There’s certainly a lot of HMRC news in the media at the moment. Some of it is for the right reasons. For example, the taxman has recently issued a total of £3.2 million in penalties for breaching money laundering rules. It has also begun writing to people named in the Pandora Papers, a huge data leak in 2001 that revealed the secret offshore accounts of many wealthy people. These people are being given 30 days to report any outstanding tax or face penalties of up to 200% and potentially prosecution.
On the flip side, there’s lots of negative HMRC news too. Already criticised for providing ‘unacceptable’ levels of customer service, it has just announced it will close its self-assessment helpline for three months over the summer. Worse, not only is Making Tax Digital now three years late, it is also more than £1 billion over budget.
In this post, we’re going to take a quick look behind the headlines and what they mean for taxpayers.
Self-assessment helpline to close
HMRC has announced its self-assessment helpline will close on Monday 12th June 2023 and reopen on 4th September 2023.
The reason for closing the helpline is that it handles far fewer calls during the summer months. By pausing the service, HMRC hopes to free up some 350 tax advisers and redeploy them where they’re more needed. If the experiment is successful, it could usher in a new seasonal model for the helpline.
While the helpline is closed, taxpayers will be encouraged to use online services, including the HMRC app. There is one situation in which you can still use the helpline. This is to discuss a bereavement.
Closing the helpline is likely to inconvenience a significant number of taxpayers. If your query isn’t urgent, the best plan is to wait until the phone line opens again in September. Of course, if you are a THP client and need tax advice, you’re very welcome to call your account manager.
Pandora Papers nudge letters
The Pandora Papers are a 2021 leak of 11.9 million documents from 14 offshore financial services companies. They include details of how hundreds of wealthy people, including a number of world leaders, used shell companies and offshore trusts to reduce their tax liabilities.
HMRC has said it began to review its data on UK residents named in the papers as soon as they were released. It has now written to hundreds of these people asking them to report any outstanding tax liabilities. These must be disclosed within 30 days or individuals face penalties of up to 200% of the tax owed.
If you have received a letter from HMRC asking you to review your tax affairs, we can help you make sure your financial affairs are compliant. Of course, if they are, you don’t have to take any further action.
MTD costs spiral
The HMRC news that doesn’t surprise us concerns Making Tax Digital. According to the National Audit Office (NAO), the scheme is now three years late and £1 billion over budget.
The main part of the problem seems to have been unrealistic expectations. In 2016, HMRC planned to have the system up and running by 2020 at a cost of £226 million. Since then, it has been delayed several times and costs have racked up to £1.3 billion.
While HMRC now intends to implement MTD for Income Tax Self-Assessment by 2027, the NAO warns that this is a ‘very challenging plan’.
Whether or not HMRC hits this target, it’s wise to be prepared. We can help you get ready for MTD with free cloud accounting software.
HMRC news summary
On the face of it, HMRC is currently struggling in many ways. To be fair to the organisation, it was under a lot of pressure during the pandemic. Not only did the vast majority of its staff have to adapt to working from home, but it had to administer a number of huge, new COVID support schemes.
While it is to be lauded for cracking down on tax evasion and money laundering, it’s a shame that individual taxpayers often struggle to get a good service. Let’s hope that, when Making Tax Digital is finally implemented, the time and cost savings will allow HMRC to deliver a better service for everyone.
About Karen Jones
Having worked for one of the world’s largest accountancy firms, Karen Jones uses her tax knowledge and skills to help clients obtain substantial reductions to their tax liabilities.
With an expanding portfolio of tax clients, Karen enjoys the variety her work brings her and particularly likes working with new businesses and people. With a growing number of tax clients, she frequently faces a variety of challenges and relishes the experience she gains as she solves them.
Karen likes the THP ethos: “I like the way the team has a professional, but friendly and down-to-earth approach – it creates a productive atmosphere that benefits everyone.”
Karen’s specialist skills:
- Personal Taxation
- Tax Efficient Planning
- Trust Administration