2 October 2021

HMRC Performance Criticised by Accountancy Bodies

The pandemic has been tough for businesses in all areas and sectors and the government has introduced various support initiatives to help firms to navigate lockdowns and restrictions and come out the other side with their business still intact. The pandemic was still in full swing as Brexit changeover occurred too, giving many businesses significant changes as well as challenges to face at the end of the last calendar year.

HMRC has been busy implementing changes to systems not only as part of the ongoing Making Tax Digital (MTD) project, but also to allow for changes to reporting processes relating to Brexit and Covid. However, HMRC has been urged to address what is described as "poor service levels" by two chartered accountancy bodies, namely the Institute for Chartered Accountants in England and Wales (ICAEW) and the Association for Chartered Certified Accountants (ACCA).

Feedback from ICAEW members leads the body to believe that there is a severe lack of resources within HMRC, that could mean it is unable to uphold its Charter commitments. ICAEW goes on to suggest that HMRC has struggled to provide a satisfactory level of business-as-usual service, let alone implementing system changes for MTD, Brexit and Covid.

The HMRC Charter is legal requirement under the Finance Act 2009 and is a document which must, according to the legislation, "include standards of behaviour and values to which Her Majesty's Revenue and Customs will aspire when dealing with people in the exercise of their functions." The latest update to the charter was published in November 2020 and some of the key points included in this iteration were bolstering the decision appeal system, responsiveness to complaints and ensuring information provided is clear and consistent.

Both ICAEW and ACCA feel that the increased level of work with which HMRC has been tasked has not been matched with an adequate investment in resources. Many businesses and individuals have suffered and HMRC's relationship with compliant taxpayers and agents has been damaged as a result. An example given was the delay in VAT registration for new businesses. Those who are trying to pay VAT but are unable to without being registered are essentially punished for simply trying to do the right thing.

However, it should be noted that both ICAEW and ACCA did commend HMRC on its strong efforts to improve despite the recent disruption caused by the pandemic. HMRC announced a new flexible working policy on 24th May 2021, which will allow almost 64,000 workers to continue working partially remotely once restrictions are lifted. This is to form part of a wider overhaul within HMRC which aims to address what its Chief Executive, Jim Harra had described as a "crisis" of pay and working conditions.

Whilst the Charter should be met and is required by law, it is recognised that the pandemic has caused problems for everyone in some shape or form and HMRC is no exception. The feeling seems to be that meeting the Charter has been made more challenging for HMRC due to a lack of resource, rather than for want of trying. Some new areas are going very well, although success often gets overlooked when it seems the majority of things are not going to plan. It should be remembered, too, that there are a lot of new initiatives being implemented, and with anything new, it can take time to bed in and really show its value.

In their final thoughts, ICAEW and ACCA urged HMRC to publish recovery plans as soon as possible and to ensure that it continues to work closely with professional bodies to improve service levels going forward.