Tax Debts following the Pandemic – through the eyes of the National Audit Office (NAO) and Tax Debts Help and Advice.

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The National Audit Office produce amongst other things national debt statistics. With tax debts at an all time high, this report focuses on HMRC and how they are handling the aftermath of the pandemic, covid19.

With £42bn in debt now owed to HM Revenue and Customs (as of 30th September 2021) are HMRC now seeing the extended repercussions of the pandemic?

The total debt peaked in August 2020 at £67b owed to HMRC.

This figure is estimated at an increase of 2.4m further taxpayers in debt between 31st January 2020 and September 2021. Further to this there is an estimated £26b increase in the total debt owed to HMRC between those dates also.

As HMRC have reduced their staff working within their debt management units by 18% since March 2014 and made further reductions, to date – How can HMRC effectively collect this escalating debt in?

It is also our experience that owing to HMRC staff being moved from one department to another, there are significant gaps within collection departments for experienced staff, leaving a lack of understanding and knowledge. Overall, this leaves the taxpayer or agent, experiencing difficulties in speaking with agents who understand the queries.

Further to this, although you can write in to HMRC (and this is something we strongly advise) the postal backlogs are enormous.

The financial and economic impact of COVID-19 is unprecedented, it goes without question that there is not a single household potentially effected in one way or another from this.

While tax liabilities have reduced somewhat since last year, HMRC still faces a significant challenge in clearing the backlog. As the UK emerges from the pandemic, HMRC will need to strike a balance in pursuing debt and allowing taxpayers time to recover their finances.

The National Audit Office (NAO) have released this report Managing tax debt through the pandemic – National Audit Office (NAO) Report

They consider whether HMRC has:

adapted its management of tax debt quickly and responsively during the pandemic and understood the impact of the pandemic on taxpayers’ ability to pay tax debt; and the capacity and capability it needs to manage tax debts.

In this article we review some of the points raised by the National Audit Office.

As we handle time to pay arrangements ourselves, and by virtue of that, deal with HMRC on a real-time basis, we have commented accordingly.

Our comments are based on practical experience within this field for over two decades. This experience gives us a unique position, we feel, to comment on actions taken by HMRC during and now in the aftermath of the pandemic.

HMRC’s real-time responses now, to requests, differ decidedly from what they seem to report and what the NAO has reviewed.

The NAO refer to the prompt response by HMRC early in the pandemic and its actions in setting up helplines and pausing its debt collection process.

Practically however, this may have helped some people, but not everyone.

Statistics provided by the National Audit Office highlight the relevant increases.

“Up to 2.4 million more taxpayers are in debt to HMRC following the pandemic, while those already in debt owe more.

HMRC estimates that up to 6.2 million taxpayers were in debt as of 30 September 2021, compared with 3.8 million taxpayers in debt as of 31 January 2020.

The average amount of each tax debt increased by 60%, from around £4,300 at January 2020 to £6,800 at September 2021. The value of debts over two years old increased from £2.5 billion in 2019-20 to £4.4 billion in 2020-21.”

National Audit Office
National Audit Office state HMRC couldn’t meet demand even though they maintain inbound and outbound lines.

We found that phone lines were inundated and HMRC could not handle the response.

Poorly trained agents were moved to departments to assist in any way they could.

This also did not assist taxpayers – By virtue of looking after our clients during these difficult times, as an agent, we found HMRCs agents lacking in ability to answer even the basic of queries and response times escalated for us quickly.

While communications were clear that no enforcement action was being taken during the deferred periods HMRC extended to taxpayers, nor did HMRC respond to taxpayers wishing to finalise arrangements to pay liabilities.

For example – The NAO do state that, although HMRC maintained inbound and outbound lines, HMRC could not meet demand.

Again, having attempted on numerous occasions to speak to agents at HMRC multitudes of telephone lines were closed, calls were re-routed, resulting in extensive on hold times, only to have the call disconnect on us.

HMRC became a ‘black hole’ and remain so, to date.

