ICAEW is calling for the immediate creation of a cross-sector taskforce to address long-standing delays at HMRC, which it says have become a drag on the UK’s economic growth.
The recommendation is one of a series of ICAEW recommendations made to the government ahead of the Spring Budget. The list also includes proposals to make affordable childcare an economic priority; provide longer-term funding certainty for regional and local authorities; update the design of the Apprenticeship Levy to remove the cap on apprenticeships in SMEs; provide incentives for business investment in net-zero aligned R&D; and simplify the net-zero funding landscape for all local authorities.
The emergency taskforce would be charged with identifying areas for support to end delays, as well as recommending improvements to HMRC’s service standards to enable business growth, ICAEW says.
Taxpayers and accountants are having to wait up to a year for HMRC to respond to queries over the phone or by post, ICAEW says, while callers report that they have waited for more than an hour before being cut off. Customer service staffing levels at HMRC have reduced from 25,500 to 19,500 people, causing long delays for both agents and taxpayers.
These delays were the biggest area of complaint made by ICAEW members in 2022, whether relating to financial or other resource constraints.
VAT registration for a new or growing business or re-registration where an existing business incorporates should be expected to happen quickly, the Institute says. Such businesses are growing and their administrative workload will double while they wait for HMRC to act.
ICAEW is increasingly of the view that HMRC is now trapped by its backlog and delays are now an anchor on the UK’s economic growth. The government needs to urgently tackle this issue if it is serious about building the ‘pillar of enterprise’, it says.
“The delays at HMRC are unacceptable, need to be addressed promptly and are acting as a drag on the UK’s economic growth,” ICAEW Chief Executive Michael Izza says. “We’re calling on ministers to set up an emergency taskforce to identify steps to eliminate HMRC’s backlog and improve its service standards, so that in the future it supports, not inhibits, business growth and maximises the tax receipts needed to fund public services.”
The taskforce should include representatives from professional bodies and from business, who would be empowered to make recommendations to HMRC to improve its services and clear its backlog, ICAEW says.
“HMRC performs a vital function supporting businesses and growth, for example ensuring new businesses can register promptly for VAT, and its work is essential in collecting tax receipts to fund public services,” Izza continues. “Despite this vital role and the commitment from hardworking civil servants, HMRC is often overlooked and overstretched, leading to problems, and we would be pleased to work with it to tackle these issues.”
It is unclear whether these waiting times relate to financial or other resource constraints, but the time it takes for HMRC to respond is perceived by many chartered accountants to be the single biggest obstacle to growth and tops the list of complaints by members, ICAEW says. It is a problem regardless of the means of communication being used, where intervention or action cannot be undertaken automatically.
The Institute has long raised concerns about issues at HMRC, where there are a number of long-term systemic problems to be fixed. They include poor design of IT systems and gaps in services online.
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