Tax return delays expected as HMRC cuts costs

Cost cutting measures at HM Revenue & Customs will lead to delays of up to eight weeks for taxpayers trying to file paperwork or register for normal frontline services. The news follows the admission last week that HMRC has built up a backlog of open cases dating back at least six years, which could lead to taxpayers owing or being owed tax totalling billions of pounds . In a notice on its website , HMRC admits a redeployment of resources to "higher priority work" will result in longer turnaround times for paper forms handled by the Central Agent Authorisation Team until 31 October, the deadline for filing paper-based self-assessment returns for the tax year 2009/10. It warns that the turnaround for a form 64-8 for self-assessment (the form which tells HMRC a particular accountant is acting as an agent for a client, and should receive copies of all correspondence) could take up to two weeks from the time of posting until processing is complete and authorisation is effective, through to eight weeks for self-assessment and self-employment registrations. It adds: "HMRC strongly encourage you to use online agent authorisation if possible, as online processing will not be affected. But please don't use the online process to set up a client authorisation if you've already submitted a form 64-8 for the same client. This will cause problems with HMRC systems and may delay the authorisation process further. "If you are applying on paper, HMRC will continue to prioritise authorisations for Self Assessment as agents have said that these are the most important." HMRC also warned that to save on costs it will no longer issue some forms to agents. The P2 PAYE Coding Notice and P800 Tax Calculation, for example, will not be sent to agents but instead will include a new message to taxpayers suggesting the forms should be shown to their tax agent or adviser. Clive Gawthorpe, a partner at chartered accountants UHY Hacker Young , said: "It is worrying that proof that austerity measures in HMRC will lead to a further slip in standards is emerging so quickly. "Considering the shock waves from the PAYE debacle you would have thought that HMRC and the Treasury would want to watch service standards very closely, but it seems there are no lessons to be learnt." Gawthorpe said the cuts in services will have a "real tangible impact" on the ease with which taxpayers are able to fulfil their obligations and ensure they do not overpay their tax, and would lengthen the time taken to get tax rebates and create delays in dealing with the paperwork for the self-employed setting up new businesses. He added: "Most people who employ accountants will have their forms filled in online, so this will not affect them. But those who are completing their own returns and prefer to fill in a paper form could be in danger of not finding out how much tax they owe until after the 31 January payment date." HMRC said: "We are determined to deliver efficiency savings and the best possible customer service. In August we clearly set out changes to the turnaround time of some agents' forms. "The vast majority of agents use online forms and turnaround times for the online forms will not be affected."