HMRC Still Not Listening To Business

by Robert Lee, Tax-News.com, London

17 July 2006

The merger between the UK's Inland Revenue and HM Customs has so far failed in its goal of creating a more efficient and customer-focused organisation, according to recently released research.

A survey undertaken by GfK NOP for the Tenon Forum, an independent think tank for entrepreneurs, found that almost 80% of the UK’s business leaders say they’ve seen no improvement in their relationship with the taxman since HM Revenue & Customs (HMRC) was created in April 2005.

GfK NOP interviewed 500 MDs, FDs and other senior directors of small and medium businesses - firms with between 5 and 499 employees. It found that an overwhelming majority of respondents (89%) felt that the tax department still did not consult businesses when putting in place changes to tax legislation.

Another trend that emerged from the research is how complicated Britain’s business leaders find working with the tax man. More than two-thirds of the respondents reported feeling bogged down by technicalities and would like to see the tax man give a clearer picture of tax liabilities, make filing a tax return simpler and provide clearer instructions on how to complete tax forms.

"A lot of faith has been placed in the ten year plan to reinvigorate the ministry," stated Andrew Hubbard, Director of Tax at Tenon.

"At present there are some antiquated, and often idiosyncratic, rigidities on business leaders. These rigidities hinder businesses from flourishing either by confusing their cash flow or not recognizing the changed nature of business in the 21st Century. It can be particularly difficult for entrepreneurs who are just starting out. Regular consultation with small business leaders will help ensure the relevance of the changes forecasted," he added.

The research highlighted one example where HMRC's inflexible rules acted as a barrier to the growth of young companies by refusing to allow a fledgling firm to adopt a monthly VAT return plan. Under the HMRC's rules, companies can only do this once they had been in operation for at least twelve months.

"We found it quite bewildering because it’s young companies in particular that need to secure their cash flow," commented Mark Sinclair, founder of Gagagoogoo.co.uk, an eighteen month-old business selling children’s clothing.

"We feel that the tax man really needs to reassess and ensure that the practices they have in place are those which play to the strengths of small businesses. At the end of the day, our success will lead to full coffers for them so they should be making it as easy for us as possible," he argued.

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