Agents and HMRC working together
May 2011 – Issue 43
Working
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Welcome
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National
Local
Updates
Contacts
Introduction
Hello and welcome to issue 43 of Working Together.
In this edition we’ve included an article outlining the different approaches HMRC may take to collect any debts your clients may have incurred. Early contact with HMRC is essential and an agent’s role as intermediary in the collection of outstanding liability is often invaluable in reaching a resolution. On page seven there’s a link to the latest guidance which may help when completing your clients’ expenses and benefits forms – this includes information on which form to use and when, along with a list of common errors to avoid when completing the forms. If you have any comments on the Working Together (WT) programme, would like to raise an issue, or would like to know more about getting involved with your local group, please contact your professional representative (contact details are shown on the back page), or if you’re not a member of one of the organisations listed, contact the HMRC representative.
Find out more about the WT programme
And finally, if you have any comments or suggestions about the layout or the content of the Working Together publication, please let me know – my contact details are on the back page.
Alison Bainbridge Editor
Local
Concentrates on what’s happening in, and being achieved by, the local WT groups.
National
Reports on how the WT Steering Group (WTSG), the National WT Team (NWTT) and HMRC business owners tackle the most significant and urgent issues that are identified through WT.
Updates
Provides updates on issues and signposts to recently published information on the HMRC website.
Contacts
Provides contact details of HMRC and your professional bodies representatives along with useful web links.
This edition includes:
• a 60 second interview with Derek Allen who represents the Institute of Chartered Accountants of Scotland on the WTSG
• a summary of the top five open and closed issues from the NWTT issues register
• an article from Jill Springbett from the Institute of Chartered Accountants in England and Wales explaining how agents helped to develop the new partnership registration forms (SA400, 401 and 402)
• an update from the post working group about its review of how Self Assessment and PAYE employee post is dealt with
Agents and HMRC working together
May 2011 – Issue 43
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Personal Perspective
60 second interview with Working Together (WT) people
1 What does your role in WT involve?
I represent the Institute of Chartered Accountants of Scotland (ICAS) on the WT Steering Group (WTSG). It’s a privilege to work with colleagues from HMRC and other professional bodies identifying the grit in the system and lobbying to achieve improvements.
2 What benefits have you seen from your involvement with WT?
Our tax system is excessively complex and many of the processes are cumbersome and bureaucratic. WT has tremendous potential to make things easier while improving compliance, communication and reducing costs. I have been involved in looking at telephone communication and the introduction of Agent Dedicated Lines, the agent authorisation process, R40s and trying to improve agent post response times. Joint learning has great potential to make the system work better and to ensure that the law is applied properly.
3 What has surprised you about WT?
WT has the potential to benefit agents, HMRC and the general taxpaying public. I have been surprised and disappointed at the apathy I have encountered from ICAS members. Getting involved at a local level offers the opportunity to learn at an early date about known problems and timescales for solutions. It’s been a pleasant surprise to work with HMRC staff involved in WT and to recognise their sincere commitment and enthusiasm for supporting WT.
4 What single thing in WT would you like to change?
Personally, I would like to see issues resolved quicker, less inertia and less resistance to change – especially where that change is potentially beneficial.
5 How can I get involved in WT?
If you’re a member of a professional body – contact your professional body. There are vacancies within local working groups across the UK. Each representative of a professional body will need volunteers to feed in their experience of problems and also to be informed of any problem areas and the workarounds which emerge. WT is a two-way process and even if agents became less polite and stopped sending acknowledgement letters, the cumulative effect of the savings could be substantial.
6 What are the latest developments in WT?
I think we’re in a process of change and I hope that communication will improve and HMRC will design its processes with the taxpayer and agents in mind. WT creates a mechanism to identify problem areas and the WTSG is able to focus HMRC’s attention on priority areas that need significant service improvements. It would be better for all if sterile contact was reduced and communication improved.
Personal details
Contacts
Updates
Welcome
Local
Name: Derek Allen
Occupation: Director of Tax
Workplace: ICAS, CA House, Edinburgh WT responsibilities include:
Member of the WTSG, communication group and various other working groups including the agent authorisation process and R40 groups
Agents and HMRC working together
May 2011 – Issue 43
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Welcome
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The National WT Team (NWTT) maintains an issues register that provides details of all open and closed issues and can be viewed by local WT co-ordinators (WTCs) who use the register to research referrals from their local WT group and to keep their group informed.
We are working towards publishing a monthly summary that will enable agents who are not part of a local WT group to keep abreast of the most important issues. In the meantime we’ll continue to report the top five issues that have been resolved since the last WT publication and perhaps more importantly, the top five issues that the NWTT are actively pursuing.
