Price of HMRC's delays in dealing with post

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As we know, our friends at HM Revenue and Customs don't look at their post for months after it is received. This has many detrimental effects on the relationships with taxpayers, and also those who have decided to come in from the cold and pay the tax they should have been paying for several years.

If I have a new client who wishes to own up to income received which should have been declared, he or she probably doesn't have a Universal Taxpayer Reference (UTR) and the only way of applying for one is by post. At the same time one wants to send a “marker” letter to HMRC to start the process of getting the individual into the system and establish it is at their own volition in case (a long shot) HMRC get their oar in first. That would theoretically increase the penalty potential which one wants to keep to a minimum.

The trouble is that the first response from HMRC will be considerably delayed. It takes months to get a UTR. It takes an age for HMRC to respond to a marker letter after they eventually read it and then allocate it to a case officer. You might say that offenders deserve what comes to them but once someone has decided to make a clean breast of things, I think it is only fair that they can get matters settled and get their tax (and interest and penalties) paid.

Of course HMRC also wait longer for their money because of their tardiness in dealing with these matters even after we get as far as being supplied with HMRC red spot stickers to mark our correspondence as more urgent than that from the hoi polloi. It just doesn't seem right, but HMRC apparently have 15 million open cases which means issues of any sort including over- and under-payment matters that haven't been resolved. They also have more unresolved than they know about with all those confessions sitting in their pile of post.

HMRC postal delays can cause hardship

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My client has a part-time job. A year or so ago her husband was out of work for a short while. They both had to go to the JobCentre to see whether they qualified for benefit. They didn't qualify. However for some reason the JobCentre told HMRC that my client might be eligible for Jobseekers's Allowance. A year later HMRC issued a Coding to restrict allowances so that my client had to pay tax on her small salary because HMRC thought she had unemployment benefit as well as being employed.

I called HMRC and told them that my client is not in receipt of benefit and never has been. HMRC's call operative told me they will not issue a Code to refund tax that has already been deducted in error until my client obtains a letter from the JobCentre confirming that she never had any benefit. Her word and mine are not good enough. “Well” I said “you take three months to look at the post”. HMRC's person admitted this was true.

This should be a simple matter to deal with. However for an individual with small earnings HMRC's bureaucratic requirement for a letter from another Government department and refusal to take the word either of someone who completes a tax return or of her agent is quite likely to cause hardship. If HMRC was anywhere near up to date with the post it wouldn’t be a problem.

This sad state of affairs is due to cuts ordered by Gordon Brown. These cuts have made HMRC very inefficient and they fail to deliver a proper service to honest taxpayers. What hope they can catch the tax evaders? They very likely take three months to open all those letters from “A Well-wisher” grassing up the dishonest tax evaders and how long would it be before they took action? Actually a long time judging by how long it has takes to get people registered in the system when they have come clean of their own volition.

HMRC postal delays and a re-think from me

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As you will know if you have been a regular reader of Taxing Times, about a month ago I copied all the postings up to date to my main business website, and you can see them here together with the new postings since the transfer. However, a guy can change his mind. I realised I did still want to continue to talk about the day-to-day running of my business and express my views perhaps a little more freely than might be appropriate on a company website, so I have decided that this blog will live on. At the same time, we have had the opportunity to introduce a new look and I hope you like it. Please do follow both blogs.

One of the problems that HMRC “customers” experience is getting their correspondence dealt with. Actually the real issue is the length of time HMRC may take to actually read what has been sent to them, As a practitioner, I know that some of my clients find it hard to believe how long things take. Some matters can be dealt with easily over the telephone, but anything involving the completion of a paper form can take absolutely ages.

HMRC admits that 7% of post relating to PAYE Coding issues is currently not dealt with three months after receipt. One particular consequence I have seen is that a client has now received three questionnaire forms P161 relating to a new private pension. I filled in the first one my client received promptly and it was signed and sent off. Meanwhile over three months HMRC's computers have churned out two more. I have explained to the client what is happening and have telephoned HMRC but that makes more work for me for which I will not be paid.

I keep my clients is the loop, but HMRC's delays in dealing with simple matters do stretch credibility. To be fair, they are open about these deficiencies and have kept us agents informed. I am not divulging some secret information from a Revenue mole.

Of course the problems are due to spending cuts; not the programme of cuts now proposed by the Coalition, but the cuts imposed by the previous Government. HMRC has far less qualified staff (people who know about tax who would command higher salaries) and relies on call centres for much of their interaction with the public. The operators are only trained in the basics and if they are presented with anything beyond those they have to send an email to an anonymous person in the relevant office and even we agents are not told who so it is harder for us to follow up if something isn't dealt with.

Do you experience delays dealing with HMRC? Is there any practice topic you would like me to cover?

© Jon Stow 2010