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The Kafkaesque problems with HMRC during Covid-19

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As accountants work hard to help their clients through the pandemic, they find themselves trapped in a web of HMRC-related miscommunications and delays, writes Director of Wynne & Co Sarah Wynne.

6th May 2021
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As a profession, accountants have a unique insight into the pressures faced by business owners. During the pandemic we’ve gone above and beyond to keep our clients supported. We’ve helped them claim grants, understand changing rules, and generally navigate a route through what has been a make-or-break period for business. 

We’ve seen clients struggling under huge stress, which we’ve experienced a great deal of ourselves. We’ve all pulled together, and HMRC has joined us in that effort. I’m not alone, however, in feeling they could have done more.

HMRC have been difficult to reach, pushed clients to the brink with delays, and expected accountants to take on additional tasks when they were already overstretched, often for no fee and with ever-changing rules.

We empathise – this is a trying time. But HMRC has given accountants no allowance for the difficulties our increased workload is creating. We were expected to rapidly adapt to furlough claims and payroll calculation changes with no agent support helpline.

HMRC blunders

As a firm, we’ve encountered a litany of blunders and miscommunications in our dealings with HMRC during the pandemic.

Accounting bodies asked HMRC for an extension to the tax return deadline of 31 January. However, they failed to act until six days prior to the deadline, by which time the work was mostly complete. 

Our staff are showing mental and physical health issues due to stress, which was preventable. HMRC could have told us that we were going to have another month without penalty. Instead, we endured the worst January deadline I've ever seen in 21 years of accounting.

Among other demands, we were asked to advise certain clients the reasons why they were not eligible for SEISS, to reduce calls to HMRC. They claimed their staff were too busy to answer the phone themselves!

VAT and SA frustrations

We have a client for whom we have been trying to get a UTR for a 2019-20 tax return. We first applied online in December 2020, and got a submission receipt. HMRC lost the application, which we waited three months for them to even confirm. We have now been told they are expecting to look at this by June 2021 – pre-pandemic, this would have taken around ten days.

We lodged a VAT claim for another client during December 2020. HMRC denied receiving it. During April, we received confirmation that the repayment would be made – the client is now still owed £22k and it’s having a catastrophic cash flow effect for them.

HMRC are taking up to 56 working days to deal with VAT related correspondence. Clients are left in the lurch; we’re unaware if we should prepare VAT returns for them, or if there are potential penalties for late registration when the delay is HMRC’s fault. 

We switched one of our clients onto quarterly VAT returns from annual. Despite receiving confirmation, we couldn’t submit anything. Nine months later that’s still the case. Meanwhile, the same client received a letter saying that because they have not made their monthly payments towards their annual VAT, they are being thrown off the scheme.

We have clients who HMRC have inexplicably stopped issuing VAT returns for. They don't inform the client – we only find out when we go to file them. HMRC has informed us there's an issue with the address and we've got to try and get that resolved. As the process doesn't seem to work online, we have had to write to HMRC in paper form, and we still can't seem to get them to make the corrections.

Delays in tax repayments have also hit our clients during a time of financial crisis. One client was due a £4,500 repayment when Covid was first affecting sole traders, without any help. HMRC held onto this for four months, despite numerous calls. We couldn't charge this time to our struggling client, as it wasn't his fault. Meanwhile the client couldn't trade, and had no income whatsoever.

We eventually established that the issue was related to £100 that HMRC said our client owed from several years ago, which HMRC had never chased. Instead of just deducting the £100 and giving him the rest of the repayment, they held onto the whole lot. 

The SEISS grants were a real challenge because HMRC didn't give us the ability to claim them for clients. They made the client do it – and most of the time the client didn't have the information they needed to make a claim at home.

No communication

When you phone HMRC you’re frequently told, “We can't do that in our department”, “We can't see this on our system”, and “We’re trying to work at home”. They've made no allowance for the fact that accountants have also had to work remotely.

We had to recruit an additional employee, who spends 80% of her time dealing with these issues (usually on hold). Because there's no dedicated agent line for VAT, it's not unusual for our team members to be on hold for 45 minutes before somebody even answers. When we eventually make contact, the problem is rarely resolved.

What would we like from HMRC?

A bit more consideration for us as a profession, and the pressures that we and our clients are under. We don't want to whinge, because our clients have got it worse, but trying to get hold of HMRC to resolve issues has been a nightmare.

All these issues have hit us against a backdrop of having to deal with Brexit, the new domestic VAT reverse charge rules, and the extended IR35 rules. We are working hard to help our clients meet all of HMRC’s requirements, but we really need HMRC to meet us halfway.

