HMRC’s Tax Refund Fiasco: A Bureaucratic Nightmare Strangling Small Businesses

HM Revenue and Customs (HMRC) has once again proven itself to be a masterclass in inefficiency, leaving taxpayers and small businesses stranded in a quagmire of delays that stretch far beyond the already egregious four-month mark reported by frustrated accountants. The tax office’s latest debacle—processing tax refunds at a glacial pace while simultaneously axing a vital free online filing service—has sparked outrage among those who rely on timely refunds to keep their businesses afloat. This isn’t just incompetence; it’s a betrayal of the very people HMRC is supposed to serve.

 

Let’s start with the refunds, or rather, the lack thereof. Reports from professionals like Nikki Ainscough, managing director of York-based Equilibrium Accountants, paint a grim picture: refunds for overpaid tax or National Insurance, particularly under PAYE and the Construction Industry Scheme (CIS), are now taking well over four months—and in some cases, much longer. One of Ainscough’s clients, who submitted a PAYE refund request in March, was told to wait until August 2025 for their funds. That’s a five-month delay for money rightfully owed, and it’s not an isolated case. Social media platforms like X are ablaze with taxpayers venting about waits stretching to six, seven, or even nine months, with one user describing a £4,000 inheritance tax refund still unpaid after nearly a year.

 

Historically, these refunds took four to six weeks, a timeframe that, while not ideal, was at least manageable. Now, HMRC’s backlog is so severe that it’s processing requests from as far back as December 2024, leaving businesses and individuals in financial limbo. Ainscough rightly points out the stakes: “If the backlog is that big, it suggests a high volume of claims and a potentially substantial sum of money that is owing to small businesses and individuals at a time when cashflows are critical.” For small businesses already battered by economic uncertainty, these delays aren’t just inconvenient—they’re existential threats. Every pound trapped in HMRC’s bureaucratic black hole is a pound that can’t be used to pay suppliers, cover payroll, or invest in growth.

 

And what’s HMRC’s excuse? A vague nod to “backlogs” and the occasional mention of industrial action by staff handling PAYE and CIS refunds. Sure, strikes can disrupt operations, but they don’t explain why delays have ballooned to such absurd lengths or why HMRC seems utterly unprepared to address the issue. The tax office’s response is a masterclass in deflection: “We’re tackling response times for these refund claims by allocating extra staff to work on them,” a spokesperson chirped, while boasting about an 80% customer satisfaction rate. Eighty percent? Tell that to the small business owner waiting half a year for a refund or the taxpayer stuck on hold for 45 minutes only to have their call dropped.

 

But the refund delays are only half the story. In a move that reeks of tone-deafness, HMRC has announced it will shutter its free online filing service for company tax returns and accounts by March 31, 2026. This service, used by countless small businesses to file their annual accounts and calculate corporation tax, is being scrapped because it allegedly “does not meet modern digital standards or recent changes to UK company law.” Instead, businesses will be forced to shell out for commercial software, with costs starting at £15 a month or over £100 for a one-off purchase. One exasperated taxpayer summed it up perfectly: “This means people will have to subscribe to a commercial, paid product for the privilege of paying corporation tax to the government.”

 

Let that sink in. HMRC is not only delaying refunds that businesses desperately need but also piling on new costs for compliance. For small traders, local residents’ associations, or incorporated charities already stretched thin, this is a slap in the face. The free filing service, introduced in 2011 to ease the transition to online filing, was a lifeline for smaller entities with simple tax affairs. Now, HMRC is yanking it away, forcing businesses to navigate a fragmented market of third-party software providers—many of which charge recurring fees that add up quickly. And don’t expect much sympathy from HMRC; their spokesperson had the gall to claim that commercial software “provides a much better service.” Better for whom? Certainly not the small business owner already drowning in red tape.

 

HMRC’s defenders might argue that modernisation is necessary, that outdated systems must be replaced to align with the Economic Crime and Corporate Transparency Act or to combat fraud. Fine. But why is the burden of this transition being dumped squarely on the shoulders of taxpayers? Why hasn’t HMRC invested in streamlining its own processes to ensure refunds are processed promptly? Why is there no transitional support for businesses forced to adopt costly new software? The answer is painfully clear: HMRC prioritises its own convenience over the needs of the public it serves.

