What I saw on a visit to HMRC's London HQ

In the middle of last month, I paid a visit to HM Revenue & Customs at their offices just off Horse Guards Parade in London, writes Ian Cass, managing director of the Forum of Private Business.

The event was their annual stakeholders’ meeting, where HMRC share with me and others in the business community their work to date and their plans for the forthcoming year.

No goblins

Although I was expecting an experience more akin to visiting ‘Gringotts Bank’ from the Harry Potter films, I was pleasantly surprised to find that while the building itself is suitably imposing and the security as impressive as the aforementioned bank, the place is not inhabited by goblins and other legendary nasty creatures.

Unfortunately though, HMRC does face the issue that in most small businesses’ perception they are seen as the enemy, part of a wider group of government-backed agencies who can descend on a small business and in one fell swoop, impose red tape and business-crippling fines.

The ‘sheep-dip’ operation

Because of their own internal mind-set and the way they view their ‘customers’, they do little to change this perception so while they are trying to change, not enough of these changes are reaching the smaller businesses sector to make much of a difference.

A big problem I spotted on my way round the Revenue’s offices is the one-size-fits-all approach; the ‘sheep-dip’ operation that doesn’t differentiate businesses by size, turnover, stage of development and thus inevitably causes issues. HMRC has certain processes and systems that may work for larger business, but these cause huge issues for small and micro businesses, such as contractors and other one-man bands. As long as HMRC are tying up business owner-operators in compliance and red tape issues, rather than allowing them to do what they do best – develop their business and sell their products or services – then George Osborne will not achieve his aim (announced at Summer Budget 2015) of improving productivity in the UK.

Whether you’ve been inside the Revenue’s HQ or not, you’ll probably know that HMRC often talks about simplifying things. Technology is supposed to be a great enabler in this instance, but my suspicion is that it is as much a cost-saving efficiency as something aimed at simplifying things for their business customers.

HM Suspicious and Sceptical

I have this suspicion because the shift from a huge paper-based system to an online system needs a huge education process for the businesses affected by such a change. While there were many stakeholders at the meeting representing the companies who supply advice and services to help businesses in dealing with the changes – at a price, there seemed to be little evidence that HMRC themselves are conducting any of this education. This is a shame, as it is the perfect platform for HMRC to be seen to be helping the small business community, rather than just being the big bad wolf there to pounce on them if they go wrong.

Mind you, when you get HMRC’s Lin Homer, the chief executive of the organisation telling you that her staff are suspicious and sceptical -“they would be, because we train them that way”, heaven help us! If they treat us all, business and individuals, like law-breakers and criminals is it any wonder most people see them as the enemy?

Punishing rather than preventing

It’s also no wonder to me that the tax department scores so low on workforce morale surveys if their staff are constantly dealing with negatives; punishing, rather than preventing through help and education. If they effectively show businesses the reasons and benefits for getting their tax affairs right in the first place then the need for punishment drops. Help business to avoid mistakes and show them how easy the online system can be and how they can cut down the costs of compliance and red tape if they do it right first time and online. Run roadshows, webinars, attend business networking events at a local level; be proactive in the business press, work with organisations like us. Do all that HMRC, and then we would be getting somewhere.

Helping business customers needs to be a higher priority on the HMRC agenda and they need to be measured against that objective – government, please take note.

Desire to change?

Like all government agencies, the Revenue is under pressure to make savings and increase revenue and unfortunately this seems to impact on the front line staff who are targeted with increasing tax collections and not with helping business to be more efficient in their tax dealings. I sense that there is a real desire to change, but as long as HMRC puts their resources behind penalising mistakes rather than helping business to prevent them in the first place – which would require a real change of mindset and culture at HMRC – then all the talk of change will be just that, talk.