HMRC’s annual report, the trade digitalisation act, plus flexible working requests
Welcome to our round up of the latest business news for our clients. Please contact us if you want to talk about how these updates affect your business. We are here to support you!
HMRC Annual Report shows some important trends for business owners
HMRC’s annual report was published last week, and it shows that they failed to meet many of their key customer services measures in 2022-23. Customer satisfaction dropped to 79% from 82% last year and telephone performance has also declined with an average wait of 16 minutes to get through to an adviser. 63% of callers waited more than 10 minutes, with an average wait-time of over 20 minutes in January to March 2023. To their credit, HMRC have improved their correspondence reply time to 73% cleared within 15 days from 46% in 2021-22.
HMRC thinks the solution lies in the use of online services by taxpayers and wants to reduce the volume of contact by telephone and post by 30% before 2025. However, given HMRC’s past record on missing its technology deadlines, this is probably unlikely without further resources being made available. Long wait times for taxpayers look likely to continue.
The report highlighted that HMRC have maintained a long-term reduction in the UK’s tax gap (the difference between the amount of tax that should, in theory, be paid to HMRC and what is actually collected) from 7.5% of total theoretical tax liabilities in 2005 to 2006, to 4.8% in 2021 to 2022.
To ensure everyone pays the “right” tax, HMRC have a compliance strategy with 3 elements: preventing non-compliance, promoting good compliance, and being robust in their response to those who bend or break the rules. In 2022-23 HMRC delivered £34 billion of compliance yield – the term for money that would have been lost to the Exchequer if not for HMRC compliance work. While it’s lower than they aimed for this year, it’s higher than the 2 previous financial years.
In the last fifteen years, in the wake of the “Crash” of 2008, the subsequent recession and the Pandemic, the UK National Debt has risen to the worrying level of 101.7 percent of Gross Domestic Product. HMRC have been tasked with increasing their efforts to help with this by recovering as much tax as possible and closing the tax gap even further.
We are seeing HMRC putting increasing resources into tax investigations, following the investment into their IT infrastructure and employee numbers – HMRC have been known to launch investigations into individuals and businesses that leads to little to no tax being recovered, following investigation. Some recent statistics have revealed that 2 in 5 taxpayers who were investigated paid no additional tax even though they had to go through the trauma of an HMRC tax investigation.
It’s a situation faced by thousands of UK businesses each year, one which has stepped up following the Pandemic as HMRC seeks to crack down on fraudulent claims for financial support. This has led to a growing number of UK businesses being randomly selected for investigation, with even sole traders finding their accounts subject to scrutiny.
Many of our clients protect themselves from the costs of an HMRC investigation with Fee Protection insurance. Tax fee protection insurance can save you from the unexpected costs of having your business accounts investigated. HMRC investigations can run into thousands of pounds in costs – hundreds of thousands in some cases. Having fee protection in place gives you the reassurance that your accountant’s costs in dealing with the investigation will be covered.
If you are not covered, then talk to us about our comprehensive fee protection insurance and expert advice.
See: HMRC’s annual report and accounts 2022 to 2023: performance overview – GOV.UK (www.gov.uk)
The trade digitalisation act
The electronic trade documents act received Royal Assent last week granting electronic trade documents the same legal status as physical trade documents, hopefully making trade more efficient, cleaner, and cheaper for firms.
Existing laws dating back to the 1800s previously meant that exporters and importers have to use paper documents to transfer ownership of the goods they are shipping – creating a costly, inefficient and outdated way of working.
UK businesses, both big and small, have been calling for paperless trades for decades, especially as the development of electronic document technologies has become increasingly feasible for the industry. With less chance of sensitive paper documents being lost, and stronger safeguards through the use of technology, digitalising trade documents could give businesses that trade internationally greater security and peace of mind.
The UK government estimates that the new law could generate a net benefit of £1.14 billion for the British economy over the next decade for UK businesses trading across the world.
Innovation Loans Future Economy competition – round 10
UK registered businesses can apply for loans for innovative projects with strong commercial potential to significantly improve the UK economy.
Innovate UK is offering up to £25 million in loans to micro, small, and medium-sized enterprises (SMEs). Loans are for highly innovative late-stage research and development (R&D) projects with the best potential for the future. There should be a clear route to commercialisation and economic impact.
Your project must lead to new products, processes or services that are significantly ahead of others currently available or propose an innovative use of existing products, processes, or services. It can also involve a new or innovative business model.
Innovate UK is particularly interested in projects that focus on the future economy areas included in the Innovate UK plan for action.
You must be able to show that you:
- need public funding,
- can cover interest payments, and
- will be able to repay the loan on time.
The funding available will be allocated across a series of competitions:
- round 10 – opened 15 July 2023,
- round 11 – opens 14 September 2023, and
- round 12 – opens 9 November 2023.
Government clamps down on unfair bank account closures
Banks will be forced to explain and delay any decision to close an account under new rules, protecting freedom of expression.
The government has stepped in to address fears that banks are terminating accounts because they disagree with someone’s political beliefs.
The changes will increase the notice period to 90 days – giving customers more time to challenge a decision through the Financial Ombudsman Service or find a replacement bank.
Banks will also be required to spell out why they are terminating a bank account – boosting transparency for customers and aiding their efforts to overturn decisions.
The changes were announced last week.
See: Government clamps down on unfair bank account closures – GOV.UK (www.gov.uk)
Acas Consultation – Code of Practice on handling requests for flexible working
Acas is updating its statutory Code of Practice on handling requests for flexible working, to reflect the anticipated reforms to legislation, significant shift in flexible working in the workplace and changing views since their existing Code was published in 2014. Their non-statutory guidance will also be updated, which sits alongside the Code.
The aim of the Code is to provide employers, employees, and representatives with a clear explanation of the law on the statutory right to request flexible working, alongside good practice advice on handling requests in a reasonable manner.
Contributions are welcome from all interested individuals and organisations. This includes employers, employees, trade unions, business representative groups, legal representatives, and any other organisations or individuals with an interest in flexible working practices and good employment relations.
The consultation closes on 6 September 2023.
See: Acas consultation on the draft Code of Practice on handling requests for flexible working | Acas
Training providers across England can bid for a share of £8.85 million government funding to offer courses in retrofitting and installing insulation
Thousands of people are to be equipped with the right skills to make homes more energy efficient, as training courses will be rolled out across the country.
Training providers, such as colleges and accreditation providers, will be able to bid for a share of £8.85 million to help up to 8,000 people – whether current installers or those new to the industry – develop the skills and expertise needed to retrofit homes with energy saving measures.
The courses will be free or provided at low cost and will cover a range of key energy efficiency measures, from putting in loft insulation to draft proofing measures. This will not only help drive household energy bills down and reduce emissions but represents key employment opportunities for people to stay in and progress in work.
Training providers will have until 25 August 2023 to apply for the funding to deliver the courses, with training places expected to open later this year.
See: Thousands to be trained to boost energy efficiency in homes across the country – GOV.UK (www.gov.uk)