Falling service standards at HMRC have resulted in the temporary closure of helplines, but this policy is likely to lead to more errors in the short-term, warns Katharine Arthur, head of private client, haysmacintyre
Having started with an initial budget of £226m in 2016, HMRC has now spent £1.3bn on Making Tax Digital in the name of greater efficiency – and the process is still yet to be completed.
And in what some might call another blow to aspirations of efficiency, HMRC is also trialling seasonal closures of its self-assessment helplines. The reason is not a lack of demand for the service - instead, it is an attempt to free up resources to deal with mounting problems elsewhere across its remit. The self-assessment helpline closed on 12 June and is not due to reopen until 4 September. Resource is being redirected to dealing with HMRC’s not insubstantial backlog of mail.
We have also seen the agent dedicated helpline dealing only with certain matters in advance of the 31 January filing deadline, and HMRC letters to taxpayers and their agents are sent without an email address or phone number to reply to, relying instead on an overstretched Royal Mail, and HMRC’s yet incomplete digital services.
This conjures the sense that HMRC is not running at its maximum efficiency. Instead, these developments imply that rather than addressing resource and operational issues head-on, HMRC is hoping these will resolve themselves, without a completed digital strategy. Unfortunately, many taxpayers and tax professionals alike simply cannot afford to wait for this to happen. I fully support the move to digital services and a self-serve approach, where possible. However, a lack of direct communication with HMRC regularly leads to simple issues taking months to resolve, and to added costs for taxpayers and their agents.
Of course, as with many other government departments, HMRC is a victim of a lack of funding and, as a result, is under-resourced and overstretched. We must remember that HMRC’s core purpose is to ensure that both itself and other arms of the government are properly funded by collecting the tax that is owed to it. But, due to persistent inefficiencies that are principally the result of continuous underinvestment, HMRC remains unable to close the tax gap it aims to tackle and, consequently, address ongoing funding issues across public services.
A problem delayed is not a problem solved
I have every sympathy for HMRC staff. Every business and public body must prioritise where their resource is focused. However, the simple fact is the self-assessment is not, or at least should not, be a ‘seasonal’ issue. By closing or restricting the helplines ‘seasonally’ - essentially doublespeak for a three-month closure - HMRC may unintentionally be discouraging taxpayers from filing their self-assessment returns early. The likeliest consequence will be an increased caseload for HMRC to deal with when the helplines re-open at the end of this trial.
An increase in errors is another potential danger. Without any recourse to input from HMRC, the unrepresented taxpayer will likely be unable to answer questions that, though daunting to the layperson, could be clarified simply enough by speaking with an HMRC agent. That risks tax returns being filed either incorrectly or not at all – which again may cause further issues down the line. After all, for the average taxpayer, filing self-assessment tax returns is typically a time-consuming (and more than occasionally frustrating) business and consequently exactly the sort of thing that is likely to be forgotten about or done incorrectly if help isn’t made easily available.
It is past time to invest
If tax returns are not filed, or are filed incorrectly, HMRC will then be forced to spend time and resources it simply does not have to correct these errors and chase taxpayers for the correct amount of tax.
That looks set to increase the administrative burden on HMRC at a time when it is evidently unable to cope with the demands that have already been placed on it. Indeed, there appears to be a growing danger of HMRC becoming trapped in a vicious cycle where more and more tax goes uncollected as a result of the tax office’s efforts to chase taxpayers for money owed.
With the UK tax gap already costing the Exchequer a sum in the region of £42bn annually, this is not a cycle the Treasury can afford HMRC to slide into - particularly as economic headwinds continue to buffet the public finances.
Which raises the question – what can be done to help HMRC? The answer is investment, both into the technology and the staff that HMRC needs to fulfil its responsibilities. Tax agents and their professional bodies are more than willing to assist.
Given the sum already spent on Making Tax Digital and improving efficiency, we will no doubt see accusations of throwing ‘good money after bad’ when discussing investment into HMRC. Such accusations would be misplaced. A properly functioning tax system is not a luxury – it is essential. More to the point, although investing in HMRC to ensure that it can carry out its responsibilities efficiently may be expensive in the short term, it will not cost nearly as much as inaction. After all, we can already put a price on that - £42bn a year.
Author: Accountancy Daily 25 July 2023
https://www.accountancydaily.co/seasonal-hmrc-helpline-closures-symptom-struggling-tax-system