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HMRC form gaffe leads to agent account suspension

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A misplaced anti-money laundering form at HMRC headquarters led to an accounting firm’s agent access being struck off, losing a month’s worth of work and almost going out of business.

30th May 2024
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A sole practitioner was locked out of their agent services account for a month after an anti-money laundering form went astray at HMRC, losing his firm an estimated £15,000 worth of business and almost causing the firm to go under in the process.

Initially offered £150, the practitioner embarked on a 12-month fight for compensation involving their MP and an independent adjudicator, only to be informed there was no avenue for redress.

The story forms part of a wider pattern of agent account suspensions, leaving practitioners unable to perform many day-to-day tasks essential to their work. During April 2024 alone, five AccountingWEB members posted about their issues, with one firm owner telling their story about being left in the cold.

The chartered accountant and sole practitioner agreed to share their story on condition of anonymity.

Misplaced form leads to agent lock-out

“I set up my firm five years ago and it grew during Covid. From the start, I’ve been supervised for money laundering by ICAEW. The only interaction I have with HMRC is as an agent.

“In September 2021, I received a request status from HMRC asking who is supervising me for money laundering. I returned the AML 103 form in the post as requested to HMRC in October 2021.

“Unfortunately, it landed at HMRC and went into the wrong workflow. It later transpired that the person who received it took 53 days to get through their workload, get to my form and realise it had nothing to do with them, at which point they gave it back to the main switchboard. 

“In the meantime, I was struck off as a non-responder. This resulted in my agent status being removed, along with my ability to submit corporation tax and self assessment returns, which make up the bulk of my work. This was on 2 Dec 2021, at my firm’s busiest time.

“With no agent services login, I lost the ability to trade – it was awful. I tried calling, writing and emailing but just couldn’t get an answer.

“The ‘agent maintainer’ team is apparently responsible for this, but they don’t accept emails or phone calls. There’s no follow-up, you can’t speak to this team – it’s an almost mythical department. They have a ‘service level agreement’ to respond to letters within 40 days, but that’s no good when I can’t run my business.

“Because I’ve previously worked on committees for ICAEW, I was fortunate to know the right people to call at the Institute. After a bit of back and forth, they had someone literally walk the corridors of HMRC to find this team and ask them. Without this, they’d have been completely unaccountable. 

“My agent service access was restored to me on 27 December when HMRC sent through codes – this was later than it might have been because of the Christmas post. Even then, all my clients weren’t allocated to me and I had to manually add the unallocated ones during the holidays and wait for the overnight refresh. 

“I lost a whole month's business, around £15,000. It had a catastrophic impact on my firm, which was in its infancy and could have gone under. As it was, I had a terrible January with a whole pile of work and a massive cashflow hole – with all the costs of December with no income. I spent the next six to eight months just recovering.  

“Naturally, I complained and got my MP involved. By March 2022, HMRC accepted my complaint and offered me £150 compensation. This was not at all acceptable and they said I had the right to approach the adjudicator’s office to make an independent complaint.

“The adjudicator’s office came back and said they do not have jurisdiction because I’m technically not a taxpayer – in this instance, I’m treated as a service provider. The best they said they could do was to attempt to launch a Parliamentary inquiry – that’s obviously not what I was looking for.

“I completely accept that it’s a process gone wrong, not someone at HMRC who hates me. But it’s their process and nobody dealt with it. If the ICAEW hadn’t got behind this, who knows where I’d be?

“My case was very clearly an internal gaffe, which HMRC admitted, but they were still unwilling to do anything or take responsibility. Agents don’t get a right of appeal when something like this happens, there’s no higher body. 

“HMRC also needs to come to the realisation that accountants in practice are not the enemy.”

*30 May 2024: The headline for this article was changed to correct the spelling of the term 'gaffe'. What a word to get wrong eh?

Replies (67)

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By adam.arca
30th May 2024 08:26

HMRC = judge, jury and executioner.

In what other walk of life is that acceptable?

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Replying to adam.arca:
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By Samsung
30th May 2024 08:57

Post Office!!

Thanks (21)
Replying to Samsung:
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By adam.arca
30th May 2024 13:32

Samsung wrote:

Post Office!!