 

The hypocrisy is staggering. While HMRC drags its feet on refunds, it’s lightning-fast to slap taxpayers with penalties for late filings or payments. Miss a self-assessment deadline by a day, and you’re hit with a £100 fine, with interest accruing at 8.5% on late payments. Yet when HMRC owes you money, it’s perfectly content to sit on it for months, leaving you to chase them through endless phone queues or unresponsive online portals. One X user’s frustration captures the sentiment: @HMRCgovuk “How are gonna send me a cheque for my tax refund, I cheque it in, and then get told I can’t cash it cos there’s a block on the cheque, ring up for you to tell me the cheque is under investigation??? Absolute jokers.”

 

This isn’t just a failure of process; it’s a failure of accountability. MPs have lambasted HMRC for call waiting times averaging over 23 minutes and a tax system growing ever more complex. Parliament’s Public Accounts Committee warned that “taxpayers’ trust in HMRC is falling,” and with good reason. The Making Tax Digital program, meant to modernise services, has instead saddled taxpayers with hundreds of millions in extra costs. And yet, HMRC ploughs ahead, undeterred by the chaos it leaves in its wake.

 

Small businesses and individuals deserve better. They deserve a tax authority that processes refunds within weeks, not half a year. They deserve access to free, user-friendly tools to meet their compliance obligations, not a mandate to buy expensive software. Above all, they deserve respect—not the dismissive platitudes of an agency that seems to view taxpayers as an inconvenience.

 

HMRC’s leadership must be held to account. Heads should roll for this systemic failure, and resources must be redirected to clear the backlog and restore trust. Until then, HMRC will remain what it has become: a bureaucratic behemoth that punishes the very people it’s meant to serve. Shame on them.

Tax does have to be taxing.

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HMRC's R&D Clampdown Harming SMEs

 

HMRC's crackdown on the abuse of R&D tax relief claims is having a chilling effect on small businesses, according to the Chartered Institute of Taxation (CIoT).

The CIoT says that HMRC is rejecting legitimate claims by SMEs, making it more difficult for them to finance their research and development activities.

"HMRC's approach to R&D tax relief is becoming increasingly burdensome and bureaucratic," said CIoT tax policy director Adam Owen. "This is making it harder for SMEs to access the relief they need to invest in innovation."

The CIoT is calling on HMRC to review its approach to R&D tax relief and to make it easier for SMEs to claim the relief they are entitled to.

"R&D tax relief is a vital tool for supporting innovation in the UK," said Owen. "HMRC needs to ensure that its approach does not discourage SMEs from investing in research and development."

Here are some of the problems that SMEs are facing with R&D tax relief:

• HMRC is asking for more and more documentation to support claims, which is putting a strain on SMEs' resources.
• HMRC is taking longer to process claims, which is delaying the flow of funds to SMEs.
• HMRC is rejecting more claims, even when they are legitimate.

These problems are having a negative impact on SMEs' ability to finance their research and development activities.

• SMEs are less likely to invest in R&D if they are not confident that they will be able to claim the relief they are entitled to.
• SMEs are having to spend more time and money on preparing their claims, which is taking away from their research and development activities.
• SMEs are having to wait longer for their claims to be processed, which is delaying the benefits of their R&D investments.

The CIoT is calling on HMRC to take the following steps to address these problems:

• Streamline the R&D tax relief application process.
• Reduce the amount of documentation required to support claims.
• Be more transparent about the criteria for assessing claims.
• Provide more guidance and support to SMEs on how to claim R&D tax relief.

HMRC said:

“We are committed to tackling non-compliance in the R&D schemes, which is why we have more than doubled resources dedicated to tackling abuse of the schemes.

Our overarching compliance approach is to direct resources where they make the biggest difference. Therefore, we step up activity if we see increased non-compliance in an area, such as in R&D tax reliefs. We undertake a range of interventions from encouraging customers to self-correct errors to blocking claims where we suspect fraud alongside our usual enquiry processes.”

