Opinion Former Article

HMRC helpline failures highlight impact of Brexit and inadequate pilot on digital reporting deadline

The Chartered Institute of Taxation (CIOT) and Association of Taxation Technicians (ATT) ascribe a collapse in HMRC’s VAT helpline service levels to the lack of an adequate pilot for the roll-out of Making Tax Digital (MTD) for VAT1 and the pressures of Brexit on HMRC resources.

Recent correspondence2 between Nicky Morgan, Chair of the Treasury Select Committee, and Sir Jon Thompson, Chief Executive and Permanent Secretary at HMRC, prompted by concerns raised by the CIOT, addresses the significant deterioration in service offered by HMRC’s VAT Helpline. An annex3 to the letter, providing VAT call data from January to May 2019, shows

  • Helpline demand4 increased by over 40% between January and May but the number of calls answered fell over this period;
  • So, in May, HMRC answered less than 42% of the calls which made it beyond their recorded messages, compared to 72% in January;
  • Average speed of answer for those calls which were answered rose from around seven minutes in January to more than 16 minutes in May (in addition to the time spent navigating the initial recorded messages);
  • Of the calls answered, the proportion which were answered within 10 minutes fell from 64% in January to just 9% in May.

Chair of the joint CIOT and ATT Digitalisation and Agent Strategy Working Group, Tina Riches, said:

“It is no surprise that there has been a peak in demand for help from HMRC as we moved towards, and into, mandation of quarterly digital reporting for VAT. While this is natural for any deadline, it has been exacerbated both by the inadequate period allowed for proper testing of the MTD for VAT systems and software, and the pressures of preparation for Brexit meaning HMRC diverted resources away from other areas including MTD as recruitment of new staff was slower than expected.”

While HMRC had committed to a year of public testing, those trials only commenced mid-October 2018, and even then only for the simplest businesses, with others coming on stream later. This gave very little time to test the processes for signing up for MTD, linking software, and submitting VAT returns. The agent experience has been particularly problematic, with many agents writing off days’ worth of time trying to help their clients become compliant.

Tina Riches continued:

“Even though we are not yet through the implementation of MTD for VAT, important lessons can already be learned. Not only is it clear that a much longer period of thorough public testing is needed to roll out new systems, but the increased support that businesses and their agents need to make the transition must be planned and provided. There are many glitches in the current process. Clearer guidance on the various sign-up journeys, how to prevent things going wrong, and the steps to take if they do, is vital to a smooth roll-out. In the absence of these, HMRC’s phone lines will continue to be swamped.”

The CIOT has consistently warned5 of the risks of implementing MTD for VAT at the same time as the UK was scheduled to leave the EU.’

Tina Riches added:

"Since the results of the EU Referendum back in June 2016, the CIOT and ATT have warned against bringing in MTD for VAT at the same time as planning to leave the EU. Not only has it impact on business’s preparations, it is clear that it has taken a significant toll on HMRC, too. But while HMRC have the scale to move resources within its organisation, that is a luxury that most businesses do not enjoy.”
Notes to editors

1. Under Making Tax Digital (MTD) for VAT, all businesses with a taxable turnover above the VAT threshold (currently £85,000) will have to keep digital records for VAT purposes and submit their VAT returns directly from compatible software. For the vast majority of these businesses, this requirement starts from the first VAT return beginning on or after 1 April 2019.

2. See https://www.parliament.uk/documents/commons-committees/treasury/Correspondence/2017-19/Permanent-Secretary-HMRC-to-Chair-re-MTD-service-levels-received-final.pdf.

3. See https://www.parliament.uk/documents/commons-committees/treasury/Correspondence/2017-19/Permanent-Secretary-HMRC-to-Chair-re-MTD-Annexe-1-VAT-data-Jan-19-May-19.pdf?dm_i=4JBS,LOP3,26BDZ3,2JDT8,1

4. Callers who made it beyond the recorded messages.

5. See, for example, https://www.tax.org.uk/policy-technical/submissions/making-tax-digital-ciot-comments.

6. The Chartered Institute of Taxation (CIOT)

The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.

The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.

The CIOT’s 18,400 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.

The Association of Taxation Technicians (ATT)

The Association is a charity and the leading professional body for those providing UK tax compliance services. Our primary charitable objective is to promote education and the study of tax administration and practice. One of our key aims is to provide an appropriate qualification for individuals who undertake tax compliance work. Drawing on our members' practical experience and knowledge, we contribute to consultations on the development of the UK tax system and seek to ensure that, for the general public, it is workable and as fair as possible.

Our members are qualified by examination and practical experience. They commit to the highest standards of professional conduct and ensure that their tax knowledge is constantly kept up to date. Members may be found in private practice, commerce and industry, government and academia.

The Association has over 9,000 members and Fellows together with over 5,600 students. Members and Fellows use the practising title of 'Taxation Technician' or ‘Taxation Technician (Fellow)’ and the designatory letters 'ATT' and 'ATT (Fellow)' respectively.

Media should contact: Hamant Verma on 0207 340 2702 or by email on  HVerma@ciot.org.uk

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