It must be acknowledged that we have dealt with some incredibly helpful members of HMRC staff, who have themselves expressed frustrations over the difficulties with their own systems. Sometimes it’s a question of getting through to the right person. So, we have some sympathy for HMRC employees too!

An HMRC spokesperson commented:

“We’re doing all we can to offer the best possible service to our customers at this difficult time, whether it’s supporting them with their taxes or delivering the government’s support schemes we’re working hard to ensure they can access the help they need and have adapted to serving customers in the pandemic.

“Wait times for some of our services are longer than we would like, and we’re sorry about the inconvenience this causes to customers at busy times. We’re continuing to redesign our business to meet our customer demand needs in the most effective way, based on our available resource.”

Replies (18)

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Chris M
By mr. mischief
06th May 2021 15:19

HMRC was rubbish in 2019 and has somehow got much worse since then. The following extract from a call I had in January - into a simple corporation tax reclaim they had been slow paying since July, now paid in April - sums it up.

HMRC: "It's been really difficult for us to cope with Covid. We've also had MTD to deal with (!!), we've all been working from home, I've had to train my dog and cat to answer the phone, whinge, whinge."

Me: "I am sitting here with Covid 19. My family all have Covid 19 right now too. I am not using that as an excuse not to do things, or as an excuse to do things badly or slowly. Why is HMRC still doing that nearly a year on from the start of this?"

HMRC: "It's been really difficult for us to cope with Covid, etc.,etc"

More or less repeated verbatim everything he'd already said. Pathetic.

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Replying to mr. mischief:
By ireallyshouldknowthisbut
06th May 2021 18:29

@Mr Mischief, I very rarely lose my rag with HMRC as its pointless, but I saw red last week on phoning up for an armful of CT repayments, last called 4-5 weeks earlier, not one of them had a repayment.

I was told (after the now standard 45 minute wait) that my call would not be logged as I now had to wait 9 weeks before calling them. 9 weeks!!!!. I was told how hard it was for them etc etc, covid etc etc. I pointed out I had never worked more hours in my life. I was doing 10-12 hours days and working weekends for much of the year. I had not had a holiday, and I most of the extra work was coming from HMRC's end and what is more it has been 12 months now and we had had to adapt and change to this situation.

They could not tell me where this 9 weeks came from. Nor could they tell me when the repayments would arise, nor could they tell me for a new repayment if I could ask about that one, or if I had to wait 3 months before even asking it we might possibly have the rebate my client has a statutory entitlement to. We wasted probably 15 minutes, at the end of this I pointed out had they actually just spend the past 15 minutes processing my 4 CT repayments instead of making excuses..... Phone line went dead. An hour of time wasted getting nowhere.

Its beyond parody, but it all boils down to the basics;

1. Not enough staff
2. Overly complex systems
3. Too many rules
4. Agents and tax payer's time simply doesn't matter.

None of this is to do with Covid, but it shows what happens to a system which is already broken when you give a huge kick, it just fragments and shatters.

They are now employing low skilled "front" staff to protect what should be the frontline staff who can undertake a basic task, and in the process inventing a massive system of referrals and work flows which are clearly never monitored to see if they are "done" as they rely on the tax payer coming back time and time until it happens, which in turn creates a massive wave of contact points to HMRC. Just doing stuff properly first time seems beyond them.

Thanks (7)
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By Paul Crowley
06th May 2021 18:52

Cannot expect any improvement
It was broke before covid and will be broke for years after.
Took a compete year to get a £7,800 refund on a subcontractor. May 20 to May 21. The appeal still not replied to.

Clients still do not know the HMRC are incapable of functioning.

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By Open all hours
07th May 2021 06:04

Time for this to be landing on the desk of every MP in the country. Huge failure at all levels at a time when getting the right amount of tax paid on time (wherever possible) has never been more important for the country.

COVID-19 has provided the ultimate excuse for poor customer service to get even worse across much of the public sector and throughout the banking industry. We now see more clearly than ever the contempt in which we are held by these incompetent bullies.

Thanks (4)
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By Bruce Roberts
07th May 2021 10:02

All the stories relayed here sound so familiar. I imagine every accountant in the country has numerous similar tales. HMRC is broken and a genuine crisis is looming. Most accountants have lost faith in the system and the public is not far behind. The problem is that the system already relies on the vast majority of the public complying without question. If the public begin to lose faith in the system then compliance will fall off the edge of a cliff and we will all suffer the consequences.