In other words HMRC have closed their ears to advice/criticism.

Tax does have to be taxing.

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Jon Thompson Given Public Drubbing by PAC

Jon Thompson, chief executive of HMRC has been given a public drubbing by MPs for failing to tell 100,000 small businesses how to prepare for a 'no deal' Brexit.

Thompson was given a dressing down in a letter from parliament's Public Accounts Committee, which has been made public.

Committee chair Meg Hillier said she was "concerned and disappointed" about the lack of communication with small businesses from the department, and asked for an urgent update on how HMRC plans to make them aware of potential changes to how they trade.

She also criticised a further delay to HMRC's new customs declarations service, which is not likely to function properly until after Brexit.

The letter is quoted by City AM:

"I am both concerned and disappointed...you have made little progress.

You gave us no assurance that HMRC has a plan to ensure that businesses are aware of what they will need to do.

We are particularly concerned about the 100,000 small traders that HMRC can not engage directly with, as you do not know who they are.

I would be grateful if you could write to the Committee as soon as possible with an update on the level of business understanding and preparedness for changes to customs rules and procedures in the event of no deal."

Hillier also accused HMRC of being underprepared for changes to how businesses would pay VAT on EU imported goods after Brexit - with bills expected to be paid quicker.

Thompson told the committee his team had only just started to work with software developers to create the new system.

WHY ONLY START NOW??????

Hillier said:

"The potential move to postponed accounting is something that was foreseeable and it is reasonable to expect you to have been better prepared for it."

An HMRC spokesperson said:

“HMRC has well-developed plans to ensure that there will be a functioning customs, VAT and excise system in the unlikely event of a no deal. We have engaged with business representative bodies who will be a key partners in reaching businesses to ensure that they understand any implications for them.

We have always said the timeline for implementing the Customs Declaration Service is tight, but that we would operate the current system (CHIEF) in tandem throughout the transition. We have made good progress to ensure that the UK has a customs system capable of handling any potential volume of customs declarations after March 2019.”

BOLLOCKS!

Oh, and in other news, Thompson has deleted his Twitter account.

Tax does have to be taxing.

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HMRC "Sharing" The Burden of MTD

Very good of HMRC to finally let people know about this huge, enforced change to accounting that will take months to implement. We've already done the necessary work for our clients, but what about unrepresented businesses? https://t.co/wlNDezVUhe

— Charlie Carne (@charliecarne) September 18, 2018

Tax does have to be taxing.

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All Animals Are Equal, But Some Animals Are More Equal Than Others

The Times reports that HMRC has admitted for the first time that it allows the most powerful members of society to escape prosecution for financial crimes.

At an economic crime conference in Cambridge last week, a senior government official admitted that HMRC accommodated celebrities’ concerns and settled debts privately to avoid the embarrassment of a public trial.

HMRC, however, continues to prosecute smugglers, small businesses and benefits cheats.

Richard Las, the deputy director of HMRC in charge of organised crime, said that “very wealthy and prominent members of the community” were afraid of the “reputational damage” that a criminal trial would bring.

As ever it is the low hanging fruit (eg SME's, "ordinary" people etc) that HMRC target.

Tax does have to be taxing.

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HMRC Investigating One in Ten SMEs

One in ten small businesses is under investigation by the taxman - equivalent to more than half a million at any one time.

HMRC told the Treasury select committee it is going after small businesses in an attempt to get back the £34 billion tax it failed to collect in 2015- 2016. It said small businesses are responsible for 46 per cent of this tax gap.

However, MPs accused HMRC of making it harder for businesses to file correct returns by shutting down local tax offices.

Stewart Hosie said:

“Wouldn't it be so much easier if they [small businesses] could go to the local tax office with their accounts and have them check before submitting.”

Yet HMRC have told us all that MTD will make things easier!!

HMRC loves low hanging fruit.

Tax does have to be taxing.

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To find out more, please use this link Solar Tax Investigation Insurance



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Elaine Clark Nails It!