Top five settled issues
• P35 penalties
All examples submitted by local groups have been investigated and no system or process problems were found. Individual reviews determined case specific problems which have all been resolved. We’ve closed this issue but if you’re still experiencing problems, please report them through your local WT group or professional body.
• Corporation Tax work on hand
Following the reorganisation of this business area – the work on hand has now stabilised and on this basis there should no longer be any major delays processing returns or dealing with post. Detailed investigations have been conducted on the ongoing difficulties with telephone contact in some locations, but it hasn’t been possible to completely eliminate the problems. The NWTT would like to hear of any continuing issues in this work area.
• Earlier year P35 repayments – reconciliation requests
One local WT group considered it unreasonable for HMRC to request detailed
National Working Together (WT) issues register
explanations about how the prior year repayment had arisen as this added to clients’ costs. We’ve looked into this but, in such circumstances, HMRC does require an explanation that provides enough detail to be satisfied why the prior year repayment occurred. The explanation would normally outline the circumstances under which the original error was discovered.
• Trade related property valuations
A local WT group said it understood that there were discussions between HMRC/Valuation Office Agency (VOA) and the Chartered Institute of Taxation (CIOT) to explore new or revised methodologies for apportioning the price paid for property and goodwill for tax purposes. The discussions between an HMRC/ VOA working group and the CIOT are ongoing and HMRC/VOA will prepare an article to be shared with CIOT with a view to publication in August. There has been no agreement in principle to an alternative apportionment method but it was recognised that the RICS GN2 provided the established approach to valuing the type of trade related properties involved although RICS GN2 states that apportionment for tax purposes is outside its scope.
• S326/S975 annual interest summary certificates not routinely issued by banks and building societies
The legislation at S975 requires financial institutions to issue certificates if requested by their customer – but in practice most issue certificates routinely as part of their customer service policy. Clearly therefore – HMRC cannot compel financial institutions to provide certificates, but on the rare occasion a financial institution does approach HMRC about their statutory obligations, we do encourage them to provide certificates to help make sure their customers can comply with their taxation obligations as easily and accurately as possible.
Agents and HMRC working together
May 2011 – Issue 43
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Top five open issues
• Delays in dealing with correspondence
At the end of March, the total Self Assessment and PAYE (employee) post on hand had stabilised at approximately 600,000 items and this represents the best year end position in the last five years – in both annual and monthly terms. Annual receipts for 2010-11 came in at 8.8 million as predicted. The age profile of the post also continues to improve with almost all of the post on hand being received by HMRC within the last 40 days – 85 per cent of Self Assessment and PAYE employee post was responded to within 20 working days. There is still more to do and the issue will remain open until the work of the WT post working group has been completed by summer 2011. There is a separate post working group update later in this publication.
• Time taken for correspondence to be received by our customers
The NWTT is working with HMRC’s commercial team to understand the nature of the delays in correspondence reaching agents. Agents have provided the NWTT with examples of cases including the original envelopes which have given us the ability to track the end to end journey of the correspondence. We aim to offer more detailed information in the next WT publication.
• Call backs
Current statistics show that, on average, the Agent Dedicated Line for Self Assessment and PAYE employee calls are picked up in 13 seconds and last around eight minutes. 94 per cent of calls to the Agent Dedicated Line in March were answered at the first point of contact and of the remaining six per cent, half were dealt with by the Contact Centre, with the rest being referred to other HMRC operational offices. All Agent Dedicated Line call backs should now be made within five days (which is being monitored). The NWTT will close this issue if no new referrals are made within the next month. We appreciate that telephone performance in other areas may still be causing problems and these will be dealt with as separate issues as and when any referrals are made by local WT groups.
• Debt management issues
The NWTT continues to work with colleagues in Debt Management and Banking to address any issues raised. A separate update can be found on page eight of this publication.
• Coding of underpayments
The NWTT is still working with HMRC business areas to consider if enhanced guidance can be provided in respect of a small number of cases where tax of less than £2,000 is owed and we are currently unable to collect this through a customer’s tax code as we would normally wish to.
Intelligent Forms
HMRC has started to introduce intelligent forms (iforms) which are easier to complete and will help improve the quality of forms received. We are grateful for the feedback received – particularly in relation to form CWF1 which, as it stands, can’t be printed unless the mandatory fields are completed. In response to your feedback, the printing restrictions on forms CWF1, CF10 and CA5601 will be removed and we will monitor the impact this has on the quality of forms submitted. A further update will be provided in a later edition.