Point 11 within the NAOs report refers to the fact that HMRC has prioritised debts based on it’s understanding of the likely impact of the pandemic on the taxpayer’s ability to pay.

The real-time view of this, that we experience on behalf of clients, is quite the opposite, certainly in regard to HMRCs understands of a situation.

HMRC agents have very little understanding on how specific industries were affected by the pandemic and how this has caused long term difficulties. Nor do they appear to understand why perhaps businesses need to consider the likes of, lower monthly payments towards liabilities for a period and then increased payments.

Surely HMRC cannot be blind to the fact that any business at present can’t possibly forecast on stability and when this may occur as this relies on various external factors.

As an agent, trying to explain to HMRC how an industry is still struggling, meets with comments such as:

  1. Can’t they just get a loan?
  2. Why are they struggling to increase their income still, hasn’t everything gone back to normal?
  3. Well pubs and restaurants have been able to open for a while, why aren’t they doing better?
  4. Can’t they just get lower payments with suppliers? Re negotiate rent and rates etc?

The responses we are still getting are truly frustrating, when all that is required is a logical view on an industries difficulty and a mutually agreeable, sustainable payment plan.

This, however, does not stop us pursuing time to pay arrangements that work for our clients. It is down to the effects prior to, during and after the pandemic and the narrative we provide for our clients.

The National Audit Office report states – HMRC have recognised that taxpayers will need longer now to repay their debts. The report talks about the average duration of a time to pay arrangement increasing from around 5 months before the pandemic to 12 months, as of July 2021.

Historically some clients have always needed longer payment plans, even prior to the pandemic, and we have worked diligently to get these arrangements in place.

Referring to a period of 12 months being feasible now is unrealistic across many sectors still trying to recover from the pandemic financial ‘blow’.

Numerous sectors we speak with need longer than 12 months to re pay liabilities still, to date. We are finding that we literally must spell out everything to HMRC to get them to consider sensible, affordable arrangements – Surely this must change?

If, as an agent, we must explain the basics to HMRC, for example – why a company can’t get a loan at present, or why the fact that HMRC’s own online portals aren’t working and effect a business, or why a specific industry may not know what their income will stabilise at, quite yet – How are we supposed to trust that HMRC truly do understand the impact of COVID-19 moving through 2021 to 2022.

Section 12 of the NAO report mentions the following.

“The Cabinet Office told us that leading debt management practitioners outside government tend to focus on agreeing affordable repayment plans that can be sustained. As well as helping the person in debt, it also reduces the workload of following up failed arrangements (such as extra contacts to chase unpaid debts or renegotiate payment plans). HMRC told us it also seeks to agree affordable repayment plans with taxpayers, although some stakeholders felt it could improve in this regard”

For over two decades we have been negotiating with HMRC on behalf of clientsto accept just this. Surely it is logical that an affordable sustainable plan has the higher degree of success. As opposed to a re payment plan that utilises most of thebusiness income to sustain it.

One key factor of a time to pay arrangement is that new liabilities are paid on time and in full, a sustainable plan helps ensure this also and helps the company remain compliant.

We do wonder if HMRC may ever actually take this logical view, as opposed to saying they do when they clearly do not in our experience.

Point 15 of the NAO report talks about the use of external debt collection agencies and HMRCs capability to manage debt.

They mention the following:

“Stakeholders we spoke to said that HMRC could further develop its approach by focusing on agreeing affordable repayment plans, rather than focusing on the time taken to pay, and that it could point more taxpayers to independent debt advice”

In principle we agree with this.

Debt Management companies are capable of handling unsecured debts on behalf of clients and separate to this debt collection agencies can collect debt for HMRC.

However, there are key points to consider here, again based on real time experiences.

When HMRC refer liabilities to a debt collection agency, they do not refer the whole debt. In fact, they only ever refer a portion of the total debt owed to these agencies, and actually causeclients’ more financial distress.

Taxpayers engage with these debt collection agencies, agree a re payment plan and think that their debt is under an arrangement.

When in fact it isn’t.

