BATTLE-AXE CHALLENGES HMRC WITH A LIST OF NEW YEAR RESOLUTIONS

By Amanda Vigar, Managing Partner, V&A Bell Brown LLP

One New Year’s resolution that many people set themselves is to get fitter.

But it is not just people who need to lick themselves into shape, there are organisations that need a major fitness wake-up call.

One outfit that desperately needs to shape up is HMRC.  Alas, as it does not operate on a free market basis, its customers - aka the nation’s taxpayers who also pay to keep it running – can’t move to an alternative service provider no matter how bad its service is!

Service that, if replicated in the private sector, would see customers vote with their feet so HMRC would go out of business.

During the last few years, dealing with HMRC on behalf of my clients has become ever more painful. Not just atrocious levels of customer service but, even more worryingly, serious inaccuracies in its paperwork and online information. The Public Accounts Office has confirmed it is not just me feels this way!

HMRC has been labelled as no longer being fit for purpose.   Businesses set themselves tough performance targets so it is appropriate that some are set for HMRC in 2016.

·         Get your sums right

Almost daily I see clients getting blatantly and obviously wrong tax demands.

This includes one client whom we know had already paid everything due to HMRC. So, imagine their horror when they were told they were more than £1,700 in arrears. 

When challenged, and having admitted the mistake, even more horrifying an HMRC employee admitted “this happens all the time”.  I hope the call was being recorded!

·         Pay tax refunds quickly and efficiently

It often takes an inordinate amount of time for monies to be repaid by HMRC – our record is a client being given a rebate payment date that was more than three years from when it was brought to HMRC’s notice.  Strangely, when you owe them……

Often the amount involved means such a delay could push some small employers over the financial brink. 

·         Be consistent

We often find that correspondence from HMRC includes totally different figures to those that appear on its online systems – when they do appear that is.

Giving taxpayers and their agents access to reliable, and consistent, information would greatly lighten HMRC’s workload.  If they got it right they could save massive amounts of time (and taxpayers’ money) not having to deal with queries about their internal discrepancies. 

·         Improve the HMRC telephone service – or offer a callback service

Research published last month by Which?  revealed callers are, on average, held in phone queues for 38 minutes before speaking to an advisor. With HMRC using 0300 numbers a taxpayer could be paying up to 45 pence a minute, depending on their type of phone, so that wait could cost a massive £17

I do wonder how many people give up long before that sort of time has elapsed.

Don’t just go for easy (but meaningless) targets

About 25 percent of tax prosecutions last year involved less than £10,000 of revenues, according to the National Audit Office, not exactly the high-value, high profile ones that you’d expect – but it’s easier to hit a volume target. 

Indeed, the NAO raised concerns about HMRC focusing on easier prosecutions to hit the annual target of bringing 1,000 cases against tax cheats.  The cost of this is disproportionate to the amount being claimed, especially as the recovery rate is appallingly low. HMRC should focus on the total amount of tax being recovered rather than the number of cases.

So, SHAPE UP HMRC!

Unless HMRC adopts my New Year Resolutions and puts its house in order, I dread to think of the future - especially as in the next decade 170 regional tax offices are likely to close and be replaced with 13 larger hubs in a bid to shift more customers to online tax services.  My heart sinks even further!

This Chancellor is Definitely For Turning!

By Amanda Vigar, Managing Partner, V&A Bell Brown LLP

Although some pundits have claimed that there were no shock announcements in the Autumn Statement, to me there were some quite unexpected and, from the Battle-Axe’s perspective, far from pleasing announcements.

The biggest headline grabber was undoubtedly the U-turn on tax credits.  Whilst most people seem to agree that the system needs to be completely overhauled to make it more attractive for people to work and strive to improve the quality of life of their family, we felt that what had been proposed harmed those who were trying to do just that.  Time for the Chancellor to re-do his homework!

