Author: md_admin

Parliament’s spending watchdog has accused HMRC of deliberately running down its phone services to force people to go online, according to a report.

The Public Accounts Committee’s (PAC) report into HMRC’s customer service levels found that the average call waiting time has passed 23 minutes.

It also found that 44,000 customers were cut off without warning after being on hold for more than an hour last year.

The report said:

‘HMRC’s customer services have deteriorated even further since this Committee last reported a year ago.’

It continued:

‘HMRC says it has not been adequately resourced to meet telephone demand from customers, but it must take responsibility for its own failings to offer sufficiently effective digital services to customers. We are concerned that it has sought to degrade its telephone service to drive taxpayers to digital channels.’

It added:

‘HMRC has been too willing to let its telephone services fail in the hope this forces people to use its digital services instead.’

The PAC report made this recommendation:

‘HMRC should ensure it understands how far its digital services can replace telephone services and what level of telephone service it needs to retain to meet customers’ needs – including those of small businesses. HMRC should ensure it meets a minimum level of service for all customers, including those seven million customers HMRC estimates can’t use digital services.’

Internet link: Parliament

New rules that will give more flexibility over how occupational defined benefit pension schemes are managed, according to the government.

The government said this will remove blockages that are inhibiting its growth agenda.

Approximately 75% of schemes are currently in surplus, worth £160 billion, but restrictions have meant that businesses have struggled to invest them.

Where trustees agree to share a portion of scheme surplus with a sponsoring employer, the employer may choose to invest these funds in their core business, for example to purchase equipment or supplies, and/or provide additional benefits to members of the pension scheme.

Prime Minister, Keir Starmer said:

‘The number one mission of my government is to secure growth, drive higher living standards for everyone, and get more money into people’s pockets.

‘To achieve the change our country needs requires nothing short of rewiring the economy. It needs creative reform, the removal of hurdles, and unrelenting focus.

‘Whether it’s how public services are run, regulation or pension rules, my government will not accept the status quo. Today’s changes will unlock billions of investment, pushing forward in delivering my Plan for Change.’

Internet link: GOV.UK

Inheritance Tax (IHT) on pensions is the most unpopular of the tax raising measures introduced by the Labour government during its first year, according to a survey.

The survey conducted by investment platform AJ Bell found that 44% of respondents were opposed to the pension IHT proposals while only 21% supported them.

Other measures were also strongly opposed, including the decision to raise employer National Insurance contributions (NICs), with 41% against the tax rise and just 24% in support. Raising rates of Capital Gains Tax (CGT) and restricting IHT relief available to farmers were also unpopular.

However, some tax raising policies attracted net support with 48% in favour of raising the rates of stamp duty on second homes.

Tom Selby, AJ Bell’s Director of Public Policy, said:

‘This data shows tax rises of every shade are divisive. While some tax increases attract a balance of support, they still divide the room.

‘Nothing that emerged from Rachel Reeves’ red box over the last year enjoys support from a majority of voters, illustrating that even less controversial tax changes are still politically fraught.

‘IHT is often described as the most hated tax and this data backs that up. Proposals to subject unused pensions funds to IHT on death are the most widely opposed of all the tax raising measures announced so far.

‘We’re urging the chancellor to instead consider alternative proposals which would be fairer and simpler, without undermining her plan to tax unused pensions on death.’

Internet link: AJ Bell

HMRC has opened up a service for landlords and self-employed to apply for exemption from Making Tax Digital (MTD) for Income Tax phase one.

From next April, people who are self-employed and landlords, and declare more than £50,000 of gross income in their 2024/25 self assessment tax return, will be legally required to follow the new MTD for Income Tax rules from April 2026 onwards.

Anyone who thinks they may be eligible for exemption must phone or write to HMRC. Third parties such as relatives and agents can do this on behalf of taxpayers if they are authorised. It will take up to 28 days for HMRC to respond with a decision.

Sharron West, Technical Officer at the Low Incomes Tax Reform Group (LITRG), said:

‘Because HMRC will deal with applications on a case-by-case basis, we don’t yet know how generous their interpretation of the rules will be, but we know that HMRC are keen to see as many people as possible manage their taxes online.

‘If you are already exempt from MTD for VAT, HMRC say you should contact them when the exemption application process opens so they can check your circumstances and confirm if you’ll also be exempt from MTD for Income Tax.

‘The clock is ticking and it’s time to get ready.’

Internet link: GOV.UK Chartered Institute of Taxation

New legislation aimed at tackling rogue tax agents and those pushing tax avoidance schemes won’t catch all of those it is aimed at, warns the Chartered Institute of Taxation (CIOT).

Instead the measures could make it harder for some taxpayers to get the advice they need to comply with tax laws, the Institute added.

The CIOT argues that the current proposals are not well targeted, imposing potentially unworkable conditions on tax agents. Meanwhile, many of the ‘bad actors’ who are the real target of these measures will be out of scope and able to continue their abuse of the system, it adds.

The Institute says it is concerned that, without changes, the proposals will lead many reputable advisers to withdraw from giving advice where the meaning of complex tax legislation is unclear, or where the potential tax liability is high.

Ellen Milner, CIOT Director of Public Policy, said:

‘The government are right to be taking a robust approach to those who continue to devise, promote or sell mass-marketed tax avoidance schemes. There should be no place for such people and their schemes in the tax services market.

‘However, the current proposals are set to miss their target. According to HMRC, the market for tax avoidance schemes is now dominated by about 20 operators. These people are not mainstream tax and accountancy professionals and are largely based overseas. The legislation as drafted will struggle to capture these people.’

Internet link: CIOT