Agents and HMRC working together
May 2011 – Issue 43
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Welcome
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New partnership registration forms (SA400, 401 and 402)
Jill Springbett explains how agents helped to develop the formsAs a tax practitioner you may know about, and used, the new forms SA400, 401 and 402 for registering partnerships and partners for Self Assessment. I would just like to give you a brief insight into how, through joint working with our HMRC partners, the new forms were developed.
A number of service issues had been identified by agents around the partnership registration process. The WT team decided to set up a small joint working party, and I was asked to join as one of the WT agent representatives. The purpose of the group was to identify ways of improving the process that would benefit both agents and HMRC. As the current form caused so many problems for both sides it was decided to design new forms. I found it very interesting seeing the process from an HMRC perspective. When discussing what was needed, I was able to bring my experiences of completing many forms for HMRC and offer a number of suggestions to consider. For example, the Central Agent Authorisation Team (CAAT) do not want any correspondence, apart from the forms themselves and related forms 64-8. However, as practitioners, we want to be sure that CAAT know what we have sent, so agreement was reached to be able to enter the number and type of forms enclosed with a SA400.
A complaint of many practitioners is the extravagant amount of toner required when printing HMRC forms and I am happy to say this has been taken on board. The new forms have been designed to use the minimum amount of toner when printed. HMRC does have design constraints and standards to work to and there is also certain information that must be included on the forms, so discussions centred on meeting these requirements while making them as easy as possible for the agent/ taxpayer to complete and to aid effective processing.
A lot of time and effort was involved in redesigning the new forms, working closely with various areas within HMRC, including CAAT. I’m happy to say that all our efforts paid off and the new forms – SA400, 401 and 402 – were launched in October 2010 in good time for the January deadline.
Early indications suggest that the forms have been a success for both agents and HMRC, with the large majority of forms being completed correctly which has in turn helped to improve the processing for HMRC.
I found it a rewarding experience working on these forms with HMRC. We all wanted to make the forms as efficient as possible to allow HMRC to extract the information they need, while making them as easy as possible to use and I think we have achieved that by working together effectively.
Jill Springbett
Tax Partner – Weston Kay, ICAEW Working Together volunteer
Read more on tax agents and advisers: registering partnerships and partners for Self Assessment
Agents and HMRC working together
May 2011 – Issue 43
Working
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Updates
Contacts
Welcome
National
Post working group update –
Self Assessment and PAYE employee post
The Working Together (WT) post working group that was featured in issue 42 of the Working Together publication continues its review of how Self Assessment and PAYE employee post is dealt with.
The Self Assessment and PAYE employee post situation continues to improve but the working group acknowledges that agents would like to see post turnaround times reduce even further. You may have seen the announcement that HMRC has moved to a PO Box address system that will speed up the flow of correspondence into HMRC and we’re confident that this change will result in post getting to the correct destination within HMRC as quickly as possible.
Read more about the change to HMRC addresses for PAYE and Self Assessment customers
HMRC continues to work hard to reduce further the age profile of Self Assessment and PAYE employee post as we appreciate that delays will generate reminder and follow up post and calls.
The post working group is still looking at opportunities to publicise more widely the average expected turnaround times in relation to Self Assessment and PAYE employee post and will report back via this publication as soon as possible. However, if agents still experience problems with individual client cases after calling the Agent Dedicated Line (Tel 0845 366 7855) or exhausting other normal channels of communication in relation to post outside of the Self Assessment and PAYE employee work area, they should contact an Agent Account Manager (AAM) for assistance.
Read more about Agent Account Managers (AAMs)
The post working group is also still considering how a number of standardised letter headings may further help post sorting and prioritisation.
The National WT Team (NWTT) is hearing fewer concerns in relation to Self Assessment and PAYE employee post and in some instances we are hearing positive news about some very quick turnaround times. With this in mind, the NWTT would like to hear from local WT groups or agents via their representative body if improvements are becoming more visible.
Event for tax agents
and advisers
West Wales WT group is pleased to announce an open event for agents, accountants, tax advisers and bookkeepers.
Agents and HMRC working together
May 2011 – Issue 43
Working
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Updates
Contacts
Welcome
National
Local
Recent changes and developments from HMRC
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Expenses and benefits
End of year forms at a glance: P9D, P11D and P11D(b)
This guidance outlines the different methods you can use to complete and file these three forms. It also sets out the key information you need to provide on each of them.
Self Assessment
File your tax return on time and avoid the new penalties
HMRC is reminding agents that new penalties are being introduced in 2011-12 for late filing and late payment of Self Assessment tax returns.