Indeed, good point. But we know which way that is headed now that the issue has finally hit public consciousness rather than merely being aired here on Aweb.

Not comparable in seriousness (but definitely still very serious for the poor chap in the article and there but for the grace of God for the rest of us) but do Harra & Co really want to expose themselves to that sort of public scrutiny? Or do they still feel they are bomb proof?

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Replying to adam.arca:
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By johnjenkins
30th May 2024 13:44

Given that both major parties have stated publicly that they will give HMRC whatever is needed, I think the answer is yes.

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Replying to adam.arca:
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By tax91
31st May 2024 10:29

Sadly, HMRC are bomb proof and the (i) lack of action (ii) denial of acceptance of fault until dragged in to admittance is proof of that. The simple truth is Mr Harra and his team do not care.
Mr Harra and specifically the Treasury, should consider what would happen to HMRC if most accountants/agents hung up their spreadsheets.
Could I ask whether this matter has been reported (prior to the election being called) to the select committee headed out by Harriet Baldwin?

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Replying to tax91:
Rob Swan
By Rob Swan
31st May 2024 13:00

If most accountants (Agents) hang up their spreadsheets....

Honestly don't think HMRC gives a 'Flying Harra'!
The only thing I think they'd worry about is insufficient audit capacity to cover statutory audit requirements, which won't happen - suppply and demand pricing will ensure that. If your accountant goes away you - the taxpayer/company - are directly responsible to HMRC for your return. If you don;t have/can't get an accountant is HMRC really troubled? Sure, your tax calc may be incorrect but... swings and roundabouts.... And if you really screw up, HMRC will fall on you for whatever they think you're worth.

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Replying to adam.arca:
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By Samsung
30th May 2024 08:58

Post Office!!

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Replying to adam.arca:
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By Dr Fauci
30th May 2024 09:08

Post Office!!!

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By OrmeGoat
30th May 2024 08:48

It shows the value placed on accountants by HMRC.

Thanks (18)
Replying to OrmeGoat:
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By FactChecker
30th May 2024 13:20

Well they prefer them to (spits out of side of mouth) Agents - who they absolutely loathe.

Tom: it's time for action - can you not pass your file to ITV and BBC?

Thanks (3)
Replying to FactChecker:
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By Pam Moreland
03rd Jun 2024 11:00

I cannot understand HMRC's attitudes to agents. Without us they would get nothing done at all. I work in small practice and have a lot of people come to me worried sick as they cannot negotiate HMRC's systems or software to file their personal returns.
It is time Harra & Co realised that we are smoothing their rubbish systems and making them work so that clients can fulfil their ever increasingly onerous obligations. Last wait on the ADL for me was 1 1/4 hours!
I think I would have gone to my MP or the press before now on their totally incompetent and arrogant attitude.
Sadly they wouldn't care if we all downed tools and it would be our client who ended up with the fines.
As for MTD - don't make me laugh. It will be absolute chaos.

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By andrewv100
30th May 2024 08:50

The Post Office!

Thanks (4)
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By agknight
30th May 2024 08:52

Our institutes need to fight this with every sinew, that's their role. Let's hear it.

Aside from the poor service, HMRC should be able to be taken to court for loss of earnings and have to settle a full and fair sum, as in an insurance claim.

This is yet another Horizon style scandal waiting to develop.

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By Justin Bryant
30th May 2024 08:55

We need a new word for this sort of HMRC induced crazy admin. nightmare - Kafkaesquellian perhaps.

Thanks (9)
Replying to Justin Bryant:
By Silver Birch Accts
30th May 2024 13:45

Harraesque Harrashow.

Thanks (5)
Replying to Silver Birch Accts:
RLI
By lionofludesch
03rd Jun 2024 13:14

Harra ssing.

Thanks (1)
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By seonaid anderson
30th May 2024 08:56

I was a bit surprised to read yesterday, In the ICAEW response to the consultation on agent regulation that HMRC should have the right to block out unregulated agents...with some safeguards.. I was remembering the issue from 2021 and am shocked that it is continuing. The impact on agents affected is immense.