What the taxpayer then finds, is that HMRC write to them separately about the rest of the debt, and owing to making an arrangement with the debt collection agency, the taxpayers’ affordability to manage the remaining debt is nothing – HMRC don’t consider this at all when utilising these agencies.

Debt Management companies – Although in practice the likes of self-assessment arrears can be including within debt management plans, it is in general, the pro-rota offers that cause the taxpayers additional stress.

HMRC simply would not accept a pro rota offer at, say, £10 p/mth against a £5000 self-assessment liability. All this will do is cause the customer/taxpayer more stress when HMRC decline this offer and ultimately end up pursuing the debt through their debt collection process.

Any tax liability should be dealt with under separate considerations that work in line with HMRCs practices and procedures.

HMRCs collections process and practices are a minefield, years of experience has given us the control and knowledge to work within these parameters to get payment plans accepted on behalf of our clients. We do not envision debt charities to understand HMRCs full position when this can change daily at the moment.

Point 21 and 25 of the National Audit Office report sums up HMRCs current position.

“HMRC faces several years of managing the impact of the pandemic on tax debt and current staffing is unlikely to be enough to manage the increased workload. It made efficiencies before the pandemic, but it did not improve overall levels of debt collection and it was writing off more debt. It has some new tools and powers, but these do not appear likely to make up the shortfall. It estimates that adding staff and private sector capacity would have most success in increasing debt collection. High rates of return indicate that this would be a good investment.”

Point to note: Where the NAO report section above refers to HMRC bringing in new staff, the report also refers later on that these numbers (given staff turnover) in principle, would only just about replace the previous staff losses and not gain additional staff levels.

“HMRC needs to improve its understanding of customers to be able to support them and target activity appropriately”

The National Audit Office report states that HMRC should.

“Adopt good practices from the private sector and from its own handling of debt during the pandemic on a permanent basis. In particular, a clear focus on affordability rather than repayment within a year could help customers maintain payments and reduce the workload of following-up failed arrangements.”

For over two decades we have worked with HMRC and our thousands of our clients to obtain payment plans that effectively work for all parties.

Across this time, we have not seen HMRC learn or adapt to any economic factors, not even a recession.

The pandemic may have highlighted to HMRC internal failings that they state they can change, but given the time we have worked with them, these are all still their failings that were relevant prior to the pandemic.

For us this suggests that as much as HMRC claim to be able to adapt to the economic climate owing to the pandemic, they have never adapted to real life situations prior to this.

We would appreciate HMRC to take the practical view, that longer arrangements are successful, based on affordability. However, agents would need significant training to understand this, they cannot even understand the basic business difficulties and obstacles now – What would make them change? Or what would encourage HMRC to adapt to a more real-world view of debt?

We are slowly finding some agents who appreciate what ‘knock on’ effects the pandemic is still causing but it would require a dramatic overhaul within HMRC to see a logical approach being adapted to the current needs of business owners and individuals.

We would always advise those who owe to HMRC to at least be paying something against their liabilities, even whilst trying to talk to HMRC to agree something more formal.

With extensive experience seeking time to pay arrangements for our clients, businesses like ourselves, are here to help should that need arise.

We understand completely the frustrations of dealing with HMRC, both historically, and now.

Hopefully we may see a positive change following the NAO report, but we also know that HMRC has been reviewing practices for years with no significant change.

The introduction of the business payment support line is one case to consider.

This line was introduced to aide businesses get arrangements in place, quickly and effectively.

It has been neither quick, nor effective in our dealings. With the same lack of agents and the inability to speak to an agent, it has fallen down. Taxpayers may also find that if you owe across multiple heads of tax, this line can’t help.

It is also the case if certain departments within HMRC are also involved in the collection process, this line can’t help you.

As is, in many cases, HMRC professes to assistin one way but in practice, it’s such a different story.

There are further articles on our website, where we fully explain what to expect from HMRC and outline how separate departments work and the route a debt can take.

