OF ALL the issues surrounding the relationship between advisors and HM Revenue & Customs, arguably the one that elicits the most passion is the process for dealing with correspondence and the delays in receiving mail from the taxman. The Commons Treasury select committee has looked at the matter in detail and all the institutes have issued numerous missives on the subject.
It looks as though things are moving on the issue. HMRC has said this is now a director level issue and it is set to release a timetable on a move to an internal scanning system this month. But will this help? And can HMRC ensure that taxpayers and their advisors will receive correspondence on time while undergoing efficiency savings?
The issue of late post is “one of those enduring mysteries in tax life”, says Richard Mannion, head of tax at Smith & Williamson. “For some years practitioners have complained that bulk post issued by HMRC takes days or weeks to arrive at its destination,” he adds. But when he raises the issue with HMRC, officers seem unable to shed light – according to their records everything was sent out on time.
The Treasury select committee saved much of its ire for this aspect of HMRC administration. “Long delays in responding to post at HMRC are endemic,” it said in its report Administration and Effectiveness of HMRC. “Such delays increase demand elsewhere in the system, as taxpayers and tax credit claimants chase progress, increasing costs for the public and HMRC alike,” it concluded.
The length of these delays varies. Paul Aplin, partner at AC Mole & Son, told the committee that a reply can take “two to three months”. When he rings to chase, the answer is often “we can’t find the letter”.
HMRC has apologised for these delays. A spokesman says: “We are sorry that some customers have experienced slight delays receiving some of our outgoing mail.
“We are urgently working to reduce the time it takes to sort, issue and deliver outbound post to help improve our service to customers.”
HMRC’s scanning system is designed to tackle this head on. Under the system, incoming mail will be scanned and available to caseworkers within 36 hours. This will also reduce the risk of post going astray, HMRC says. All that will be needed to identify the relevant office is a single PO Box address and a case reference number. The plan is to implement scanning for the “large majority” of compliance checks during 2011/12. The timetable for the implementation of the scanning system is due in September.
The scanning system will help reduce the time it takes to reach the right person at HMRC. However, this is providing it goes slowly and there are no problems with lost files or data protection – quite a big caveat in itself.
Even if the implementation does go smoothly, it will not defeat the problem of lengthy delays. Post does take time to reach the right recipient within HMRC; however, there are just as many problems, if not more, with delays in mail sent out by HMRC officers. Derek Allen, head of tax at ICAS, says it is “often the case that delays of 10 to 15 days between the date on the letter and the date of delivery arise”. The ICAEW goes further: “It can sometimes take up to three weeks from the date of the letter to the date of receipt for bulk computer-generated and individual letters.”
Indeed, according to Bill Dodwell, head of tax at Deloitte, “HMRC officers are usually instructed not to date the letter, as this should be done separately before mailing – and is why most HMRC letters have a hand-written date”.
As well as inconvenience, this can cause further problems for both the taxpayer and the advisor. As the ICAEW points out: “If the item is a letter relating to a proposed HMRC visit but does not arrive before the date of visit, or a statement of liability with the payslip required for payment, or is a reminder to pay tax where the individual thinks it has been settled.” Delays in sending out letters to taxpayers can be even more dangerous than HMRC failing to receive letters in this case.
According to many advisors, HMRC officers privately put this down to an HMRC process that requires external letters to be sent in internal mail to designated offices before being sent out to the taxpayer. This, of course, is for cost saving purposes. As Dodwell says, “the scale of HMRC’s post is such that they think they need to operate bulk posting arrangements so as to cut the otherwise huge cost”.
With this in mind, what are the chances of the system improving? Initially, we will have to wait for the outcome of the HMRC steering group review. The ongoing agent strategy consultation plays some part in this too – under the proposals, advisors will be able to change basic administrative details themselves, therefore reducing the administrative burden on the taxman.
However, any optimism must be tempered. Bulk posting arrangements from central offices, made with private companies, have helped reduce HMRC’s mailing costs. At a time of huge required efficiency savings, these savings will not be given up lightly.
More importantly, however, is the point made by the Treasury select committee on the scanning system. “This may alleviate some delays, but the essential question of whether there are enough people available to respond to the post in a comprehensive way will remain,” its report said.
This remains the bottom line. Improved processes can only go so far in speeding up the time it takes to reply to taxpayers. But while the number of officers dealing with compliance work continues to decrease, taxpayers and advisors should not expect their queries dealt with any time soon.
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