For a long time, the Battle-Axe has been calling for a reform of the rates system.  So, the announcement of the abolition of the Uniform Business Rates and passing powers to local authorities is a step in the right direction.  However, the current proposals don’t go far enough because there is still the serious and outstanding issue of the movement in relative property values to be addressed.  So whilst Mr Osborne has rotated slightly on this he’s not turned enough for me.

One very welcome volte-face was over the proposals on travel expenses for contractors/freelancers.  

It seems that for now only the few that are caught by the draconian rules of IR35 will be affected.    I say “for now“ advisedly – HMRC and the Treasury are still muttering away about root and branch changes to the rules on the treatment of contractors. 

 Let’s hope that the potty proposals that were run up the mast recently implying that anyone on a contract lasting more than a month must be an employee have also been brushed right under the middle of the plush carpets of No 11.

Despite promising not to raise any of the existing taxes, Mr Osborne has managed to introduce another payroll tax – the apprentice levy.  

So businesses will be paying to train their staff and pay the levy – nice one George! 

Whilst it won’t (at least initially) hit smaller businesses you have to wonder how long it will be before the “allowance” that removes the new tax will disappear.

On a side note, the allowance against the apprentice levy was pretty much the only acknowledgement that there are small and medium sized entities driving the UK economy. 

The Battle-Axe’s team looked in vain for any really assistance to this massive section of the employing community.  Again, a missed opportunity to underpin a major driver of the UK’s economic growth disappointingly eclipsed by more grand political gesturing about the Northern Powerhouse and selling off of old prisons.

Oh, and don’t even get me on to the potential effect that the spending cuts will have on the already appalling quality of service we see from HMRC……right at the time when we’re all going to get our own digital tax accounts! 

Given that HMRC can’t currently match up the figures on their portal to the amounts they agree taxpayers owe or are owed goodness only knows what chaos the combination of personal digital tax accounts and spending cuts will have.

All in all, the Autumn Statement seems like an attempt to please various groups of highly vocal lobbyists and lacks focus on what is important to the wellbeing of the UK. 

We believe that this was a missed opportunity to help get people working to grow the economy.  Chances to make taking jobs really benefit people and to help employers to afford to expand their workforce and spend less time on red tape could (and for me should) have been in there.

Let’s just hope the Spring Budget is a bit more coherent.

It’s official – HMRC is not fit for purpose!

For fear of telling our beloved government, ‘I told you so,’ there are now official reports setting out just how horrendously badly HMRC is doing.

Maybe the House of Commons’ Public Accounts Committee could have just read the wise words of the Battle-Axe rather than spending money on a long report that concluded, ‘We are concerned that it has made little or no progress on a number of important issues that this Committee has raised before. The standard of customer service also remains unacceptable.’

Needless to say, I would put it somewhat stronger (and more succinctly) than that!

Sure, HMRC claims to be collecting more tax. However, this should be no surprise given that government figures say that the economy is gradually coming round.

Even then, I’m unconvinced this is the result of good management by HMRC rather than simply a sign that people are paying amounts that they don’t actually owe. We see, on a daily basis, taxpayers getting demands from HMRC, which simply aren’t right.

That’s no surprise as often one part of the HMRC system shows a radically different number to another part then, a few months later, we hear that HMRC has been issuing erroneous demands.

Strangely enough, the admission comes just long enough after the issue that a lot of people will have paid the penalty and, needless to say, refunds only appear if demanded by the taxpayer!

Possibly more shocking is the decline in customer service: only 50% of calls are being answered at all and only 39% are answered within five minutes. That’s against a target of 80%, which was seen to be ‘woefully inadequate and unambitious’, and significantly worse than last year. It is some achievement to miss the barn door by quite so many miles!

Our experience is that you can wait nearly an hour on hold, so I suspect this view of HMRC’s customer service is over generous because it doesn’t take into account the number of people who have given up even trying to ring them as they’ve never had a call answered!

When challenged over this, HMRC couldn’t say how they will improve; only commenting that ‘they are still struggling’. That should be no surprise as its performance measures don’t cover delivering a consistent, let alone an improving, level of service. It claims that its service levels have dropped as calls are taking longer than anticipated. Maybe if it introduced the long awaited ‘one and done’ system and made sure taxpayers and their agents have access to reliable, and consistent, information, the calls would be far shorter and fewer in number.