HMRC's address system is bonkers. I have one client where although her online record is correctly Edinburgh 3 lots of post have recently been sent to an address in London she lived in for a few months over a decade ago ( fortunately a friend still lives there). HMRC lose so much post their safeguards would be ineffective and they definitely should not have the right to cut anyone off without approvial of a tribunal.

Thanks (11)
Replying to seonaid anderson:
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By sheila t
30th May 2024 09:19

As an agent I've also had HMRC randomly send mail to a very old address for my firm, fortunately I own the property and the tenant has passed it on to me. When I called them HMRC were unable to explain why an old address had been used as most post had been coming to the correct address for years

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By PAULLEWISFCCA
30th May 2024 09:01

the slave systems needs scrapping

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By sammerchant
30th May 2024 09:04

A gaff is a sharp metal hook used to land large fish, while a gaffe is an embarrassing mistake or social blunder.

So a gaffe by Accounting Web!

Thanks (8)
Replying to sammerchant:
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By Dr Fauci
30th May 2024 09:12

I dare you to go round AWEB's gaff and tell them that...

Thanks (8)
Replying to sammerchant:
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By NewACA
30th May 2024 09:29

When I saw the headline, which included "gaff", I wondered what on earth the post was about. I thought it was something to do with the giff-gaff mobile phone network!

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Replying to sammerchant:
Tom Herbert
By Tom Herbert
30th May 2024 09:51

Oh dear. Apologies one and all for my, ahem, headline gaffe. I shall retire to my gaff to contemplate :-)

*Edit - that's been changed

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By Ammie
30th May 2024 09:09

All control and no responsibility. Good luck with any attempt for restitution.

HMRCs relationship with the public is increasingly one of control and demands and less of service and support. Bring on MTD, it will drown the systems they expect will manage and control the taxpayer. It will be years before the intended systems are actually fit for purpose.

Thanks (7)
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By johnjenkins
30th May 2024 09:14

Please correct me if I'm wrong, but my understanding of AML for ASP's is that if there is a problem HMRC will not lock you out if you appeal. It does appear that either I've got it wrong or HMRC have simply bypassed this scenario.

Thanks (2)
Replying to johnjenkins:
David Winch
By David Winch
30th May 2024 09:22

On a slightly different point, if you apply for AML supervision by HMRC as an ASP and they refuse your application they will tell you that (1) you can ask for a review of that decision by another HMRC officer, and (2) pending the outcome of that review you are not registered for AML supervision and must not trade as an ASP. So if you commenced to trade as an ASP when you applied (which you are permitted to do) you must then stop trading while the review is carried out.
HMRC handling of AML supervision is, er, not ideal.
David

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Replying to davidwinch:
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By johnjenkins
30th May 2024 09:34

Thanks for that. What happens if you are already registered, then HMRC pull the plug?

Thanks (2)
Replying to johnjenkins:
David Winch
By David Winch
30th May 2024 11:25

HMRC can suspend or cancel a person's AML registration under reg 60 MLR 2017 where, for example, HMRC suspect on reasonable grounds that the person will fail to comply with their obligations under MLR 2017.
The MLR in this area are not easy to follow and interpret but my expectation is that if HMRC issue a notice saying that a person's AML registration is cancelled that notice will specify a date when that cancellation will take effect and HMRC's view would be that it will take effect on that day notwithstanding any application for a review.
Also if one (sensibly) applies for a review that means one can appeal after the review has concluded (but one cannot have a review and an appeal ongoing simultaneously).
So receiving a notice of cancellation of AML supervision from HMRC looks to me to be very bad news!
David

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Replying to davidwinch:
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By johnjenkins
30th May 2024 11:51

My understanding is that while there is a review or appeal you can still trade. Perhaps things have changed or HMRC are bypassing what should happen.

Thanks (1)
Replying to johnjenkins:
David Winch
By David Winch
30th May 2024 12:04

johnjenkins wrote:

My understanding is that while there is a review or appeal you can still trade.


