By Annie Makoff MembersWhat should HMRC’s key priorities be under the new government?12 Jul 2024 Accountants discuss which problems the department should address first, given Labour’s goals.HMRC has been making headlines lately but unfortunately, for the wrong reasons. In one case, it failed to prove a valid discovery assessment when a nom-dom fell foul of complex remittance basis rules and, in another, failed to impose a penalty on a high profile £14m tax avoidance scheme. Despite HMRC’s powers to tackle tax evasion, the department hasn’t fined anyone involved in tax fraud or tax evasion for five years.It’s also recently been reported that HMRC knowingly ‘withheld’ offshore tax avoidance figures during the election.In addition, the department is currently facing a huge wage bill despite staff cuts, because it’s having to rely on overtime to address the backlog.And when it comes to service levels and performance – accountants, agents and bookkeepers continue to experience frustrations. They cited:huge delays in receiving VAT numberslong telephone wait timeslack of reliable and timely support from HMRC stafflack of staff trainingcorrespondence delays.It seems that HMRC has a long way to go to improve its customer service reputation as well as its ability to deal with tax fraud and tax evasion. However, in their manifesto, Labour committed to allocating HMRC around £855m in funding to help recruit new compliance staff.So with all this in mind, we asked accountants what HMRC’s key priorities should be under the new government.We’d like to see investment in HMRC’s R&D unitStephanie Hurst, Tax Director, MonahansHMRC phone call waiting times are the longest they have ever been, at around 40 minutes on average, and actions such as issuing self-assessment refunds or responding to letters can often take months rather than weeks.Labour has previously pledged to invest around £855m in HMRC, primarily to tackle tax avoidance by increasing registration and reporting requirements, strengthening HMRC’s powers, investing in new technology and renewing focus on large businesses and wealthy people.But we would like to see some of this investment directed towards the R&D unit of HMRC. Over the last year, HMRC has changed the way in which it conducts R&D enquiries and the industry has seen a significant rise in R&D activity.However, HMRC’s approach falls very short of the service levels we should expect. Communicating with the R&D unit is very difficult and businesses are, in certain circumstances, waiting more than 6 months for a written response. As a direct result of HMRC’s conduct in this area, some small businesses are reconsidering whether or not it is viable to continue with their innovation projects and have been exploring alternative funding and revenue options. Instead of encouraging UK innovation, HMRC appears to be actively discouraging genuine claimants.Verdict: There needs to be investment in HMRC’s R&D unit.Crack down on tax avoidance and progress umbrella company regulationPaul Newsham, Partner, RfM Accountants and CEO, Payroll Compliance Authority (PCA)After the election hiatus, HMRC should now focus on cracking down on tax avoidance schemes as a priority. Labour is coming in with guns blazing, setting many plans in motion, but these will all cost money. A critical step will be to bolster treasury coffers and focus on tax avoidance, which is a monumental issue in the UK and is a sensible place to start.Furthermore, given the party’s focus on supporting workers across the country, I strongly feel that Labour should progress with regulation of the umbrella company market, which was mooted by the previous government earlier this year through a due diligence regime. This would protect thousands of contract workers and hiring firms that are at risk daily.A thorough due diligence regime is the only realistic way to shut down the myriad of tax avoidance schemes run by fraudulent umbrella companies and should be a key priority for HMRC under the new government.Verdict: Crack down on tax avoidance schemes and implement umbrella company regulation.Recruitment drive is needed to get on top of delaysToby Ryland, Corporate Tax Partner, HW FisherThere is nothing more frustrating than trying to get in touch with HMRC. Call waiting times are at an all-time high, responses take forever, and getting hold of the person you need is borderline impossible. This is causing serious delays at all stages of interaction. Tax enquiries are taking too long to solve, and repayments are slow to process. The next government must commit to staffing HMRC properly to stop the needless cycle of delays and the frustration it causes for everyone involved.Banks also need to be quicker at opening new business accounts, especially for those that are inward investors into the UK. It is shocking that an overseas business can incorporate a UK subsidiary company, register it for tax, VAT and payroll within a short time, but cannot open a bank account for months and months. If the UK is serious about attracting more overseas investment to create new jobs and wealth, this issue needs to be fixed sooner rather than later.Verdict: HMRC needs a big recruitment drive to get on top of delays.Improve response times and provide better customer serviceJames Wood, Accounts Partner, JS Accountants and Business AdvisorsThe key priorities for HMRC should include focusing on improved response times, customer service consistency and enhanced training programmes.Improved response timesOne of the most pressing issues we encounter is the variability in response times, particularly with VAT registrations. Some applications are processed within days, while others can take months. This inconsistency not only delays our operations but also causes uncertainty for our clients. HMRC needs to streamline its internal systems and processes. This could involve increasing its workforce to handle the volume more efficiently, or improving internal communication.More consistent customer serviceWe frequently experience situations where we receive different answers to the same query depending on who we speak to. This inconsistency undermines our credibility with clients and creates unnecessary frustration. Implementing better training programmes and internal systems for recording and tracking conversations can help ensure that all operatives provide accurate and uniform information.Addressing phone line accessibilityThe intermittent plans to close some phone lines have further compounded service issues. Reliable access to phone support is crucial for addressing urgent matters swiftly. Maintaining and potentially expanding phone line availability should be a priority to meet the service expectations of both businesses and individuals.Verdict: HMRC’s priorities should be on improving response times and providing better, more consistent customer service.Would you like to contribute to future articles like this one? If so, please get in touch with Annie Makoff-Clark at [email protected]. Annie Makoff is a freelance journalist and editor.