I for one won’t be holding my breath over this and fear that it will get worse before it gets better. Does anyone know of a desert island, with suitable Triathlon facilities of course, that a Battle-Axe, with the marks of a phone handset almost permanently embossed on her ear, can move to? 

Politicians 'steal' ideas from Business Battleaxe

By Amanda Vigar, Managing Partner, V&A Bell Brown LLP

While some commentators have accused George Osborne of stealing ideas from the Labour Party, those of us in the know realise that actually, they’ve both just been reading the Battle-Axe’s recommendations!  In particular, my call for a major reform of the business rates system.

For a long time, I have been an exponent of locally-raised money being spent locally.  Why have two systems of raising taxes when the money goes into the same pot? In fact our multiplicity of intertwined tax streams goes way beyond this – but that’s something for another Battle-Axe barrage!

The Chancellor has announced that local authorities will have the ability to set level of business rates and retain them for spending locally.  For me, it’s the first part of this that is the most important because it enables local government to set business rates to attract businesses into their area and, most importantly, to stay there as they grow.  There are plenty of reliefs for smaller businesses and wonders such as centrally-determined exemption zones, which have led to some very odd corporate structures to manipulate the system. We’ve seen companies moving from plush establishments in rates free zones to less salubrious premises as soon as full-scale rates kick in.  This means revenue is actually being lost!

The change will also mean that where spending decisions are made will be right next to the heart of the business community.  So, there should be far more local engagement in what the money should be spent on – if not, then the councillors may rapidly find they lose their seats!  With the drive towards the Northern Powerhouse, this move makes sense - otherwise it might turn out to be yet another pointless bit of Government spin.  Local businesses remote from London know the challenges of being heard when they’re outside the immediate range of vision of the Mandarins in Whitehall.

I was, however, very disappointed that none of the major parties have seen fit to deem it time for a re-valuation exercise.  The property values on which rates are based are now so woefully out of date that they’re not even close to reflecting the way that the country has developed over the last few decades.   The saving grace is that the ability to set rates locally means that, although the valuations are outdated, at least the pence per rateable value figures can be adjusted to smooth some of this effect.  That said, what if one are of a town is out of sync with another area – e.g. a new prestigious business park against an old run down area of industrial units that are not as easily accessible?

George’s comment:  “We will give councils extra power and responsibilities for running their communities” makes it fairly clear that (as ever!) there are likely more than a few devils in the detail.  My concern is that the headline grabbing announcements may turn into the proverbial Paper Tiger – much as I fear the whole Northern Powerhouse concept may be doomed to do as well.

I’d also like to take this opportunity to thank everyone who supported and sponsored me as I took on the Last of the Summer Tri, my first ever triathlon.   So far I’ve raised in excess of £1,500 with more donations still coming in.  It was one of the toughest challenges I’ve ever faced, but I have to say I enjoyed every minute of it.  The thought I was raising money for two very important causes, Motor Neurone Disease Association and One Good Turn, was a real motivator and helped drive me on.  

Turn that competitive streak into a charitable one!

By Amanda Vigar, Managing Partner, V&A Bell Brown LLP

It seems to have become something of a corporate competition - business owners trying to outdo each other with how heavy a workload they and their company has.

Complaining about not having enough hours in the day, how they have to burn the midnight oil all the time and staff having to work flat out are seen as a status symbol and a sign of success.

I hear so many variations on the same theme -

·         “We have to focus on the core business, we can’t afford to take our eye off the ball with outside distractions.”

·         “It is just a waste of time getting involved in that sort of thing.”

·         It’s not our responsibility to save the world.”

·         “Someone else can do all that touchy feely stuff.”

Come on - hands-up how many of you reading this Business Battle-axe column have been guilty of this?

Yes, business owners and their staff have to graft really hard to bring home the bacon. There is no getting away from that fact.