I think that would be a sensible approach - but I'm not sure HMRC would agree!
Under Reg 56(5)(b) a person can trade as an ASP if they have applied to HMRC to be AML supervised and that application "has not yet been determined". HMRC's view is that the decision is determined when they write to say what their decision is (notwithstanding that the decision may be subject to review and/or appeal).
By analogy, they may take the same approach where they make a decision to suspend or cancel an existing registration.
David
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By cereus77
30th May 2024 09:28

HMRC urgently requires regulating. It is an uncontrolled law unto itself - and massively inefficient and overbearing with it.

Thanks (16)
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By Chris Owens
30th May 2024 09:30

This is another example of Institutionalised Incompetence. It occurs across the board in commerce and authorities. Often those people we can deal with are pleasant and well meaning but mired in a failed system, the intelligent are forbidden from thinking, others incapable of logical thought, often badly educated, or badly trained, or all three. Often the institution (corporate, governmental, etc) washes its hands, as it is following its published rules, therefore is innocent of fault. The amount of time wasted, by all parties, and the scale of consequences on the "customer", the shear cost, is phenomenal; mostly it is accepted as being inevitable and just a cost we have to bear -but it should not be. I expect it contributes to Gross Domestic Product, of a kind.
I am not an accountant, just a citizen; it applies everywhere.

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Replying to Chris Owens:
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By johnjenkins
30th May 2024 09:36

You are so right, Chris.

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Rob Swan
By Rob Swan
30th May 2024 09:31

All - or nearly all - government, public and utility (water, post, transport, etc) institutions and organisations have been slowly degraded by successive govenments over the last 40+ years. Many here obviously apprecate that and understand why and how it happened. There are also many good people within these organisation but the structures and conditions they work under/within are highly disfunctional and have no interest in or ability to improve things. Improvement is akin to restoring a rotten building - better, easier and cheaper to demolish and rebuild than to repair and restore.

What is described in this article is what the profession, (and many other professions, eg. medicine/health service) will have to cope with for the foressable future, if not longer. As the Post Office scandal (and others) have demonstrated, when these organisations/institutions screw up, they blame you - who they exist to serve - not their own failings or those of their masters.

It's no wonder this profession, and many others, are seeing a drop in numbers and lack of new entrants. Why put up with this incompetence, risk, chaos and hastle? As this artice so clearly illustrates; they can destroy you, your business and your life - with impunity!

I think there is only worse to come. I see no hope of any improvement, given the current situation, public sector debt and failure to address the fundamental causes. You can put a sticking plaster on a cut, but 1000 cuts is not helped by 1000 sticking plasters.

There's more of this to come and it will only get worse.
You should not be surprised when it does.
Sorry :(

I just believe that's how things are. I though, in the early 80's, when Thatcher declared that a 'service economy' was the way to go, they (the Government and The City) were effectively destroying our future. My surprise is that I'm seeing it in my lifetime.

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Replying to Rob Swan:
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By johnjenkins
30th May 2024 09:44

Maggie realised that we could not compete with the rest of the world as a manufacturing economy, so "the only way to go" (not Essex) was a service economy. Unfortunately Mr. Brown decided to start to destroy the small business, carried on by successive Governments (hoping that MTD will be the final straw) and that is where we are now and you're right it will get worse until another Maggie or Tony comes along and reverses the chaos.
The other contributing factor is the reliance on high tech to solve all problems.

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Replying to johnjenkins:
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By PAULLEWISFCCA
30th May 2024 09:57

Maggie talked a good job - never did anything about the bankers and the fraudulent monetary/currency system though, for some reason. Lets see the bankers and central bankers operate in a 'free' market.

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Replying to PAULLEWISFCCA:
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By johnjenkins
30th May 2024 10:02

Friends in high places, eh.