HMRC Re-Payment Plan – Our Guide. – Taxdebtshelpandadvice.com

We are always here to help guide and advise anyone struggling with arrears to HMRC. Owing HMRC does not mean your business may have to close, payment arrangements can help ease the financial burden on a business or an individual.



or call 0800 448 0293

HMRC causing us all to waste time and money!

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New research suggests that when it comes to contacting HMRC, workers are wasting £2.4 billion of productive time a year calling the taxman.

Inefficiency, poor customer services and delays at HMRC are costing the economy more than £200 per person who completes a self-assessment form, the Institute of Customer Service has calculated.

Almost 12 million people are registered for self-assessment and HMRC receives 32 million telephone calls a year. No wonder contacting HMRC is getting more and more difficult and time consuming.

Nearly 750,000 people missed the deadline to file their Self-Assessment tax return, running the risk of a £100 fine.

HMRC said that 10.7 million people filed on time, but that 6.5 per cent of those required to submit a tax return failed to do so by the deadline.

I wonder how many spent all day on the phone contacting HMRC to discuss issues.

The research concluded that the public waste millions of hours trying to resolve customer service problems from their workplace including contacting HMRC for various tax queries. These delays cost employers £28 billion a year in lost productivity. The taxman is the second worst-offender, behind the property industry, where conveyancing problems cost the economy £2.5 billion a year.

HMRC says that since April taxpayers contacting HMRC have had to wait an average of 4 minutes, 35 seconds for a call to be answered, down from more than 12 minutes in 2016. These figures do not count the 4 minutes of automated messages that callers must listen to. The taxman’s own figures show that one in seven callers wait more than 10 minutes, or up to 14 minutes when automated messages are included.

If you have ever tries contacting HMRC, I think these timeframes are a little on the fair side! We have had to wait 30 / 45 minutes or longer in most instances.

The figures are likely to embarrass Philip Hammond. In December the chancellor appeared to suggest that the large number of disabled people on the workforce was suppressing productivity, perhaps without justifiable evidence? However, he failed to mention problems when contacting HMRC!

Jo Causon, chief executive of the Institute of Customer Service, said; “There will always be times when employees will have to take time out of their working day to deal with personal issues. However, the responsibility lies with UK organisations to ensure that, as much as possible, problems are prevented at source and customer service interactions are right first time – to protect both the productivity of their own staff, and those interacting with them.” She said that with so many people affected, there was a clear need to improve the skills of customer service staff.

HMRC said: “These claims don’t in any way reflect the positive experience most customers have. There are over 40 million people in PAYE alone and there will be times customers may have to wait a little longer than normal but our customer service is getting better.”

Have a look at one of our other blogs Top 10 tips handling HMRC

When contacting HMRC you definitely need to have a coffee ready and be cool, calm and collected. I doubt very much 45 minutes on hold will help that cool reserve stay in place!

There is help out there, let us take away this stress and be the ones contacting HMRC for you.

If you find you need help with HMRC debts, or are finding issues with them in getting in contact / getting debts resolved….We can help.

Call our friendly team on 0800 448 0293 or visit out website – www.taxdebtshelpandadvice.com – and start a live chat. Alternatively, you can email enquries@taxdebtshelpandadvice.com

Carillion’s collapse and it’s knock-on effect

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Tens of thousands of jobs and a multitude of government contracts were under threat on Monday 15th January 2018 after construction giant Carillion was forced to enter liquidation.

They are expected to appoint accountants PricewaterhouseCoopers as special managers to handle the collapse of the firm.

The company has suffered from a massive crisis, caused by project delays and missed budgets, leading to warnings, mounting debts of around £2 billion and a large pensions deficit of approximately £600million.

The Wolverhampton-based firm is involved in a large number of government projects.

These include providing school dinners to around 30,000 pupils a day in 218 schools, cleaning and catering for NHS hospitals, construction work on rail projects and maintaining circa 50,000 army base homes for the Ministry of Defence.

In the UK it’s projects have included the likes of; The Royal Opera House, the Channel Tunnel, Tate Modern, the Library of Birmingham and the famous doughnut building of the UK’s Government Communications Headquarters (GCHQ).

