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HMRC reforms to customer service

HMRC has recently announced the next step in its ten year modernisation programme which includes the creation of 13 new regional centres over the next five years and the phased closure of 137 offices by 2027.

The public accounts committee reported in October 2015 "little or no progress has been made" in HMRC service to taxpayers (customers).  One issue in particular which the report was critical about was customer service which was "unacceptable". 

Since 2008 the UK has reduced the cost of tax collection by more than any OECD country except Turkey, and the move towards a low cost tax administration is set to continue. Long response times for telephone services seem to be here to stay.

Consider whether HMRC needs to be involved in the first place?

In fast moving transactions where time is a critical factor, an application for a ruling on a question of law which can take up to six weeks or longer may put the whole transaction at risk.  Factors which indicate it may be worthwhile pursuing a ruling are:

  • Need for certainty on valuation – especially for statutory share schemes where HMRC are required to provide a ruling.
  • Complex area of law where the legislation is unclear and guidance does not cover.
  • Large amount of tax at stake.

Where these factors are not in place, HMRC may in any event decline to provide a ruling.

Get it right first time

When communicating with HMRC it can take weeks for written correspondence to be opened, read and responded to.  With each further round of correspondence introducing additional delays, it is important to present full arguments – with full disclosure of facts – in a logical and clear manner, hopefully eliminating the need for additional rounds of correspondence. 

Plan for scrutiny

Where commercial considerations preclude a ruling from HMRC being sought, it is even more important that you ensure that the tax position is properly analysed and understood. This should involve you taking legal and accounting advice and the tax position taken will need to be fully recorded and justified. It is not safe to assume that HMRC will be too overworked to retrospectively scrutinise an individual's or company's tax affairs.

Summary

With long response times set to be the norm for the foreseeable future, it has never been more important to get your relationship with HMRC right.  In the first instance ask whether an answer from HMRC is required at all, and if it is then HMRC should be engaged at the earliest possible opportunity with detailed and accurate information and a properly formulated analysis. 

DWF's tax team can assist you with minimising the effect of HMRC's ongoing service problems on your business.

Authors: Richard Armstrong & Samuel Dooley

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

John Toon

Partner - Head of Commercial Tax

I am a Partner and Head of Commercial Tax.