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TaxationWeb wonders if the government should encourage HMRC to sign up to the Prompt Payment Code.

I read an article in Taxation Magazine recently, on a topic which we at TW Towers feel quite strongly about, so I thought I should share.

The article – “Out of Control” by Alex Byrne – rings true. I have, in fact, started many a conversation with HMRC officers in the last few years, along the lines of Alex’s opening sentence,

“Many years ago, I remember HMRC’s attitude to tax repayments was that claims should be treated as a priority because they involved the taxpayer’s money.” (Emphasis added).  I have also raised this point on numerous occasions through “Working Together”, and been assured that repayments remain a high priority.

The article goes on to catalogue several cases – sadly, all too familiar, despite those assurances – where taxpayers have suffered dreadfully at HMRC’s indifference.

Alex attributes the delays to poor systemic controls at HMRC’s NIC & EO (National Insurance and Employer Office) but I do not believe that the problem is attributable solely to one department – for instance, I don’t think it is accidental that the department which deals with the now-infamous “detailed security checks” (which all but guarantee your repayment will be made at no more than a snail’s pace) has no external telephone number and, I am assured, no means of communication with most other departments in HMRC. Now why would a government department, answerable practically to no one, be cause for concern..?

In an organisation which has been tasked with recovering as much money as possible, for as little outlay as possible, where is the incentive to do anything to return taxpayers’ money to them? While HMRC frequently refers to interest charges for late payment as “commercial restitution” for being out of pocket, there is a significant difference between the 3%  HMRC commonly charges the taxpayer, as against the 0.5% it normally adds to late repayments. No equity there, but a 2.5% differential must make a nice earner for HMRC.

I wonder if the government, which is HMRC’s master, after all, has any sense of irony when it says that it is “going to war ” on large companies which are slow to pay SMEs; perhaps it should also encourage HMRC to subscribe to the Prompt Payment Code?

Despite the best intentions of many individual HMRC officers, I have no sense that policy will change in this regard. I suspect that there is no appetite even to recognise that there is still a problem, let alone to remedy it. This may well be allowed to fester, or perhaps it will be a carrot to encourage agents more readily to adopt the Agent Online Self Service, when it eventually rolls out.

As to NIC & EO, they are apparently the source of several letters attempting to charge Class II NICs on property letting “businesses”.  I wonder where the, er, “bright sparks” behind HMRC's notorious “Wick letters” ended up?

Regards all,

TW Ed