Taxman still failing VAT applicants

The most efficient tax office in Britain still takes more than twice the time it should do to register start-ups and individuals for VAT.

Staff at HM Revenue & Customs’ Wolverhampton office process applications in 32 days, the shortest waiting time UK-wide but far off the target of 14 days.

The official figures, from April this year, also show only seven per cent of tax offices met the target, rising to 17 % in June. In six months, less than a fifth of applications were on time.

Delays have been blamed on staff needing to carry out more checks because of fraud and tax changes to managed service companies prompted a “spike” in applications, HMRC has said.

Making matters worse, the ‘workforce change programme’ saw thousands of staff lose their jobs; in fact 25,000 civil servants will go by 2011, while the number of VAT processing units shrank from four to two.

“It hasn’t reduced overall staffing levels, but some people have had to be retrained,” a Revenue spokesman told The Observer, dismissing the cuts as a main culprit of the delays.

But Alex Flynn, of the PCS union, told the Sunday paper that laying off back-office staff has left HMRC unable to provide a proper service.

“If it continues cutting this number of jobs, it will not be able to function, and will not be able to collect the taxes to pay for hospitals and schools.”

For shadow Treasury minister David Gauke the delays to VAT registration are an affront to enterprising types looking to set up small businesses.

“This is an ongoing problem which we have been warning about for well over a year,” he reportedly said.

“In that time, performance has continued to decline and, at one point this year, HMRC had practically ceased to process any VAT applications in a reasonable time.”

Last week, leading MPs recommended that HMRC should assess the costs and benefits of introducing a single simplified VAT scheme .

In its report, entitled Helping newly registered businesses meet their tax obligations, the PAC said errors occur in online VAT registrations because the Revenue’s system lacks validation checks.

In July, former Treasury minister John Healey admitted that delays to registering for VAT had become “unacceptable.”

A more conservative admission came from HMRC last week. A spokesman said: “We recognise it hasn’t been entirely satisfactory. We’re hoping that, from about now, people are going to see an improvement.”


1st November 2007

Related News

Latest News