The Hindu Business Line : The more help a person has in his garden, the less it belongs to him

HMRC or Her Majesty's Revenue and Customs is "the new department responsible for the business of the former Inland Revenue and HM Customs and Excise," informs www.hmrc.gov.uk.

"As a single department, HMRC will have the added benefit of producing greater efficiencies, reducing the tax gap and providing a greater customer focus," promises the site.

The new outfit came into effect on April 18, 2005, one learns from Wikipedia. "The merger was described by the Financial Times on July 9, 2004, as `mating the C&E terrier with the IR retriever'," it adds.

"HMRC is expected to concentrate on reducing the estimated £30 billion `tax gap' — the gap between the tax that is actually paid and the tax that would be due if all tax avoidance and tax evasion were eliminated," is another info from http://en.wikipedia.org.

But what I am interested in is a June 29 posting on www.accountingweb.co.uk that reads, "HMRC helpline staff can `rarely give a proper reply'." Because we are so often used to such grudges that instances of unhelpful `help' are as good as `dog bites man' stuff.

The AccountingWeb story is about a joint response from the Chartered Institute of Taxation (CIOT) and the Association of Taxation Technicians (ATT) to HMRC's consultation paper, `Working towards a new relationship: a consultation on priorities for reducing the administrative burden of the tax system on small business'.

And so, I have two more windows minimised on my desktop, one the March 2005 36-page consultation paper that begins with HMRC Chairman, David Varney's foreword speaking of his vision for his department as "one in which small businesses know where they stand, with simple information on what they owe, what they have already paid and what they need to pay available when and in the form that they need it"; and the other, the 15-page response from www.tax.org.uk, the homepage of CIOT, `The professional body for Chartered Tax Advisers'.

After one saw the headlines about the FM's keenness in monitoring the top 100 taxpayers, close on the heels of the RBI getting suddenly interested in closely tracking financial markets, how refreshing it is to read Varney talking about "compliance cost savings for small businesses and a real improvement in their experience of the tax system" and offering through the paper small businesses and their advisors an opportunity to tell the HMRC about what they need, and what the taxman's priorities should be in responding to those needs.

There is no single definition of `Small Business', concedes the HRMC. The paper, however, uses the phrase to refer to small and medium-sized enterprises (SMEs).

It may be of interest to know that the UK's Department of Trade and Industry uses the following definitions of SME for statistical purposes: "Micro firm: 0 - 9 employees; small firm: 0 - 49 employees (includes micro); and medium firm: 50 - 249 employees."

Why are small businesses important? HRMC reels out the numbers:

"There are some 4 million small businesses in the UK today, more than 99 per cent of all UK businesses, using a range of different legal forms. Just over 3 million people earn some of their income from self-employment, of whom some 2.3 million are mainly or solely self-employed. Around 600,000 are in partnerships. And nearly 900,000 companies are small businesses."

The paper seeks answers to 18 questions, beginning with "Which forms give rise to the greatest burdens for businesses, and why? How might they be improved?" and moving on to the difficulties posed by `different payment dates for different taxes' and the burdens from `inspections and enquiries'.

It seems the tax bodies are pleasantly surprised. "There have been many occasions in the past where it has appeared to us that the consultation process has commenced only after the key policy decisions have been made," they note. "We are encouraged that the new department has started out by genuinely seeking the views of representative bodies before making fundamental decisions."

Let me focus on the response of the CIOT and the ATT to communication posers in the communiqué. "There is very real divide between Internet-based communication and other forms of communication," note the two tax bodies, arguing for a thorough review of the way the taxman communicates with, and provides information to, businesses. "The amount of information that is available on the site is enormous, and a lot of it is extremely helpful," it appreciates, but cautions against seeing the Internet as the way of solving the communications problem.

According to the response, many small businesses who are infrequent visitors to the website may find the navigation methods tough to get familiar with; and, "even experienced practitioners often have to spend longer than they would wish trying to find something which they `know is there somewhere ... '."

A `more fundamental problem' that the CIOT and the ATT speak of is down-to-earth:

"Information on a website can only be by its very nature generic. Very often, a taxpayer's particular problem will not actually be addressed in a FAQ: indeed, the taxpayer may not know how to frame his question to enable him to access the appropriate answer. This is where the need for a personal service comes in."

How do personal services fare? One, it is getting `much harder than it once was' to get a live person at the other end! And there are `major problems in getting through to Helplines'.

The response narrates an experience:

"Only recently, a manager in one firm reported to a member of our working group his experience of ringing a local tax office. He rang and was put on hold. He got a recorded message and some canned music. He was then put on hold again, and finally the call was automatically disconnected. If this were an isolated experience it could be put down to bad luck, but in fact such experiences are all too frequent."

Of even greater concern is the fact that when it is possible to speak to somebody it is rare that a proper reply to a question can be obtained, rues the tax body. "Helpline staff are almost invariably courteous and clearly want to be helpful, but the fact is that in most cases they are simply not properly trained to do the job." Thus, if your question is what appears on their screens they can give the appropriate answer; not otherwise.

"The level of frustration that this causes should not be underestimated. We are, after all, talking about taxpayers who are trying to comply with their obligations. Taxpayers who are attempting not to comply with their obligations are not going to be using Helplines."

Therefore, a key recommendation of the CIOT and the ATT is that HRMC pump in `a major investment' for training its staff "whose job it is to deal with direct queries from small businesses and their agents".

If one were to apply to taxation William Henry Davies's warning — that the more help a person has in his garden, the less it belongs to him — our incomes may less belong to us the more help we have from the taxman.

Despite such fears, the two documents are a good read, not only for our Department as a model for implementation here, but also for professional bodies closer home to know how to be more forthright in their views if and when the Government comes up with proposals.

Tailpiece

An e-mail joke:

Q: Why does PC want to monitor the top 100 taxpayers?

A: Because he doesn't know the top 100 tax evaders!!

Detaxification@TheHindu.co.in

D. Murali

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Tackling terror

The slogans on Africa

Payment of tax is a fiscal fact

The more help a person has in his garden, the less it belongs to him

Wide are the Board's powers

Wanted, a new strategy to combat terror

Geographical indication is a nomadic intellectual property in search of identity