Among many ongoing projects, Carillion was also building the £335 million new Royal Liverpool Hospital, which is reported to be at least a year behind schedule.

Internationally it has been responsible for the likes of Oman’s parliament – the Majlis, Alvito Dam in Portugal and the Yas Marina Hotel in Abu Dhabi.

It is looking like contracts for building part of the HS2 rail link will remain in the private sector.

Kier and Eiffage, the other two construction partners, have assured ministers they can build the London to Birmingham section of the line with Carillion.

Other companies have already drawn up contingency plans for Carillion’s demise, including the UK’s largest construction firm, Balfour Beatty, which expects to take a £45m hit.

Carillion employs around 43,000 globally – around 20,000 in Britain – But many thousands more are employed by firms linked to Carillion as sub-contractors or suppliers – Hundreds of smaller businesses could collapse, the domino effect, as it travels down the chain could be unprecedented.

There will also be a lot of individuals and firms who were a supplier or subcontractor to Carillion who will be wondering what they should do now.

The knock-on effect for the company’s suppliers and subcontractors is going to be considerable and confusing for all involved.

On a day to day basis, subcontractors and suppliers to large construction companies often have to endure a lengthy wait for their invoices to be paid – More so now, if they are owed by Carillion!

Some companies will have immediate issues which will cause potential impact on their own cash flow and ability to maintain payments. This could result in serious problems when it comes to paying wages, suppliers and business debts, HMRC included.

Consider your actions, if this affects you personally or if you are struggling in general with HMRC debts/business debt:

• Speak to your accountant with regards to any up-coming bills which you don’t think you will now be able to pay on time – Assess with them, the impact on your cash flow/forecasts.

• If you need assistance, with the likes of accruing HMRC debts – speak to specialist advisors out there who can assist with the likes of a Time to Pay Arrangement – www.taxdebtshelpandadvice.com

• Look at your own ways of increasing revenue – If a void is left; can new business contracts/sales be bought on quickly that could help?

• Contact a specialist Insolvency Practitioner if you are concerned things may escalate out of control.

Seek advice as early as possible, be that from your accountant or a specialist advisor. At the moment everyone is assessing just how much impact these events may have on other businesses and it is likely to take time before the dust settles on this.

Lloyds Bank has said it will provide £50 million to support it’s small business customers who are struggling after the failure of Carillion – Let’s hope others follow!

HMRC will also provide practical advice and guidance on those affected through it’s Business Payment Support Service (BPSS). The BPSS connects businesses with HMRC staff who can offer practical help and advice on a wide range of tax problems, providing a fast and sympathetic route to agreeing the best way forward and addressing immediate concerns with practical solutions.

Or feel free to contact us direct to discuss any issues with HMRC arrears. You can call us on 0800 448 0293, start a live chat on our website or email enquiries@taxdebtshelpandadvice.com


HMRC Debt Collection

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Do you need help with HMRC debt?

Having HMRC on your doorstep is never a comfortable situation but there is help out there. No matter what stage you are at with the Revenue, there is always an option to sort issues out but the sooner you react and seek help with HMRC debt, the better.

Tax arrears plays an ever increasing part in today’s larger debt problems across the UK. With many banks and lenders offering large overdrafts and extended credit facilities for more individuals and businesses than ever, it’s perhaps not difficult to see why.

According to Government statistics, there are 5,200,000 small to medium enterprises operating in the UK, employing some 25,200,000 people – How much does owing the ‘taxman’ affect these businesses?

Whether you are a small or large enterprise, business can suffer as cash flow can be massively affected when in debt, especially when owing HMRC. This can lead to bankruptcy and even business closures.

The worse thing to do is ignore this matter and not seek help with HMRC debt. Your situation may not be as bad as you think but as always, time is of the essence – Seek advice from your accountant/business advisor or a 3rd party as soon as possible. If you don’t act, you increase the risk of legal action being taken against you and your business.

There are companies out there who can help you such as Tax Debts Help and Advice.