I suggest we all send our local MP's a link to this thread.

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By AndyC555
07th May 2021 10:07

"We refer to your letter of 10th July 2020 and apologise for the delay in replying. Please supply the following information listed on the attached 15 page schedule within 28 days.

Yours

HMRC"

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By Ben Alligin
07th May 2021 10:10

Don't waste your time writing to your MP. I did and was told that due to Covid 19 they wouldn't respond to my email 'cos they were too busy dealing with the pandemic?!!

The MP concerned isn't a doctor, just a back bencher who doesn't appeared to have done anything in the last 12 months.

Maybe she used to work for HMRC?!!

Thanks (1)
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By sammerchant
07th May 2021 10:27

The rot set in with Gordon Brown's decision to do away with the local offices, where individual Inspectors had 'ownership' of cases and you dealt with the same individual till the matter was settled.

I think it is a damn cheek HMRC referring to us as "customers" - if I treated my clients the way HMRC treats agents and taxpayers alike, I would very soon be out of business.

When a Self-Assessment matter for a client became a marathon, I wrote to his MP (with the client's permission) and that provoked a favourable response within 6 weeks. I had been pushing for them to look at my letter from 9 months earlier!

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Replying to sammerchant:
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By AndyC555
07th May 2021 11:39

I was working in HMIT (as was) when this mandate came down to start calling taxpayers "customers".

I left and many years later I am working for a firm of accountants based in a building which HMRC exited when the local office closed. We still get the occasional HMRC "customer" turn up thinking it's the tax office and we have to tell them there isn't one in the town any more.

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By Ebutler
07th May 2021 11:20

And the team dealing with probate seems to have been furloughed.

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By Hugo Fair
07th May 2021 12:51

Last night I had a dream in which I found a new 'insert' to be added to HMRC's guidance to Helpdesk operators:

"Before picking up a call, ensure that you carefully remove any working brain cells ... and switch to 'robot' mode. Under no circumstances should you listen to what is being said by the caller or deviate from whichever script you have randomly selected from those issued to you on your first day. Your target is to close the call irrespective of sounds of crying/teeth-grinding/shouting emanating from your ear-piece, with an extra bonus if you can get the caller to slam down the receiver at their end."

It was a dream wasn't it?

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Replying to Hugo Fair:
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By Catherine Newman
22nd May 2021 10:48

Brilliant

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By Ajtms
07th May 2021 15:10

It is a disgrace that the Agent Dedicated line has not been restored for as none of us can continue wasting almost an hour in a queue we have to write a letter instead which always gets posted "signed for" to know that they HMRC have it, as so often they deny receipt. I give them 4 months and then write letters of complaint to BX9 1AB. So far no replies to those letters either so further complaints have gone in and the compensation they will have to pay will start to mount up.

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boxfile
By spilly
07th May 2021 16:23

We have been advising clients to phone HMRC themselves for simple stuff like wrong tax codes - if nothing else, it makes them aware of how appalling the level of service is.
One chap came back very indignant after he had twice waited over 45 minutes for his call to be answered, only to be hung up on before he’d even managed to get so much as a ‘hello’ in. He was aghast to find that this was quite normal, and that we regularly start work early just to try and get a call answered at all.

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Replying to spilly:
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By Catherine Newman
22nd May 2021 10:49

I do too. I refuse to ring HMRC.

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By Refs1
07th May 2021 19:20

Could have wrote this myself! Service is worse I have seen in the 30 years of my career.

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BirdnCo
By BirdnCo
08th May 2021 13:16

We also have has the same issues with HMRC, that also makes us aware that it is these people collecting the revenue to run our country! We filed our VAT for the Feb 2020 that was a larger than normal due to the “tax season”. HMRC for reasons only known to them cancelled the DD, so these funds were not collected but automatically deferred. I reinstated the DD and the VAT has been collected since (apart from Feb’20). I then paid the derferred VAT on 5 March 2021. Mid April the VAT debt management wrote to me asking for payment of the deferred amount. I wrote back through the post advising them to check their records and anticipate they’ll be chasing again soon. Also the Feb’21 VAT that should have been collected for a few 000’s, they collected on £600 or so! I have also written to them advising them again. All the funds were there for them to collect last year and this one.
This concerns, not only for all the comments made here, but it is frightening why the are incapable of collecting and refunding as they promptly should…

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By Catherine Newman
22nd May 2021 10:43

Sarah-what a great post. It sums up everything succinctly.

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