Tax & admin · 2 June 2016

Catalogue of HMRC blunders could cost business owners and government dear

HMRC blunders
May 2016 was not a good month for the tax man

Millions of pounds of VAT and corporate tax may have gone uncollected since February, after the UK tax authority changed its bank details without informing payers. The news follows the withdrawal of thousands of accelerated payment notices (APNs), and a damning report into HMRC’s customer service.

An investigation by The Telegraph has uncovered a swathe of bounced tax payments in recent months, following a change in HMRC IBAN bank account details which the tax authority failed to notify taxpayers about.

Though the IBAN payment method is used predominantly for overseas transfers, the newspaper highlighted the UK-based firms which have also been affected, including an accountancy firm that received a late payment notice after a VAT transfer was rejected.

Tina Riches, a partner at accountancy firm Smith and Williamson, told The Telegraph: “The change certainly seemed to have been poorly managed as businesses have not had sufficient warning. These cases may just be the tip of the iceberg as although there was some advance notice in a couple of HMRC publications, those notices did not include the vital IBAN numbers needed to make payments. If it is, then there could be a significant hole in the government’s revenues, which is obviously a big problem.”

The news follows the withdrawal by HMRC of swathes of APNs after individuals who had been served with the tax notices contested their legality. Introduced in 2014, the method of collection requires individuals whose tax affairs are disputed to pay the contested sum upfront within 90 days – and has been criticised for bankrupting recipients.

Adam Craggs, head of tax disputes at RPC, the law firm which brought the claim, said: “HMRC’s policy of issuing APNs seems to be ‘shoot first and ask questions later.’ It is regrettable that the taxpayers concerned were put to the inconvenience and expense of having to commence judicial review proceedings before HMRC acknowledged that the APNs were unlawful.”

Both announcements come hot on the heels of a critical review of HMRC customer service published by the National Audit Office (NAO) on 25 May 2016.

The report points to a collapse in service quality in 2015, and questions whether a subsequent reduction in customer waiting times will last.

“HMRC needs to move forward carefully and get their strategy back on track while maintaining, and hopefully improving, service standards,” said NAO head Amyas Morse.

Unsure about your obligations and responsibilities with HMRC as small business owner? Our tax expert has it covered.

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ABOUT THE EXPERT

Hannah Wilkinson is a reporter for Business Advice. She studied economics and management at Oxford University and prior to joining Business Advice wrote for Kensington and Chelsea Today about business and economics – as well as running a tutoring company.

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