Thursday 30 May 2024

Lost AML Form Cost Agent £15K - HMRC Fucks Up Again

In the world of accounting and finance, precision, accuracy, and adherence to rules are not just desirable traits - they are the very foundation upon which the industry stands. However, it seems that these principles do not always apply to the institutions that govern these industries. A recent incident involving His Majesty's Revenue and Customs (HMRC) serves as a stark reminder of this fact.

The Incident

An accounting firm recently found itself in the eye of a storm, all due to a misplaced anti-money laundering form at the HMRC headquarters. This seemingly minor oversight had major repercussions, leading to the firm's agent access being revoked. The result? A loss of a month's worth of work and the firm teetering on the brink of closure.

The Fallout

The suspension of the agent account meant that the firm was unable to carry out its regular operations, leading to significant delays and financial losses. The firm, like many others, relies on the agent account to interact with HMRC, submit forms, and carry out other necessary tasks. The suspension effectively crippled the firm, highlighting the disproportionate impact of the HMRC's error.

As per Accountingweb:

“I set up my firm five years ago and it grew during Covid. From the start, I’ve been supervised for money laundering by ICAEW. The only interaction I have with HMRC is as an agent.

In September 2021, I received a request status from HMRC asking who is supervising me for money laundering. I returned the AML 103 form in the post as requested to HMRC in October 2021.

Unfortunately, it landed at HMRC and went into the wrong workflow. It later transpired that the person who received it took 53 days to get through their workload, get to my form and realise it had nothing to do with them, at which point they gave it back to the main switchboard. 

In the meantime, I was struck off as a non-responder. This resulted in my agent status being removed, along with my ability to submit corporation tax and self assessment returns, which make up the bulk of my work. This was on 2 Dec 2021, at my firm’s busiest time.

With no agent services login, I lost the ability to trade – it was awful. I tried calling, writing and emailing but just couldn’t get an answer.

The ‘agent maintainer’ team is apparently responsible for this, but they don’t accept emails or phone calls. There’s no follow-up, you can’t speak to this team – it’s an almost mythical department. They have a ‘service level agreement’ to respond to letters within 40 days, but that’s no good when I can’t run my business.

Because I’ve previously worked on committees for ICAEW, I was fortunate to know the right people to call at the Institute. After a bit of back and forth, they had someone literally walk the corridors of HMRC to find this team and ask them. Without this, they’d have been completely unaccountable. 

I lost a whole month's business, around £15,000. It had a catastrophic impact on my firm, which was in its infancy and could have gone under. As it was, I had a terrible January with a whole pile of work and a massive cashflow hole – with all the costs of December with no income. I spent the next six to eight months just recovering.  

Naturally, I complained and got my MP involved. By March 2022, HMRC accepted my complaint and offered me £150 compensation. This was not at all acceptable and they said I had the right to approach the adjudicator’s office to make an independent complaint.

The adjudicator’s office came back and said they do not have jurisdiction because I’m technically not a taxpayer – in this instance, I’m treated as a service provider. The best they said they could do was to attempt to launch a Parliamentary inquiry – that’s obviously not what I was looking for.

I completely accept that it’s a process gone wrong, not someone at HMRC who hates me. But it’s their process and nobody dealt with it. If the ICAEW hadn’t got behind this, who knows where I’d be?

My case was very clearly an internal gaff, which HMRC admitted, but they were still unwilling to do anything or take responsibility. Agents don’t get a right of appeal when something like this happens, there’s no higher body. 

HMRC also needs to come to the realisation that accountants in practice are not the enemy.”

HMRC's Role

While mistakes happen in every organisation, the magnitude of the impact in this case raises questions about HMRC's processes and systems. 

How did a single misplaced form lead to such drastic consequences? 

Why was there no system in place to prevent such an oversight, or at least to mitigate its effects?

The Need for Change

This incident underscores the need for HMRC to review its procedures and implement safeguards to prevent such occurrences in the future. It is crucial for HMRC to remember that its actions and decisions have a far-reaching impact on businesses and individuals alike. A misplaced form should not have the power to bring a business to its knees.

In conclusion, HMRC must acknowledge its responsibility towards the entities it governs. A review of its systems and procedures is not just desirable, but necessary. After all, in the world of finance and accounting, even a small misstep can have a domino effect, leading to consequences far greater than the initial error.

Tax does have to be taxing.

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  1. More to the point; why wasn't the form made available by the tax office online?

    Such outdated working practices have no place in the modern era.

  2. This underscores the need for urgent reform of HMRC's governance. While all the various misconduct, bullying etc is going on, staff aren't doing the jobs we pay then for to a competent standard.

    When mistakes of this magnitude occur, those responsible should be named and shamed to encourage all staff to take personal responsibility for decisions which, as you say, have far reaching consequences. Let's focus their tiny minds.

    I accept that the horrific error may not have been motivated by malice or hate, on this occasion, but the truth is there are a large number of HMRC staff who do hate agents and do hate the self employed/traders. They assume all financially successful people not on PAYE must have been 'at it'. I know this both as a former employee and, now, as an agent. They really are bitter, jealous, vile scumbags

    1. It's not entirely a one-way street though, is it? I have come across plenty of agents with an openly hostile, threatening attitude towards HMRC staff just trying to do their job. Not to mention being complicit in their client's tax evasion.
      No doubt a minority, but there's bad on both sides.

    2. Can you blame agents for occasionally getting a little cross when HMRC make some many mistakes and a lot of their staff are filled with hate and prejudice towards taxpayers and agents?

    3. Being complicit in evasion is not "getting a little cross".
      And "a lot" of HMRC staff are not filled with hate and prejudice towards taxpayers and agents.
      As I keep saying, HMRC is a deeply flawed and mismanaged organisation urgently needing reform, but OTT hype just makes this look like a blog for conspiracy theory nutters.

    4. Errrr a former employee has admitted that a "large number" of HMRC staff do hate agents and self employed persons. Doesn't sound like a conspiracy to me.

    5. Errr, former employees never have an axe to grind do they?
      Also, he didn't say self-employed persons, he said taxpayers.
      Spoiler alert - HMRC staff pay tax!!!!
      As far as conspiracy theorists are concerned, have you read 1st June @11:18? "Drain the swamp". "Globalist commies". Where's the guy think he's from, freaking Wyoming?

  3. When it comes to HMRC, it's time to drain the swamp.
    Will that happen when the Labour Party are installed as the next government? Of course not, HMRC will be even worse. Worrying times ahead with those globalist commie nutters

  4. Welcome to the Digital Utopia and putting the customers at the heart of everything they do. They don't give a shit.

    Do you think HMRC caused Eamonn Holmes marriage to break down? The stress of endless investigation and having to sell their home. It wouldn't have helped would it.

    HMRC has been out of the news cycle this week. DWP have been getting a lot of criticism because of £50 million in benefit fraud going to some Eastern European backwater village. Blamed on incompetence. Nothing to see here, move along.

    1. HMRC needs to be privatised. We have a fantastic accountancy profession in the UK, who are ready and willing to take on this work and who bring a high degree of skill, professionalism and fairness.

    2. A great idea. There would be absolutely no conflict of interest in accountants calculating and collecting their clients tax.
      Surprised Liz Truss didn't think of it.

    3. @14:36 What do you envisage happening to the 60K HMRC staff if it were privatised? Is there any method to sidestep the TUPE regulations? Just a thought: any privatised entity forced to take on HMRC personnel is doomed to failure from the get-go !!!