complaints procedure is actually simply a delaying mechanism and an individual compalint can last for months as anyone with ten or twelve simultaneously active complaints (as I have) will tell you.

The truth is that that HMRC is incapable of dealing with most aspects of routine "taxpayer" correspondence not dealt with through their archaic, inefficient and preposterously over complex "web" solutions.

The problem with making all these complaints is that they are time consuming and you don't get paid for them. Pretty soon you learn that complaints lead to penury and stop making them and that after all is the purpose of the Complaints Department. To deal with the complaints issue so that there aren't any in future.

From a Revenue perspective the system is functioning perfectly and presumably the number of complaints is declining.

Unfortunately this is the only way to change the world. You need to back it up with what used to be a code of practice one claim. Bill your client confirm they have paid and submit the claim to HMRC. They will take notice then. also advise them that if a reply is not received then you will need to submit a claim.

Sometimes this is the only way we can get a reply even when we are trying to pay some more tax.

I agree that the purpose of HMRC seems to be to outsource their inefficiencies to us.

HMRC and the entire tax system is on the verge of collapse ! The system encourages tax payers to choose how much tax they would like to pay, deliberately making it difficult for the honest tax payer while the errant are threatened by penalties that are never invoked.

I always strongly support to the notion of paying tax to run the government smoothly, but the government should not  impose heavy taxes to its pupils. By the way, to pay tax means to tribute to nation. Government have to give tax resolution services to the people and also of course pave the easy way to pay tax. In this way, people will not feel difficult to pay tax and they will feel that they are paying for themselves.