Over half (54%) of insolvency practitioners believe that HMRC makes it harder to rescue businesses than wind them up, ignoring letters and failing to answer calls, according to a survey of the insolvency profession by R3, which wants to see an overhaul of the tax authority’s approach
R3 says most (71%) insolvency practitioners report that HMRC has made the insolvency process harder to manage in the last few years. Only 10% said HMRC was ‘helpful’ when it comes to business rescue.
The survey of some 350 members found that they estimated 33% of the estimated 480,000 letters and forms they send to HMRC for a year’s worth of cases are duplicates of lost or ignored post, or are copies of letters that have to be sent to multiple HMRC addresses. This is the equivalent to approximately 160,000 excess forms and letters for a year’s worth of new cases.
Half of those polled (49%) had to wait longer than 15 minutes the last time they called HMRC before their call was answered/cut off/they hung up, and 25% waited over half an hour. Some 43% of insolvency practitioners have had requests for information from HMRC – to which they were entitled as office holders – rejected.
Over half (54%) of insolvency practitioners had to wait over three months for clearance from HMRC to close their last case while 25% waited between six months and a year. Half said that HMRC is one of the creditors they look forward to working with the least.
R3 is pushing for HMRC to look for opportunities for reform, by improving the government’s own performance as a creditor.
Phillip Sykes, president of R3, said: ‘The government, as a creditor, can do much more to help promote a business rescue culture. At the moment, it can be responsible for lengthy paperwork delays, and creates extra costs for itself, the insolvency profession and other creditors, while its lack of commercial decision-making capabilities undermines business and job rescue proposals.’
Sykes said that HMRC’s recently announced changes to its structure, which will see it close large numbers of local offices in favour of a small number of regional hubs, could be the spur for improvements.
‘The shift to a smaller number of centres gives HMRC the opportunity to create a specialist insolvency unit. A specialist unit would cut duplicate post, have more consistency in its decisions, be more accountable, and be far more efficient,’ he said.
Sykes pointed to HMRC estimates which suggest that it loses up to £4bn a year as a result of insolvent businesses and individuals being unable to pay tax bills. This is equivalent to just over 10% of the total ‘tax gap’.
‘The better the government gets at working with the insolvency profession when taxpayers’ become insolvent, the more chance it has of shrinking the tax gap,’ he said.
