It certainly didn’t make any headlines, but there was a welcome announcement in last month’s Budget for insolvency practitioners.
The chancellor revealed that £71m is to be invested in HMRC services, including the recruitment of 800 new call centre staff and a move to make tax offices open 7 days a week.
These improvements should not only help ease waiting times (only 51% of calls are answered within 15 minutes), but also alleviate delays in insolvency procedures (approximately one third of all paperwork sent to HMRC is lost or ignored and a quarter of cases take more than 6 months to close).
These changes should be good news for creditors, the insolvency profession and HMRC itself, as HMRC are the largest unsecured creditor in the majority of insolvency cases.
Is HMRC Reform Needed?
The trade body for insolvency practitioners, R3, recently surveyed its members to get their thoughts on HMRC and how helpful they find the current system.
The results show, rather worryingly, that more than half of insolvency practitioners (54%) believe HMRC make it easier to wind up a business than rescue it. And nearly three quarters (71%) say the insolvency process has become harder to manage in the last few years due to HMRC. A mere 10% find HMRC “helpful”.
It seems the proposed changes can’t come soon enough!
Credit Where Its Due?
You would think that being a creditor in most insolvencies would spur HMRC to swift action when an insolvency practitioner requests information it holds. However, it seems administrative delays and obstacles have become the norm, meaning the task of rescuing businesses and jobs has become increasingly difficult.
In fact, 43% of the insolvency practitioners surveyed said they’d had information requests denied, despite being entitled to access the material.
Understandably, creditors become frustrated when there’s a delay in getting their money returned and insolvency practitioners often bear the brunt of it. This helps to explain why HMRC is considered the creditor they least look forward to working with!
An Opportunity for Improvement
R3 are calling for further improvements to help alleviate delays in insolvency procedures (while saving time and costs), including the introduction of a specialist insolvency unit at HMRC with a dedicated helpline. This proposal is supported by 90% of R3 members.
HMRC are already planning to ‘Make Tax Digital’ so the process will be easier and more efficient for taxpayers, and a more streamlined, digital insolvency system would also be welcomed.
Making insolvency procedures faster and more cost-effective for all concerned definitely gets the thumbs-up from us. Please get in touch if you’d like to discuss any insolvency-related issues.