As part of its drive to cut costs HMRC will stop issuing copy letters to tax agents of P2 PAYE coding notices, P800 tax calculations and a collection of Self Assessment notices.

“We hope that agents will understand our decision to withdraw these communications. We estimate… that we will save in the region of £1.25m by discontinuing the issue of agents’ copies of Forms P2 and P800 alone”

While withdrawing agent copies of some notices, HMRC will include a new statement on the letters advising taxpayers that the form should be shown to their agent or adviser. The notices affected include:

• P2  PAYE Coding Notices to be dropped from December 2010
• P800 Tax Calculation (August/September 2010)
• P810 targeted review form (already dropped in April)
• SA 250 advising tax payer of UTR and need to file a return and SA 251 Letter advising that tax returns will no longer need to be completed (both October 2010).
• SA 252 Letter for those who don’t submit a tax return but are liable to higher rate (September 2010, but already dropped since April).

The CIOT published the message on its website and immediately raised a series of concerns. While appreciating and supporting the need to cut government spending, the CIOT warned that the move was a false economy.

“This is a seriously short-sighted move from the Revenue,” said CIOT Deputy President Anthony Thomas. By keeping tax agents less well-informed about their clients’ tax obligations HMRC are likely to find they lose more money than they save.”

Calling on HMRC to reverse its stance, he added, “It is particularly disappointing that this change is being sprung on taxpayers and their agents with more or less immediate effect and without consultation.

“If they are set on proceeding, then much more effort will need to be put into telling all taxpayers about the changes. At the moment all that is planned is a message on letters from HMRC to taxpayers, but if the taxpayer doesn’t read letters obviously from HMRC (which is not uncommon, on the basis that they leave that to their agent) they will not see the message on the letter telling them to show it to their agent.

“Given that the vast majority of the costs involved in sending this information to agents come from paper, printing and postage, a consultation could also look at whether sending the information by email offers a possible cheaper alternative to sending it by post.”

The HMRC notice acknowledged “hard decisions and choices will inevitably have to be made” and indicated that it would continue to review the need for existing forms and look for ways to rationalise its printing and postage costs. The PAYE system, for example, will introduce a new process from December 2010 in which P2s will not go out until all 2010 SA Returns (for those meeting the 31/1/2011 online filing deadline) are captured. “This means that the code we issue will be based on the information in the return and will avoid the need for amendments had we issued the code earlier.”

A £158BN hole in the public finances means that HMRC are being used to try and raise extra cash for the Treasury, as quickly as possible and that will mean easy targets, so small and medium size firms, anyone in the construction industry are in the direct firing line for:

employer compliance reviews

PAYE/NIC investigations

Employment status reviews

tax investigations

you name it and they are heading your way and don’t think it won’t happen to you – it will, so why not take advantage of the special deal that EICG is running this month on PAYE/NIC healthchecks and Construction Industry reviews, call us today on 0800 917 9176 to see how we can help you avoid being a victim

The current delays within HMRC are getting ridiculous and it’s not just the taxpayers that are having problems, even professional tax advisers are having problems.

Sue Moore, associate director for BTT and A, has been struggling to get hold of anyone at HMRC.

“We’re having difficulties when dealing with the HMRC. It would seem that most offices are eight weeks behind dealing with post. When you telephone it is just the call centre and if you want to speak to somebody actually dealing with the case, that is almost impossible. All this was before the cuts in the department spending.

Everybody is affected by the delay. Issues take longer to resolve and cost the clients more in professional fees as we have to keep chasing HMRC. Working on a case is very inefficient as we have to pick up the threads of the case after several months’ delay.”

Now we are finding that we are having to escalate matters in order to get a response to correspondence which is no good for anyone

HMRC announced in June that Extra Statuory Concession B46 (ESC B46) allowing a seven-day grace period for late employers’ and contractors’ returns will cease from 31 March 2011.

ESC B46 established the principle that penalties would not be charged when employers and contractors submitting tax returns and CIS forms had taken “all reasonable steps” to file their returns on time, but were not able to do so due to unforeseen circumstances such as postal delays.

With the advent of online filing, which is required for P35s and P14s and will become mandatory for Corporation Tax returns from 1 April, HMRC considers the concession to be “redundant” because the delays it was intended to address will no longer happen. Returns must therefore reach the department by their due date or incur a late filing penalty of £100.

Confirming the new penalty regime HMRC explained: “Any customers filing a return late will, as now, be able to request us to remove any penalty, if they believe they had a reasonable excuse for the delay in filing. We will consider every case on its own merits. Customers can also appeal against the penalty to a Tribunal.”