Businesses lack confidence in HMRC’s competence

Employees who have been claiming “Home Office Relief” during the Covid 19 Lockdown should be urgently reviewing their tax codes to clarify whether HMRC have included the relief within their notice of coding.

Business confidence in the HMRC’s competence has fallen markedly as accountants raise “significant concerns” about the accuracy of the information it provides.

Official annual surveys of SME-sized businesses released by HMRC has revealed that those with fewer than 20 staff are least confident, with confidence levels down from 63 per cent in 2021 to 54 per cent in 2022. Confidence levels among mid-sized businesses fell from 62 per cent to 55 per cent.

Fewer smaller firms said they were confident that HMRC’s systems would catch mistakes and fewer were happy with the length of time they had to spend dealing with the taxman. However, 74 per cent said the overall experience of interacting with HMRC was positive, the same level as in 2021.

The majority of mid-sized businesses trusted HMRC, although 10 per cent did not, the survey found. Some 44 per cent said the taxman tried to minimise the “cost, time and effort” for companies to remain compliant, while 43 per cent said the agency was good at helping them avoid mistakes.

A small but growing number of mid-sized companies said they thought tax evasion was acceptable “in some circumstances”, up from 4 per cent in 2019 to 6 per cent in 2022. Some 18 per cent thought tax evasion was widespread, with the most common source of this information being word of mouth.

The Chartered Institute of Taxation said that poor service levels at HMRC were undermining HMRC’s ability to maintain the health of the tax system.

Richard Wild, the institute’s head of tax technical, pointed to a separate survey of 900 taxpayers and tax agents released at the same time by HMRC, which gave the taxman low scores in “responsiveness, ease and accuracy”.

He said: “The accuracy of guidance and information provided by HMRC continues to raise significant concerns, while many respondents felt getting a response and action via correspondence or telephone can be extremely difficult and time consuming, even for simple issues.”

A spokeswoman for HMRC said: “Most businesses have confidence in us and trust they’re treated fairly. We recognise the need to improve all our service levels to increase confidence. To do this, we must move more of our customers to our online channels to deliver a better experience to them, while crucially providing support to taxpayers who really need to talk to us.

She added: “We continue to enhance the way we communicate, improving the clarity and accuracy of guidance and letters to make it easier for customers to get things right.”