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Replying to johnjenkins:
Rob Swan
By Rob Swan
30th May 2024 10:08

The problem with a 'service' economy - as I see it - is that it depends entirely on mineral extraction and/or manufacturing. 'Services' are not self sustaining and the money spent on them has to come from the 'value' obtained from natural resources and their 'conversion' into 'products'. There is no other source of true economic growth.
I think the UK could and can compete in manufacturing. We are a highly inventive nation and high-tech is our best hope - look at Taiwan, we could have done that! We need a governemnt willing to grasp the initiative and 'build up from the rubble', with a keen eye to the future. Fashionable trends - the 'green' economy, AI, etc. is, I believe, somewhat of a false hope and just 'fashion'. Many people have great ideas and inventions but, as we here well understand, starting a business is harder and riskier than it has ever been in modern times. If the Government will fix that, however hard it might be and while also coping with the chaos we have, then there is hope. Otherwise, I fear, there isn't much, if any :(

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Replying to Rob Swan:
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By johnjenkins
30th May 2024 10:24

If I remember rightly, back in the eighties, our IT and financial world was cutting edge, small business was booming, until the artificial recession hit. I really don't think we could have competed on the manufacturing side. You have to ask, why is a business harder to start these days. The answer is simple. Government don't want one man bands cos they are harder to deal with (control). They can't control big business so they are left in limbo. This is why we have a wishy washy Government without the EU to blame. The next lot (whoever they are) will be just the same.

Thanks (4)
Replying to johnjenkins:
Rob Swan
By Rob Swan
30th May 2024 10:54

I'm more incline to believe big companies give governments money, (in return for 'favours'), and small businesses just give them grief. Pave any road with gold and they'll follow it...

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Replying to Rob Swan:
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By johnjenkins
30th May 2024 11:47

Spot on.

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Replying to Rob Swan:
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By cereus77
30th May 2024 13:22

Mmm maybe clarify what you mean by small businesses giving the government grief. In my experience, it is precisely the opposite situation.

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Replying to cereus77:
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By johnjenkins
30th May 2024 13:42

If I May, Rob.
What we mean is that Government can't control the small business cos the people running them can actual think in a common sense way, whereas HMRC et al don't.

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Replying to cereus77:
Rob Swan
By Rob Swan
30th May 2024 14:38

In my experience, (30 yrs. small business), and as demonstrated on thes pages all too often, UK Government throw more difficulties, hurdles and needless red tape in the path of small businesses than ever before; as a result they receive - justly in my view - a lot of criticism for making life harder, not easier, for the vast majority of (small) UK businesses.

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Replying to Rob Swan:
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By cereus77
30th May 2024 13:22

Mmm maybe clarify what you mean by small businesses giving the government grief. In my experience, it is precisely the opposite situation.

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Replying to Rob Swan:
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By Chris Owens
30th May 2024 09:49

Yes, professional reputations in all sectors are severely compromised, let alone the consequences for clients.

Another compounding irritation is that all these people organising the systems, or not, all of those serving the systems, or not, are PAYE guaranteed with pensions paid for etc etc. I am self-employed (32 years), like many or most professionals on the front line, and the financial impact on us is huge.

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By David MacBean
30th May 2024 09:44

A scary tale & one I fear where letters as opposed to online submissions are required. In these situations I send the letter the most expensive way ‘next day delivery to be signed for’, there’s another cheaper version of this which isn’t signed for & can get lost which I found out to my cost.
So my comment on this is more of a question - was the letter sent by what I will call this ‘recorded delivery’ way or was it just by normal I presume 1st class post & would it have made any difference?
If I don’t hear back in 30 days, which is what HMRC give you (& the letter date is always about 5/6 days before you get it) I try & phone someone to make sure it’s in someone’s in-tray at least. With something as important as this tale of woe I’d be phoning every day which with a mobile is easy as queuing not a problem as you can work with it on loudspeaker turned right down as the repetitive frequent recorded messages can give you more mental health problems & probably designed more to get you to hang up rather than being reassured.

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Replying to David MacBean:
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By Joe Alderson
30th May 2024 16:36

In this particular case it probably wouldn't have made any difference, however in the event HMRC "lose" a letter and deny ever receiving it, having it signed for gives you the hard evidence you may need to prove that they did.

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By Martin B
30th May 2024 09:46

Civil Servants are just clock watchers, they are not bothered.
I suspect most are WFH doing little or no productive work.

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Replying to Martin B:
By Nebs
30th May 2024 10:26

Most accountants offices require you to keep a daily timesheet showing which file you worked on, for how long and briefly describe what you did. Maybe all civil servants should have the same.

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