On Tuesday I was invited to an HMRC partner conference and networking event at 100 Whitehall. The meeting actually took place in the Churchill room so was redolent of history.
The objective of the afternoon was to see how HMRC can work with partners to improve support for their SME (Small and Medium Sized Enterprises) customers.
The obvious question was why would they take this approach, and they were impressively frank and honest with their answers. It starts with their vision; “our customers will feel that the tax system is simple for them and even handed’.
Our Way
– We will understand our customers and their needs
– We will make it easy for customers to get things right
– We are passionate in helping those who need it
I love the way they refer to tax payers as customers, and am amazed that they put in writing that they are passionate about helping them. This is not the kind of language one expects from a civil service department, and especially not the tax office. I suppose the real test is whether their customers see it the same way.
SME’s are a key customer group for HMRC. There are 4.8 million SME’ in the UK and they account for over 99% of all businesses in the country. They make up over 50% of business turnover and employ some 14 million people. They collect or contribute over 40% of tax receipts.
The bottom line is that £6bn is lost from the Exchequer each year because of failure to take proper care in record-keeping. SME’s make up the bulk of that ‘tax gap’, but are often scared of, or unwilling to contact HMRC directly to address tax problems. Whereas they are much more willing to talk to others such as the partners invited to the meeting. These ranged from business advisors, to professional bodies (such as the Federation of Master Builders), to accountants and even trade retailers such as Screwfix.
Stephen Banyard, HMRC’s Director of the Business Support Unit gave some fascinating information on the scale of their challenge:
– For instance £1.6 billion pounds of tax income is lost due to mistakes made by business.
– This despite the fact that HMRC receive 10 million phone calls a year from their customers.
– Seventy percent of companies use a tax agent to avoid dealing with the forms themselves.
The Tax deferral scheme introduced to help businesses make it through the recession has helped more than 242,000 companies, totalling nearly £4.23 billion.
– All tax related information will be moved onto the Business Link website, but will allow content to be mashed-up on partners websites.
The key problem that HMRC face is the lack of record keeping from tax payers. To help address this they have partnered with Staples officer supplier. They have produced jointly branded marketing materials which are displayed in Staples stores and on their website.
They are even sponsoring a Channel Five TV show starting on 10 March this year. The Business Inspector will be a troubleshooting series aiming to transform failing small companies, with the intention of to encourage good-record keeping.
Keeping records 
(pdf 57KB) Brings together the main record keeing guidance for easy reference by our customers and provides opportunity to mention the new penalties that maybe applicable.
Self-employed and partnerships
Form or record
A record of all sales and takings, including cash receipts. For example • till rolls • sales invoices • bank statements • paying-in slips • accounting records.
A record of all purchases and expenses, including cash purchases. For example: • receipts • purchase invoices • bank and credit card statements • cheque book stubs • accounting records.
Why
Allows you to quickly see what you are owed and accurately work out your total income. Allows you to quickly see what you have spent, how much you owe and what you can claim for tax purposes.
Further information
Self-employed: go to www.hmrc.gov.uk/sa/ rec-keep-self-emp.htm Partnerships: go to www.hmrc.gov.uk/sa/ rec-keep-part-partners.htm Phone Self Assessment Helpline 0845 900 0444