But I believe that every business owner has a social duty to make time in their hectic schedules for a bit of philanthropy. Being busy is simply no excuse.

Everyone can make time if they want to. And what could be better than finding a slot in the diary to do a bit of good for the local community or a worthy cause or charity?

There are great benefits in embracing corporate social responsibility.  You can help a cause close to your heart, it helps you take a well-earned break from the usual routine and grindstone, and then there is the feel good factor.

Why not get staff involved? – encouraging them to become volunteers or take part in charity events can enhance a firm’s personnel development strategy and help build teamwork. And not least give employees the chance to have a bit of fun.

Never let it be said that the Business Battle-axe does not practise what she preaches.

Having hit the age of 50, I have set myself the challenge of completing my first ever triathlon – the Last of the Summer Tri - in the name of charity.  Outside work most of my spare time is taken up training for this endurance test.

I am supporting the Motor Neurone Disease Association (MNDA) – a cause close to my heart as I lost my Dad to this horrible disease in 2013.  The other worthy cause is Huddersfield-based One Good Turn, which does great work improving the quality of life of individuals and families experiencing poverty and isolation.

For those who may be interested I have set up two mydonate pages:

MNDA - https://mydonate.bt.com/fundraisers/amandavigar1

One Good Turn - https://mydonate.bt.com/fundraisers/amandavigar2

So I am throwing down the gauntlet – or in my case a rolling pin!  How about turning that competitive streak into a charitable one?

My rallying cry is – come on all you business leaders across the Examiner’s circulation area I challenge you to follow my Business Battle-axe lead.

Find time to do something for a good cause. And don’t forget I won’t accept any excuse or take no for answer!

ENDS ­

Business Battle-axe Amanda Vigar is facing one of her toughest challenges ever – a triathlon in aid of two charities.

Amanda, who is Managing Partner at V&A Bell Brown, is taking part in the Last of the Summer Tri on October 4 to raise money for the Motor Neurone Disease Association and One Good Turn.

The endurance challenge will involve swimming 400 metres at Holmfirth Pool, riding a bicycle 24km around Holmfirth that has a total ascent of 320.14 m and a maximum elevation of 195.45m, and then running 5.6K on a similar route to the cycle.

Amanda, whose business is based in Holmfirth, said: “I like to exercise to wind down after a hard day’s work and I thought why not put this to good use by raising money for charity.  As I reached 50 this year, I told myself it was now or never!

“As the Business Battle-Axe, I am used to throwing down the gauntlet - or in my case brandishing my rolling pin – and taking on challenges both inside and outside of work. This is certainly going to be one of the toughest challenges I have taken on – but I am thoroughly enjoying it.

“I have chosen to support the Motor Neurone Disease Association as it is especially close to my heart as I lost my Dad to this horrible disease in 2013.  The other worthy cause is One Good Turn, which does great work improving the quality of life of individuals and families experiencing poverty and isolation.”

The MNDA is dedicated to improving care and support for people affected by MND, funding and promoting research, and campaigning and raising awareness so the needs of people with MND are addressed by society.

One Good Turn, based in Lockwood, Huddersfield, offers practical support, such as providing household essentials such as washers, cookers, fridge freezers, beds and other household furniture. It also offers a listening ear and signposts people to specialist services if further help is required.

Anyone who would like to support Amanda’s fundraising efforts can log onto to her mydonate pages:  

MNDA: https://mydonate.bt.com/fundraisers/amandavigar1    

One Good Turn: https://mydonate.bt.com/fundraisers/amandavigar2

Business battle-Axe recounts "painful" experiences dealing with HM Revenue & Customs

By Amanda Vigar, Managing Partner, V&A Bell Brown LLP

 

It is not often that the Battle-Axe’s rolling pin spins on its own without human input, but we have had three incidents this week alone, that have had it dancing a veritable tarantella – and, surprise, surprise, they all involve HMRC!

