Furlough scheme: Spare a thought for HMRC
On the day that it introduces the furlough scheme, The Imprudent Accountant considers the impossible workload that has been loaded on to HMRC in recent weeks.
For most accountants, HMRC is viewed somewhere between a minor irritation and a necessary evil.
These are the people who administer compliant systems that fall over far too often, stop our clients from paying the right amount of tax (ie too little) and never answer the phone.
That said, I dread to think what officers of our taxing authority are currently going through. The starting point, as we well know, is that morale in the department has been low for decades, with staff numbers cut to the bone – and then cut again.
Given the nature of their organisation, there has to be a fair possibility that a significant percentage of the remaining workforce is currently self-isolating or has been or will be absent from work.
That would be enough to harm many organisations. On the positive side, job security should be a given, since it is unlikely that HMRC will close down completely, although who knows whether there could be even more jobs slashed, as the government desperately tries to balance the country’s books?
My main issue today is workload and the ability to do even the basics.
In his first Budget, Rishi Sunak was enthusiastic about the need to pursue those involved in tax avoidance. That is hard work with many projects taking years of effort and much manpower to come to fruition.
In passing, he also introduced the digital services tax. Anything new is likely to take some bedding in and will require significant staff input.
These are projects that had been in the pipeline for some time, so you might imagine (possibly erroneously) that the powers that be have made provision for their introduction, alongside ongoing work and perhaps even yet another attempt to make tax a little bit more digital.
What nobody could have imagined a month ago was the incredible increase as a result of the coronavirus effect.
Suddenly, a creaking system to provide universal benefits to a large number of people has become a creaking system to provide universal benefits to what could be five times as many people.
At the same time, HMRC also has to deal with a load of new-fangled schemes designed to alleviate the pain of temporary or permanent unemployment, companies which might well be going to the wall and difficulties faced by other businesses.
While some of the new plans will be administered by others, I fear that the amount of additional work required by HMRC to bring in so many instant ideas without adequate preparation will become truly terrifying.
Already, there have been reports that HMRC is suspending many enquiries and some of its investigation work. That may just be the tip of the iceberg, since I cannot see how it will be able to staff the new projects and high-level fraud enquiries without increasing numbers or persuading staff to work very long hours.
Today sees the implementation of the furlough scheme, which will undoubtedly apply to millions and quite probably tens of millions of instantly impoverished people. While everybody seems to be taking it for granted that this will run smoothly, if that actually happens, it will be the first large HMRC project to do so. Given the remarkably short lead time, it is far more likely to be riven with unforeseen difficulties.
The powers that be at HMRC must also know that the public accounts committee will be lying in wait in about three years’ time to lay in as soon as its members discover that every single one of the new releases has been a magnet for fraudsters.