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54% of IPs see HMRC as ‘unhelpful’

OVER half (54%) of insolvency practitioners (IPs) think HMRC makes it harder to rescue businesses than wind them up, according to a survey of the profession by R3, the insolvency trade body.

And nearly three-in-four (71%) IPs believe HMRC has made the insolvency process harder to manage over the past few years with just 10% believing that the taxman was ‘helpful’ when it comes to business rescue.

The survey of 350 practitioners discovered that IPs estimate that a third (33%) of the estimated 480,000 letters and forms they send to HMRC for a year’s worth of cases are duplicates of lost or ignored post, or are copies of letters that have to be sent to multiple HMRC addresses. This is the equivalent to approximately 160,000 excess forms and letters for a year’s worth of new cases.

Some 54% of insolvency practitioners reported that they had to wait over three months for clearance from HMRC to close their last case, while 25% waited between six months and a year.

Half (50%) of insolvency practitioners say that HMRC is one of the creditors they look forward to working with the least with just 8% saying the most.

Over four in ten (43%) said their requests for information from HMRC – to which they were entitled as office holders – were rejected.

Phillip Sykes, president of R3, says: “The government, as a creditor, can do much more to help promote a business rescue culture. At the moment, it can be responsible for lengthy paperwork delays, and creates extra costs for itself, the insolvency profession and other creditors, while its lack of commercial decision-making capabilities undermines business and job rescue proposals.”

“The insolvency profession believes the government’s behaviour as a creditor makes it harder to manage insolvency processes and rescue businesses. It’s one of the creditors the insolvency profession looks forward to working with the least – which is a problem given how often the government is a creditor in insolvencies.”

Another gripe was that some 49% of IPs said they had to wait longer than 15 minutes the last time they called HMRC before their call was answered, it cut off or they hung up. A quarter (25%) said they waited over half an hour.

“Like the rest of government, HMRC does have to operate under tight budgetary constraints,” added Sykes. “These can limit the time it can spend on a relatively small but highly technical and very important area such as insolvency.”

He said the government has a great opportunity for reform and with the shift to a smaller number of centres now is the time to create a specialist insolvency unit to make it more accountable and efficient.”

With HMRC estimating it loses up to £4bn a year as a result of insolvent businesses and individuals being unable to pay tax bills, some 10% of the total ‘tax gap’, according to R3, the body says “the better the government gets at working with the insolvency profession when taxpayers’ become insolvent the more chance it has of shrinking the tax gap.”


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Andrew Tate, R3 president