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Ex-inspector blasts HMRC over statement delays

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30th Sep 2011
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Mike Fleming, a former tax inspector and partner at Straughans, said that HMRC's attempt to resolve late statements of account in July created an “unfair dual standard” for those who paid their tax on time.

The late statements issue came to light in AccountingWEB's Any Answers section during July after a number of members received calls from clients who had not yet received their twice-yearly tax payment demands.

The second instalment (or D2) was due on 31 July, but due to insufficient paper stocks, reminder letters were not sent out to half a million people. Those with 10-digit UTR numbers ending in 70-99 did not receive statements in time and were initially granted an extra 30 days from when they were eventually notified.

After failing to issue all the statements that it should have issued in July, the Revenue then issued the remaining letters in August.

At the time HMRC issued a statement apologising for and explaining the delay:

“You don't need to worry about this. If HMRC have asked you to make a second payment on account, you normally should have paid this by 31 July. You usually have to pay interest if you don't pay on time. If you receive your statement in August, you should still pay the tax due as soon as you can. However you'll only be asked to pay interest on the tax due on the second payment on account if you still haven't paid it by 27 September.”

Tax editor Rebecca Benneyworth also informed members of the 30 day extension from the receipt of the statement to pay, and at the time, Benneyworth said HMRC's response was “sensible and pragmatic”.

However, Fleming pointed out that affected taxpayers would enjoy advantages in terms of the interest accrued on money set aside in their banks for tax payments compared to those who met the 31 July payment deadline. He was also concerned about the lack of transparency surrounding the extension and said it was symptomatic of wider issues within HMRC.

“This situation reflects widespread systems and administrative problems within HMRC. These are the result of a cost-cutting exercise which was short-sighted and has been badly managed, leaving the revenue unable to continue to deliver the quality of service we expect.” Fleming said.

“There has been a wholesale closure of regional tax offices, with a huge 73,000ft of office space cut, leaving a gaping hole in the administrative process.

“Clearly the administrative error which led to the discrepancy in D2 payment deadlines is indicative of a much broader demise of standards within HMRC which need to be addressed if taxpayers’ trust in the system is to be maintained,” Fleming concluded.

AccountingWEB put these concerns to HMRC, who said that due to the exceptionally high demand it experienced delays in issuing paper self assessment tax statements to some customers. An HMRC spokesperson said: "This in no way prevented the accurate payment of tax and no one will be out of pocket as a result. HMRC gave those affected up to 27 September providing a minimum of 30 days from the date they received the statement, to pay any outstanding tax.

"We very much regret any inconvenience caused but do not accept that the issue was not publicised. HMRC announced the issue on our website, informed external Tax Professional bodies, and released a statement to the media."

The Revenue also confirmed that statements were despatched between 5 August and 19 August.

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