As accountants work hard to help their clients through the pandemic, they find themselves trapped in a web of HMRC-related miscommunications and delays, writes Director of Wynne & Co Sarah Wynne.
As a profession, accountants have a unique insight into the pressures faced by business owners. During the pandemic we’ve gone above and beyond to keep our clients supported. We’ve helped them claim grants, understand changing rules, and generally navigate a route through what has been a make-or-break period for business.
We’ve seen clients struggling under huge stress, which we’ve experienced a great deal of ourselves. We’ve all pulled together, and HMRC has joined us in that effort. I’m not alone, however, in feeling they could have done more.
HMRC have been difficult to reach, pushed clients to the brink with delays, and expected accountants to take on additional tasks when they were already overstretched, often for no fee and with ever-changing rules.
We empathise – this is a trying time. But HMRC has given accountants no allowance for the difficulties our increased workload is creating. We were expected to rapidly adapt to furlough claims and payroll calculation changes with no agent support helpline.
As a firm, we’ve encountered a litany of blunders and miscommunications in our dealings with HMRC during the pandemic.
Accounting bodies asked HMRC for an extension to the tax return deadline of 31 January. However, they failed to act until six days prior to the deadline, by which time the work was mostly complete.
Our staff are showing mental and physical health issues due to stress, which was preventable. HMRC could have told us that we were going to have another month without penalty. Instead, we endured the worst January deadline I’ve ever seen in 21 years of accounting.
Among other demands, we were asked to advise certain clients the reasons why they were not eligible for SEISS, to reduce calls to HMRC. They claimed their staff were too busy to answer the phone themselves!
VAT and SA frustrations
We have a client for whom we have been trying to get a UTR for a 2019-20 tax return. We first applied online in December 2020, and got a submission receipt. HMRC lost the application, which we waited three months for them to even confirm. We have now been told they are expecting to look at this by June 2021 – pre-pandemic, this would have taken around ten days.
We lodged a VAT claim for another client during December 2020. HMRC denied receiving it. During April, we received confirmation that the repayment would be made – the client is now still owed £22k and it’s having a catastrophic cash flow effect for them.
HMRC are taking up to 56 working days to deal with VAT related correspondence. Clients are left in the lurch; we’re unaware if we should prepare VAT returns for them, or if there are potential penalties for late registration when the delay is HMRC’s fault.
We switched one of our clients onto quarterly VAT returns from annual. Despite receiving confirmation, we couldn’t submit anything. Nine months later that’s still the case. Meanwhile, the same client received a letter saying that because they have not made their monthly payments towards their annual VAT, they are being thrown off the scheme.
We have clients who HMRC have inexplicably stopped issuing VAT returns for. They don’t inform the client – we only find out when we go to file them. HMRC has informed us there’s an issue with the address and we’ve got to try and get that resolved. As the process doesn’t seem to work online, we have had to write to HMRC in paper form, and we still can’t seem to get them to make the corrections.
Delays in tax repayments have also hit our clients during a time of financial crisis. One client was due a £4,500 repayment when Covid was first affecting sole traders, without any help. HMRC held onto this for four months, despite numerous calls. We couldn’t charge this time to our struggling client, as it wasn’t his fault. Meanwhile the client couldn’t trade, and had no income whatsoever.
We eventually established that the issue was related to £100 that HMRC said our client owed from several years ago, which HMRC had never chased. Instead of just deducting the £100 and giving him the rest of the repayment, they held onto the whole lot.
The SEISS grants were a real challenge because HMRC didn’t give us the ability to claim them for clients. They made the client do it – and most of the time the client didn’t have the information they needed to make a claim at home.
When you phone HMRC you’re frequently told, “We can’t do that in our department”, “We can’t see this on our system”, and “We’re trying to work at home”. They’ve made no allowance for the fact that accountants have also had to work remotely.
We had to recruit an additional employee, who spends 80% of her time dealing with these issues (usually on hold). Because there’s no dedicated agent line for VAT, it’s not unusual for our team members to be on hold for 45 minutes before somebody even answers. When we eventually make contact, the problem is rarely resolved.
What would we like from HMRC?
A bit more consideration for us as a profession, and the pressures that we and our clients are under. We don’t want to whinge, because our clients have got it worse, but trying to get hold of HMRC to resolve issues has been a nightmare.
All these issues have hit us against a backdrop of having to deal with Brexit, the new domestic VAT reverse charge rules, and the extended IR35 rules. We are working hard to help our clients meet all of HMRC’s requirements, but we really need HMRC to meet us halfway.
It must be acknowledged that we have dealt with some incredibly helpful members of HMRC staff, who have themselves expressed frustrations over the difficulties with their own systems. Sometimes it’s a question of getting through to the right person. So, we have some sympathy for HMRC employees too!
An HMRC spokesperson commented:
“We’re doing all we can to offer the best possible service to our customers at this difficult time, whether it’s supporting them with their taxes or delivering the government’s support schemes we’re working hard to ensure they can access the help they need and have adapted to serving customers in the pandemic.
“Wait times for some of our services are longer than we would like, and we’re sorry about the inconvenience this causes to customers at busy times. We’re continuing to redesign our business to meet our customer demand needs in the most effective way, based on our available resource.”