Yesterday's article about HMRC stopping personal credit cards from being used to pay business penalties, elicited an observation that HMRC were helping people avoid debt by banning personal credit cards and that businesses were not being run properly if a personal card is used.

Well over on Elaine Clark's site, a similar point was raised, and she nailed it with this excellent response:

"I'd be interested to hear how you would explain this restriction to a self employed employer without a business bank account using his or her personal credit card to settle any debts with HMRC to get things back on track.😋 

The self employed do not need to have a business account. In fact many choose not to because of charges etc which decreases their income. 

I guess when you deal with these things day in day out everyday then you immediately see the unnecessary impact.🙂 

Not only is the decision ill conceived it costs money to implement. All too often these decisions are made by people who are so far removed from the 4 million plus micro businesses in the country."

Well said Elaine!

Tax does have to be taxing.

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HMRC Stops Use of Personal Credit Cards for Payments - Bonkers!

CCH Daily reports that HMRC has confirmed that employers will not be able to pay PAYE penalties with a personal credit card from 13 January 2018.

However, it will continue to accept payments by company credit card or debit card, as well as BACS payments.

All payments must include the 14 or 15 character payment reference that begins with X and is on the payslip. Payments may be delayed if the wrong reference is used.

It will also not accept part payments by credit or debit card so any employers who are unable to make full payment by card will have to pay a different way, through telephone banking, CHAPS or Bacs using sort code 08 32 10, account number 12001020 via HMRC Shipley account.

Elaine Clark is unimpressed, and refers to HMRC's decision as "bonkers":

"Surely the role of HMRC is to collect tax!

If someone is willing to settle debts, regardless of the source of funds, isn't it HMRC's remit to collect the tax on behalf of the Government.

Otherwise what is their job?

Personally I think they HMRC have lost the plot or they have some sort of hidden agenda which we can all speculate about.

Whatever is happening this is just a completely bonkers decision which would have cost money to implement!"

I agree, on the face of it this decision makes no sense given that HMRC still accepts card payments.

Does anyone know why HMRC has done this?


Tax does have to be taxing.

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What is Solar Tax Investigation Insurance?

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HMRC Shoot First, Ask Questions Later APN Policy

HMRC has found a very nice little earner wrt its accelerated payment notices (APNs) scheme, which extracted £1.3bn from taxpayers and SMEs in 2016/17.

This is a 21% increase from the previous year, when HMRC extracted £1.07bn from APNs, according to research from accountancy firm Moore Stephens.

APN's are more than a little controversial, as they give HMRC the power to demand tax it believes it is owed before the dispute is adjudicated. Those affected have only 90 days to pay the sum, and have no right of appeal.

"Ironically" HMRC's prime targets are not large businesses but the low hanging fruit of individuals and SME's. The compliance yield from the Counter Avoidance Directorate rose significantly for individuals, whilst the amount collected from large businesses fell significantly from £943m in 2015/16 to £19m in 2016/17.

Dominic Arnold, head of tax investigations and disputes at Moore Stephens, is quoted by economia accusing HMRC of making full use of its powers to “shoot first and ask questions later”:

“Its ability to demand accelerated payments remains a draconian, but clearly increasingly effective mechanism for HMRC to clamp down on what it sees as abusive tax schemes.

That’s all well and good for the Treasury. However, it’s a heavy price for taxpayers to pay before they have even had a chance to put their case. Small businesses and individuals can be put under immense strain, financially and emotionally, while the process is ongoing.

Whether they have crossed a line or not, they don’t have long to find what can often amount to thousands of pounds in disputed tax.”

HMRC is more than happy with the arrangement, its spokesperson said:

"HMRC has an excellent record in supporting those in genuine difficulty, including offering more time to pay if appropriate.

APNs change where the disputed tax sits while the issue is being investigated, ensuring that those who have used avoidance schemes are in the same position as everyone else who pays their tax, up front, and on time. The regime does not change taxpayer appeal rights."

Last year HMRC was forced to withdraw 4,300 APNs issued in error out of a total of 60,000. 

Tax does have to be taxing.

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Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

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What is Solar Tax Investigation Insurance?

