With so much disruption to businesses over the last couple of years due to COVID restrictions, we are now experiencing a different type of disruption – business progress being stifled by HMRC inefficiency.
Whether it is slow progress with a VAT registration application; establishing the extent of any options to tax exercised by a particular client; changes to VAT grouping or the inability to speak to anyone at HMRC who might be able to help, it is becoming increasing difficult to provide certainty for clients.
It is important that we are candid with clients and manage their expectations in the light of these issues. Some processes that should be turned around by HMRC swiftly are taking weeks or even months to be resolved, even when the form, application or correspondence submitted is all in order.
Most HMRC sections closed their telephone lines for three Fridays in December 2021, allegedly so that staff could concentrate on actually processing work! Even when the lines are open, it is not always possible to speak to anyone and if you do, they are usually unable to help or give any indication of likely timescales.
Here I shall provide some top tips and horror stories.
Ensure that VAT applications are completed fully and accurately before submitting to HMRC.
“Clean” VAT applications can result in the issuing of a VAT registration number by HMRC in just a few days, when the process can be completed by the HMRC automated system – computer says “yes”!! However, once the application needs to be considered by a member of staff, additional information can be requested, and processing can take weeks or months.
These seem to disappear into a black hole, and you may need to chase HMRC endlessly. One case that I have dealt with has taken nearly a year! Even though I have chased on many occasions to check the progress, it is not usually possible to speak to a case officer, and they don’t even call when a “call back” has been logged. After all this time, it seems that the exemption request was authorised just two days after the application went in, but nothing was ever communicated to ourselves or the client!
HMRC VAT records now include the company incorporation number for companies that are registered for VAT, but these are not always correct. It seems that incorrect records can occur when there has been a change in legal entity, transfer of a going concern or change in VAT group – it should be the company incorporation number of the representative member that is on HMRC record for a VAT group.
If the HMRC record of company incorporation number is incorrect (and you won’t know what they have recorded unless you ask them) any application for VAT registration for the company with that incorporation number will be automatically rejected. HMRC will state that the application “duplicates the information that we already hold”, without indicating precisely what the problem is.
The reason for the incorrect company incorporation number being recorded in the first place is not often clear to the HMRC staff, but more worrying, they don’t seem to know how to correct their own records!
It is proving very challenging to get HMRC to process any VAT group changes, whether it is a cancellation of a VAT group registration, change in a representative member, adding a group member or removing a group member. Bear in mind too, that some of these actions will need to be completed before further changes can be made. For example, if you want the representative member of a VAT group to be removed, it is necessary first to change the representative member using form VAT56.
Some of these actions are seemingly straightforward, yet there seems to be another black hole at HMRC.
Also, the HMRC record of VAT group members that is issued to clients and forms the basic HMRC record, does not have a large enough name field to capture company names that are more than 18 letters long, and the abbreviations used by HMRC to fit in the space often lead to ambiguity.
It is possible to email ‘option to tax’ forms and correspondence to HMRC. The benefit of this is that you will receive an automated email acknowledgement, which shows that they have received an email with that particular subject title. The acknowledgement email is not an acknowledgement of an option to tax and does not include the original email trail in the automated response, so do ensure that the contents of the subject box are detailed enough to link to the original enquiry.
Be prepared for lengthy delays. Be persistent. Keep copies of all communications from HMRC, even the brief messages and acknowledgement reference numbers that appear on your Agent Services Account. If you are going to telephone, best to try as soon as the line opens in the morning. Keep names and call reference numbers every time you speak to someone at HMRC.
Keep clients informed, even if it is only of the lack of progress!
Where possible submit forms and make applications well in advance of any critical deadlines.
With one case that I dealt with recently, HMRC suggested that the best way to get the case dealt with or prioritised was to make a specific complaint! That really should not be necessary but gives an indication that HMRC are aware that their operations are in crisis.
Article written by Alison Sampson, Senior VAT Consultant at Knill James LLP, one of our UK200 Group member firms.
All data and figures referred to in our news section are correct at the date of publishing and should not be relied upon as still current.