Over the last few months dealing with HMRC has become steadily more and more painful, but the events of the last seven days have left me horrified at the sort of service and behaviour that they clearly think is acceptable.

Case number 1 concerns a small employer. They took on a new employee part way through the 2014/15 tax year.  Because of the salary/bonus the employee had received from his previous employer, and the way the PAYE system works, in certain months of his old employment higher rate tax had been deducted from his salary. 

Now, across the year as a whole his package (including the new employer’s wages) was below the higher rate threshold.  So, the employee was rightfully entitled to a refund of the excess higher rate tax, which was paid back to him via payroll.

Now, if this had been a bigger employer the employee’s refund would probably just have reduced the amount of PAYE to be paid at the year end with no big issue. However, because the business was very small, the refund was actually more than the PAYE due to be paid.

But that’s no big hassle, HMRC just reimburse the employer right?

Well, that’s the concept and we would normally have expected this to happen within a couple of weeks of tax year end payroll returns going to HMRC – so, sometime in April or May.  We’re now in August and, despite our active chasing, still no refund.  This week we rang again (and after being on hold for 47 minutes) were informed that the repayment would be made in, wait for it, February 2016!  Errrr…that’s the employee’s money that the new employer has already repaid (as required) and which HMRC are not entitled to (and actually never have been) being held back for no reason.

This means our client is going to be waiting to get back money that was deducted in relation to a period when the employee was working for someone else for well in excess of 12 months.

In a similar vein, another client had what turns out to be the misfortune to have a key employee go on maternity leave.  That’s OK as the reimbursement of statutory maternity pay (SMP) is done by reducing the PAYE payable each month.  But again, the SMP was more than the PAYE due so the extra SMP payment needed to be reimbursed by HMRC.  Believe it or not, this time, the estimated payment date is March 2016.  So here, the employer has lost a key member of staff in a small business for at least nine months, putting added strain onto the business, and has to wait well over a year to be repaid the SMP that they have paid out on behalf of the Government. 

In both cases, the amounts involved would be enough to put some small employers into the bankruptcy courts!  Of which more in a little while. And remember, the Government is currently talking about pushing big businesses to play fair and pay small businesses more rapidly.  Pots and kettles comes to mind…..

Now the pièce de résistance: HMRC’s debt collection system!  We’ve long suspected that HMRC have a random number generator that they use to create documents to send to similarly randomly selected companies or individuals. Fortunately, we do monthly book keeping for the third client in this sorry list, so we know that they have paid everything that is due to HMRC.  Unsurprisingly therefore, this business owner was horrified to be asked to pay £1,700-plus of arrears.  HMRC has confirmed that the overall liability agrees with ours, and the debt collection team can’t explain why or how the claimed arrears have arisen.  Better still the online portal that we use to check HMRC balances gives a totally different figure to the amount they’re attempting to collect.  When pushed to explain this apparent discrepancy, an HMRC employee actually admitted that “this happens all the time, it would appear that our systems don’t work” – talk about stating the obvious!  But at least we now know what dear old ERNIE is doing in its spare time when not picking numbers for the Premium Bonds.

While I would like to think that my clients have just been unlucky, this pattern of HMRC errors (almost always seemingly going in HMRC’s favour if we didn’t pick them up) is growing all the time. Exercising my democratic right I have made my views very clear to the client’s local MPs and to David Gauke - the Minister responsible for HMRC. 

Sometimes that institution seems to forget that it is part of Government and therefore exists for the people of this country – not against us!

If you are having similar issues, I would urge you to contact your MP and let them know what has happened. Do feel free to copy the BattleAxe in as we want to monitor both the issues and HMRC’s overall performance. Maybe when they get sack loads of mail and their e-mail boxes are bursting at the seams, they might take things serious. 

Oh yes, to bring this sorry tale to and end and very sad to say, we also have seen cases where HMRC has actually petitioned for the winding up of a business based on blatantly wrong information from their systems!

To solve this ridiculous situation I don’t know what my weapon of choice should be –what’s your vote: my rolling pin or a magic wand?

ENDS