Tag Archives: ciot

HMRC VAT Helpline failures

By   5 July 2019
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If any of you have had the unfortunate necessity to use the VAT Helpline you will know the frustration, unhelpfulness and general exasperation of trying to get a reasonable response from the department. Well, it isn’t just you.

In correspondence between the Chair of the Treasury Select Committee and the Chief Executive and Permanent Secretary of HMRC here the previously highlighted issue of the deterioration of the performance of the HMRC VAT Helpline is addressed.

The extremely poor performance is ascribed, by the Chartered Institute of Taxation (CIOT) to:

  • the lack of an adequate pilot for the roll-out of Making Tax Digital (MTD) – details here
  • the pressures of Brexit on HMRC resources.

And HMRC state that:

  • their telephony performance has been impacted by ongoing recruitment and staffing shortfalls
  • recruitment for a no deal EU exit was slower than expected
  • they had to divert resources from usual business to issues with a No-Deal Brexit
  • the target of five minutes waiting time for the VAT Helpline has not been met
  • they are developing a new way of measuring performance
  • there are issues with some MTD businesses experiencing problems with paying VAT by direct debit

An annex to the letter, providing VAT call data from January to May 2019, shows

  • helpline demand increased by over 40% between January and May but the number of calls answered fell over this period
  • in May, HMRC answered less than 42% of the calls which made it beyond their recorded messages, compared to 72% in January
  • average speed of answer for those calls which were answered rose from around seven minutes in January to more than 16 minutes in May (in addition to the time spent navigating the initial recorded messages)
  • of the calls answered, the proportion which were answered within ten minutes fell from 64% in January to just 9% in May

Commentary

It is appreciated that some of the excuses are “reasonable” (to use HMRC parlance) and matters are not within HMRC’s influence, however, the service provided is, frankly, unacceptable. Businesses need HMRC assistance for all sorts of reasons and if it is not forthcoming, errors may be made resulting in potential penalties and interest, loss of income, deals failing, accounting compromised and uncertainty and complexity, VAT becoming a cost, and customers lost.

It is not as though HMRC have not been warned about pushing MTD through without adequate testing of systems and software at a time when Brexit was always going to make huge demands of the department. The House of Lords Economic Affairs Committee published  a damning report last year here which recommended delaying the introduction of MTD. Also, the CIOT has consistently warned of the risks of implementing MTD for VAT at the same time as Brexit.

Support for business and tax agents is sadly very lacking and it appears that insufficient resources have been devoted to this. There has been an overall lack of planning, combined with a political will to push ahead with MTD regardless. It really is not good enough. And we are not even yet through the implementation of MTD for VAT with larger and more complex business yet to join the fray. That, added to the fact that many glitches have already been identified, does not give any reason to be optimistic about the future for either MTD or the VAT Helpline.

As CIOT say: while HMRC have the scale to move resources within its organisation, that is a luxury that most businesses do not enjoy.

VAT: Brexit – Intending Trader registration for overseas businesses

By   14 June 2019
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With the continuing uncertainty over a No-Deal Brexit, which appears to be a more likely prospect given recent political events, HMRC has made a statement on the process of registering non-UK EU businesses as intending traders in the UK.

Background

What is an intending trader?

An intending trader is a person who, on the date of the registration request:

  • is carrying on a business
  • has not started making taxable supplies
  • has an intention to make taxable supplies in the future

If the business satisfies HMRC of its intention, HMRC must VAT register it. VAT Act 1994, Schedule 1, 9 (b). It is, in some cases, difficult to convince that there is a genuine intention to make taxable supplies. This often comes down to documentary evidence.

Why do overseas businesses need to register as intending traders?

In the event of a No-deal Brexit, it is assumed that the EU VAT simplification that relieves the current obligation to be registered in the UK will no longer available. As a consequence, the EU supplier will itself become responsible for accounting for VAT on sales deemed to be made in the UK. In order to do this, the business will require a UK VAT registration. As the simplification is in place until Brexit, the registration will be required the very day after the UK leaves the EU – currently 1 November 2019.

Therefore, many EU businesses have applied for UK VAT registration as intending traders. That is, they do not currently make supplies, but intend to in the future (from 1 November 2109).

The issue

The Chartered Institute of Taxation has reported that businesses applying for intending trader registrations are experiencing difficulties with the process.

In response, HMRC have stated:

“Businesses in the position you have described can register for VAT using the Advanced Notification facility, by registering online requesting a voluntary registration from an advanced date of 1 November 2019. In the ‘business activity’ section they should enter trade class/SIC code 99000 European Community. In the free text box they should describe accurately what the business does and ensure there is a positive amount entered in the ‘taxable turnover in the next 12 months’ box. If this is not done the application will be rejected. This information will enable the VAT Registration Team (VRT) to identify and actively manage any registration that is conditional on the UK leaving the EU without a deal.

If there is a change to the date of withdrawal from the EU, the VRT will amend the Advanced Notification date to match this new date. If the UK enters a transitional period or agrees a deal with the EU that allows current arrangements to continue then the registration will be cancelled. The approval of an Advanced Notification registration in these circumstances is only made as a contingency for the UK leaving the EU without a deal and the VAT number may not be used unless that happens. The business will receive an automated notification of an Advanced Notification VAT Registration and the VRT may follow this up with a manual letter to further explain the conditions and both.

With the UK having agreed an extension to the date of withdrawal from the EU, we would not expect businesses to use this facility until closer to the 1st November.”

It is clearly prudent for overseas businesses which make certain supplies in the UK to properly prepare for a No-Deal Brexit. However, experience insists that many have not identified or made provisions for this outcome.

We are able to assist and advise other EU Member State businesses on this process.