Capital gains post transaction valuation requests – form CG34
Since November 2009, the capital gains post transaction valuation requests from individuals, partnerships and personal representatives have been handled, largely, by a single office. The details of that procedural change were announced in issue 38 of the Working Together publication.
In December 2010, a new three page version of form CG34 was launched on the HMRC website. This version of the form gives the new address to which capital gains post transaction valuation requests should now be sent. Only this latest version of the form, with the up to date office address on it, should be used.
Find the latest version of form CG34
When submitting form CG34, practitioners are reminded that valuations will only be checked after a chargeable occasion has occurred, and if all relevant documentation is supplied to allow HMRC to arrive at an informed view on the valuation proposed. This should include: capital gains computations and a professional valuation (in the absence of this – full details should be provided
about the asset to be valued at the relevant date that will help us understand how your valuation has been arrived at) and, in the case of goodwill valuations, three years’ accounts right up to the date of valuation. Any applications that don’t meet requirements will be returned with a request for resubmission with the additional information. Providing all relevant information will save unnecessary delays. Finally, we would ask those who intend to use this service to do so as soon as they have all the information, and certainly at least two months before the return needs to be submitted, otherwise we may not be able to complete the valuation check before the return has to be made and comes under the Self Assessment rules.
Employment income post transaction valuation checks
There is no formal post transaction valuation checks service for employment income valuations. However, HMRC wants to be as helpful as possible so Shares and Assets Valuation have agreed that if all the following information is sent directly to the address given, it will consider the valuation request:
• a covering letter making it clear that an employment income post transaction valuation check is being requested – form CG34 should not be used
• an explanation of the value offered including a copy of any valuation report obtained/prepared
• for share valuations – full accounts for the three years up to the valuation date and the names and National Insurance numbers of all employees who have received shares or an interest in shares
• for valuations of chattels – exact details of the interest acquired by each employee
Agents and HMRC working together
May 2011 – Issue 43
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Welcome
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Local
The letter with all the requisite information and documentation quoting reference 532/NOTT/PTC/PTVC should then be sent to:
Local Compliance – Personal Tax Compliance 2nd Floor (West Wing)
Fitz Roy House Castle Meadow Road Nottingham
NG2 1BD
Debt pursuit in HMRC
HMRC’s purpose is to make sure that money is available to fund the UK’s public services. To do this we need people to pay their taxes in full and on time, and we appreciate agents’ efforts in helping us to achieve this. However, if people don’t pay or engage with us we will pursue their debts, whatever the size.
We understand that some of your clients may find themselves in financial difficulty and worry that they won’t be able to meet their tax obligations. If they are in this position, the important thing is that they – or you, as their agent – contact us straight away – before payment is due, so that we can help. The support we can offer (for example – offering an installment arrangement) will be judged according to the particular circumstances of each case.
If your clients don’t contact us before payment is due and end up owing us a debt, HMRC strategy is to segment customers according to their previous behaviour, payment history and risk. We try to tailor our debt letters and interventions according to the characteristics of each of those segments. For example, our letters will be stronger in tone if customers have a history of non-payment and are ignoring our attempts to contact them. The segmentation will also determine which interventions are appropriate, so customer debts will be referred to a debt collection agency, for distraint or court action on the basis of risk and customer behaviour.
When HMRC debts are referred to a debt collection agency, we are aware that third party representation can be an issue and plan to discuss this further with the agencies. There is a tender evaluation under way for the appointment of new debt collection agencies and we plan to discuss this in more detail with them to see what scope there is to improve arrangements for these agencies to deal directly with tax agents.
Our current debt collection agencies tell us that they are required to have their own authority in place before dealing with third parties. Verbal authority that lasts for 24 hours is possible if the third party is present at the time of the telephone call and your client can answer data security questions. This must, however, be followed up in writing if the authority is to continue. This intentionally cautious approach is adopted for the protection of your clients.
The best way of avoiding these problems is for your clients to respond to us when we write to them. Under our current processes any client referred to a debt collection agency will have received a letter from us giving them a ‘final opportunity to pay’. If you, or your client, contact us as soon as you receive this letter then we can discuss matters with you directly and there may then be no need for us to involve a debt collection agency.
An agent’s role as an intermediary in the collection of outstanding liability is often invaluable in reaching a resolution. Our debt management staff may be in touch regarding your clients’ liabilities if we have been provided with notification that you act on their behalf in an effort to secure payment. Our opening hours are 8.00 am to 8.00 pm Monday to Friday, and 8.00 am to 4.00 pm Saturday and Sunday, and we may make contact during these hours in an effort to secure payment.