HMRC have taken to sending collection agents out to companies to push for results face to face.

They will threaten that they can take goods and assets!

They will talk to any employee they come across!

They won’t care about confidentiality and I speak from experience!

Who is there to help with HMRC debt though? There are an abundance of companies who will seek to offer advice and assistance and in most instances, they will be Insolvency Companies – But you don’t always need an Insolvency option to help keep the business on track.

There are companies out there who can help with HMRC debt such as Tax Debts Help and Advice. For over two decades now, we have specialised in getting monthly arrangements set up with HMRC for our clients. Helping them tackle the debt at an affordable level each month, whilst being able to cater for upcoming liabilities – We are here to help with HMRC debt and are always available for a friendly chat.

Plenty of press articles have been wrote about the tactics used by HMRC and the debt collection agents that represent them.

Source: http://www.dailymail.co.uk/news/article-3389720/HMRC-worse-private-debt-collectors.html

HMRC is ‘worse than private debt collectors’: Taxman rated bottom of list of Whitehall departments and private companies that chase money.

HMRC ranked bottom in list of private firms and government departments that chase debts for it’s ‘shocking’ treatment of people who owe tax.

Citizens Advice found it even failed to meet standards set by regulators.

Poor practices highlighted in the report included the taxman taking money directly from people’s bank accounts.

A study by Citizens Advice found it even failed to meet standards set by government regulators for private collection agencies.

Poor practices by her Majesty’s Revenue and Customs highlighted in the report included the taxman taking money from people’s bank accounts while the amount owed was still being disputed, staff being ‘rarely or never available’ on the phone to discuss issues and being inflexible of repayment.

The report showed the result of analysis of debt collection practises by more than 250 debt specialists who rated agencies against seven factors, including how they resolved disputes and set affordable repayment plans and how easy they were to contact.

It gave HMRC a score of just 34 out of 100 – Ranking it below phone operators, banks and private debt collectors for poor treatment of customers.

The report raised particular concerns about how difficult it was for people to get through to HMRC, adding it could have ‘dire consequences’ as -unlike private firms- it can seize wages and assets without a court order.

Gillian Guy, chief executive of Citizens Advice, said “Of course people must repay government debts as soon as they can, but there is a difference between people who can’t pay and won’t pay. Our evidence shows glaring inconsistencies in how some government departments and private companies go about recovering money. It’s unacceptable that government agencies are behind the standards set for private companies when recovering debt.”

James Daley, of consumer campaign group Fairer Finance, said “It is shocking that a government department has got such poor standards. On something as sensitive as debt collection, government and HMRC should be leading the way and settings the highest standards. It undermines the government’s ability to ask private companies to do better.”

And Chas Roy-Chowdhury, of the Association of Chartered Certified Accountants, said “People can inadvertently owe tax or be fined for filing late and this becomes a debt. Public sector debt seems to be handled in a very heavy-handed way.”

HMRC’s own charter outlines what it expects from you and the standard they should be delivering

What you can expect from us:

• Respect you

• Help and support you to get things right

• Treat you as honest

• Treat you even-handedly

• Be professional and act with integrity

• Tackle people who deliberately break the rules and challenge those who bend the rules

• Protect your information and respect your privacy

• Accept that someone else can represent you

• Do all we can to keep the cost of dealing with you as low as possible

We recognise that you might be concerned about how we deal with you.

We will:

• Treat you with courtesy and consideration

• Listen to your concerns

• Answer your questions in a way you understand

• Try to understand your circumstances

• Make you aware of your rights, including your right to appeal our decisions

• Tell you how to exercise your right to appeal our decisions

It would appear that from the above that HMRC are not adhering to the standards, them themselves have outlined, for their own treatment of tax payers and business.

If you do end up owing HMRC and can’t pay this in full and on time – Seek help as soon as possible.

Please feel free to contact us for help with HMRC debt, if you would like further advice on this matter. We are a very friendly and understanding company so visit our website www.taxdebtshelpandadvice.com and start a live chat or call a member of our team 0800 448 0293.

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