Phoning HMRC Cost Taxpayers £97 Million in a Year

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Last year, waiting on the phone to HM Revenue and Customs (HMRC) cost taxpayers millions, according to spending watchdog the National Audit Office (NAO). Thanks to long wait times, people calling the taxman spent a collective £10 million in call costs while on hold and waiting to speak to an adviser, the NAO said.

Over the span of 18 months, starting in 2014, the NAO said that HMRC’s standards of service when dealing with telephone queries “collapsed.” Over that space of time, the Office claims, the time that customers spend waiting to speak to an adviser tripled and many calls went unanswered. While HMRC has claimed that the majority of incoming calls now get an answer within six minutes, the NAO says that the time spent waiting on hold with HMRC last year could be up to an hour.

In the course of its recent investigation into the standards of HMRC’s service, the NAO calculated the amount that these lengthy calls had costs taxpayers. The cost of phone calls, the organisation reports, was £10 million in total, and the NAO believes that much of this is a result of long waiting times.

The NAO also included the value of people’s time in the calculations, averaging this at a rate of £17 per hour. On this basis, the organisation estimates that taxpayers spent a total of £66 million worth of their time just waiting on hold to speak to an adviser, and a further £21 million while talking to HMRC after their call is finally answered. This brings the NAO’s estimate for the total amount lost to taxpayers on calls to HMRC, including both call charges and time spent on the phone, at £97 million.

One of the key causes for the drop in standards for HMRC when it comes to dealing with phone queries, the NAO claims, is staff cuts. Specifically, the organisation points to the fact that the tax authority drop 11,000 of its staff as part if its drive to increase the number of tax returns completed online, on the assumption that this would result in fewer phone calls to be answered. These cuts took place in stages between 2010 and 2014.

Seemingly recognising this as a misstep, HMRC has since increased the number of staff available to answer helpline calls by 2,400. These extra staff were brought in last autumn, after typical waiting times for calls to HMRC peaked at 47 minutes.

In response to the NAO’s report, HMRC director general for customer services Ruth Owen said: “We recognise that early in 2015 we didn’t proide the standard of service that people are entitled to expect… We have since fully recovered and are now offering our best service levels in years.”

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Millions of Tax Returns “Unnecessary,” say Critics

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Critics are claiming that millions of people across the UK are filling out tax returns that are just not necessary. It is claimed that a large portion of those filling out tax returns are required to do so despite not owing HMRC any money at all.

At present, an annual tax return is required of roughly a third of taxpayers across the UK. Nearly a quarter of them (24%) owe very little – less than £50 for the entire year – and two thirds of these (16% of the total number who must fill out a tax return) owe nothing to HMRC at all.

Some of those who must complete a tax return are sole traders or owners of businesses which have not turned a taxable profit – in which case a tax return is necessary to show HMRC that profits have not reached taxable levels. However, many others are required to complete a tax return for entirely different reasons. For example, company directors and employees earning over £100,000 per annum must complete a yearly tax return even if they have no additional, undeclared income whatsoever. Furthermore, recent changes to the administration of child benefit mean that one parent or guardian often finds themselves with the need to submit a self-assessment tax return even if they do not owe HMRC money.

Others, however, may register for self-assessment voluntarily even if no money is owed to HMRC. For those in some unusual and specific financial circumstances, tax returns can serve as useful records to assist with things like applications for loans.

HMRC has defended itself from these criticisms, however. A spokesperson said that the organisation “[doesn't] want anyone to fill in a tax return unless it’s absolutely necessary.” For this reason, he claimed, HMRC automatically takes 400,000 people out of the self-assessment process each year.

The spokesperson also insisted that HMRC goes to great lengths to ensure that the self-assessment process is as easy as possible for those who do have to complete an annual tax return. In particular, he pointed to the organisations’ “bringing in short tax returns and online self-assessment, and we are taking this much further by introducing the new digital tax accounts.”

Indeed it is hoped that new online tax accounts, which will be regularly updated with information about people’s income, could almost completely eliminate the problem of people filing unnecessary tax returns. Fully rolling out this new process, however, is likely to take some years.

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Boost Your Business with Better Bookkeeping

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Too often, small businesses and sole traders see bookkeeping as a boring obligation. It’s something to get done (eventually) and use for the necessary evil that is the tax return then file away in a dark cabinet. In other words, it’s important as record keeping but has no use outside of working out your obligations to the taxman.

In fact, your business’ books can be a powerful and valuable tool to help your business operate at full efficiency. Maintaining your books carefully and regularly looking over them, preferably with the help of your accountant’s expert opinion, can help you better run your business in a number of ways.

Predicting the Future

Your books are the closest thing you have to a crystal ball when it comes to making forecasts about your several important aspects of your business. In some areas, the best way to work out what will happen is to look at the past. True, past performance is certainly no guarantee of future performance, but in some areas it can be a very useful tool to predict what is likely to happen.

In particular, if your business is at least a few years old, your books from previous years can help you get a good idea of seasonal trends. This means you can be prepared for “famine” periods and better prepare for them in “feast” periods. It also means you can be prepared to take steps to mitigate periods of slow trading and capitalise on seasons or events which boost your business.

Tax Compliance and Efficiency

Another benefit of paying close attention to your accounts is that you are simply more likely to keep them in thoroughly good shape. Small expenses, especially the kind that represent crumpled and half-forgotten receipts, can easily slip through the net if you make the mistake of just going through your books in a single blitz once every few weeks. Similarly, discrepancies and compliance issues are more likely to appear, and even if you spot these in time it will be harder to investigate them if you don’t see them until weeks or even months after the fact.

For this reason, your business will be a lot healthier and run far more smoothly if you keep a closer eye on your books and deal with them more regularly. You should set up regular sessions for dealing with your books and getting your latest records in shape, with short intervals in between. Weekly sessions are ideal.

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