If you’re unhappy with the service HMRC has provided, please let us know as soon as possible. You should contact the office you have been dealing with, or the appropriate helpline – relevant telephone numbers will be found on any correspondence sent. You can also locate your local office or appropriate helpline
Agents and HMRC working together
May 2011 – Issue 43
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Welcome
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Local
through the HMRC website. If you have a complaint regarding the service received while on a telephone call, we will do our best to resolve your concerns at the time. If we’re unable to resolve the matter over the telephone we’ll escalate your complaint to our national complaints team.
Here are some links you may find useful:
Paying HMRC
Problems paying HMRC
HMRC’s Business Payment Support Service What could happen if you don’t pay
Other organisations that can help with debt problems
HMRC wants to work with you to help clients pay their taxes on time. It’s in nobody’s interest for taxes not to be paid, or to be paid late. Our approach to debt collection is to ensure everyone pays their fair share of tax, providing a sympathetic ear to those needing help and taking a tougher line with those who choose not to play by the rules.
Real Time Information (RTI) update
HMRC has published an RTI update alongside a Technical Pack to enable software developers to build payroll software products capable of reporting using the internet through the Government Gateway.
In response to concerns from the software and banking industries about the timescales for developing the ISO standards for use in the Bacs channel, HMRC will accept RTI data through Electronic Data Interchange (EDI) until at least April 2014 in addition to the internet channel.
The timetable for moving employers to the RTI system, announced in 4 April, is not affected by this interim solution. Bacs remains HMRC’s strategic solution for RTI reporting and further details about the timetable for that channel will be published in due course.
Read the latest update about RTI
New Contracts Finder service available
HMRC would like to alert you and your clients to a free, new service that enables you to access public sector procurement opportunities and closed contract
documents with a value greater than £10,000. Launched by the Prime Minister in February, Contracts Finder aims to help small and medium enterprises win more Government contracts. It’s also one of several measures that the Government has taken to become more open and transparent so that it can be held to account and deliver better value for money.
Contracts Finder can be found on the Business Link website, enabling visitors to easily click through to guidance on public sector procurement, as well as wider business support information and resources. You can also set up email alerts to hear about live contract opportunities and newly published tender and contract documents.
Agents and HMRC working together
May 2011 – Issue 43
Working
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Contacts
Welcome
National
Local
Updates
Contacts and useful web links
Working Together (WT) is a partnership between HMRC and CIOT, ICAEW, ACCA, ICAS, ATT and AAT.
One of the key objectives of WT is to improve two-way communication between HMRC and tax advisers. If you have any comments on the WT programme or would like to know more about getting involved with your local group, please contact your professional representative (contact details are below), or if you are not a member of one of the organisations listed, contact the HMRC representative. If you are contacting your professional body please make it clear that your
comment is about WT.
Comments on any article in this publication are welcome and should be sent to either the Editor, or to your professional body.
Contacts
Organisation Contact Name E-mail address
Editor Alison Bainbridge alison.bainbridge@hmrc.gsi.gov.uk
HMRC Yvonne Baker yvonne.baker@hmrc.gsi.gov.uk
CIOT Anne Wright wt@ciot.org.uk
ICAEW Martyn Warren taxfac@icaew.com
ACCA Peter Jennings peter.jennings@targetlimehouse.co.uk
ICAS Derek Allen tax@icas.org.uk
ATT Jean Jesty wt@att.org.uk
AAT Brian Palmer wt@aat.org.uk
Did you know that…
• Agent Dedicated Helpline for all your PAYE and Self Assessment enquiries you now need only call one number Tel 0845 366 7855
• you can get e-mail updates direct from HMRC by signing up to RSS (Really Simple Syndication) feed for easy access to news for agents • we’ve recently published the online learning for HMRC staff on compliance
checks and penalties on our website so that agents can access the material too
• we’ve published a series of Tax Help factsheets covering issues for Small and Medium Enterprises (SMEs) which some of your clients may find useful
• there are also Tax Help for Business pages on Business Link containing guides and tools to support SMEs (and their agents) through the various stages of their business life
How do I…
• get authorisation to act on behalf of my client • register for VAT on behalf of my client • register for HMRC Online Services
• work through the Online Services Demonstrator • find out about current online service issues • find out about current online service availability • make my online experience as safe as possible • find out about paying HMRC
Copyright
This publication is covered by © Crown Copyright. There is no objection to firms copying the publication for their own use. Anyone wishing to republish Working Together or extracts more widely should write to the editor for permission.