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HMRC's Small Business Forum

HMRC has now launched it Small Business Forum (which had been running on a "beat" basis up until now).

Mel Stride, Financial Secretary to the Treasury and Paymaster General, is quoted by CCH Daily:

"The UK’s 5.4 million small businesses play a vital role in our economy. We want to help businesses get off the ground and support them as they grow.

That is why we are launching a new forum and webchat service which will give these companies useful hints and tips – including how to complete tax returns, grow a business and trade outside the UK – so that they can continue to flourish."

Here is a link to the forum Small Business Forum.

Tax does have to be taxing.

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Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

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What is Solar Tax Investigation Insurance?

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Tyrie Still Doesn't Believe The HMRC MTD Hype

In February I wrote:

"Treasury Committee chairman Andrew Tyrie has written to the financial secretary to the treasury, Jane Ellison, requesting further detail on HMRC’s claim that the Making Tax Digital programme will cost only £280 per UK company to set up."

Yesterday the Treasury Sub Committee reported that Tyrie has received replies from Jane Ellison MP, Financial Secretary to the Treasury, and Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), on the compliance cost of Making Tax Digital.

• National Chairman of the Federation of Small Businesses (FSB) writes to Treasury Committee Chair, dated 8 February 2017 ( PDF 92 KB)
• Jane Ellison MP, Financial Secretary to the Treasury writes to Chair of the Treasury Committee regarding Making Tax Digital for Business, dated 21 March 2017 ( PDF 215 KB)
• Treasury Committee Chair writes to Ms Teresa Graham regarding Making Tax Digital for Business, dated 23 March 2017 ( PDF 407 KB)
• Updated Impact Assessment on Making Tax Digital for Business, from HMRC ( PDF 433 KB)
• Inquiry: UK tax policy and the tax base inquiry
• Treasury Committee

Chair's Comments

"There are huge differences between the FSB and HMRC about the administrative burden of Making Tax Digital. This is the heart of the matter. The FSB think that with MTD, businesses might spend three times as much time on their tax obligations as they currently do. This could cost them around £3,000 a year in time, salaries and accountants' fees. HMRC think that they will spend less time, leading to a small net saving. A comprehensive pilot should shed some light on which assumption is closer to reality.

This serves to illustrate the need for the implementation of one of the Committee's recommendations that a comprehensive pilot is needed to establish the facts, and before mandatory roll out of the digital regime. I have written to the Administrative Burdens Advisory Board to ask for a view on the basis of their members' extensive business and accountancy practice networks."

In other words, Tyrie still doesn't believe the MTD hype!

Oh, and with good reason. As Kevin Reed notes:

@ken_frost 2/2 .. In the released documents KPMG undertook part of the research for HMRC, as a small biz tax adviser.... pic.twitter.com/eKKzNvrtzn

— Kevin Reed (@Goonerreed) March 27, 2017

As an ex KPMG person myself, I don't call into question KPMG's professionalism. However, "small" to them may not cover all genuinely "small" businesses!

Tax does have to be taxing.

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Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

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What is Solar Tax Investigation Insurance?

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To find out more, please use this link Solar Tax Investigation Insurance



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MTD Survey

Please spare a mo this Sunday to complete my Making Tax Digital for Business (MTDfB) survey https://t.co/WFXcFg4vSf

Ta very much 😇😆

— Elaine Clark (@cheapaccounting) March 5, 2017

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

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What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



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Tyrie Doesn't Believe The MTD Hype

Treasury Committee chairman Andrew Tyrie has written to the financial secretary to the treasury, Jane Ellison, requesting further detail on HMRC’s claim that the Making Tax Digital programme will cost only £280 per UK company to set up.

During the committee’s recent inquiry into the project, the Federation of Small Businesses (FSB) said the true cost would be significantly higher – as much as £2,770 per business per year.

Given this gap in estimates, Tyrie (quite rightly) is calling for clarification from both HMRC and the FSB. Tyrie has also written to FSB chairman Mike Cherry asking for the details behind that figure.

Tyrie is quoted by Computer Weekly:

“The compliance cost estimates are so far apart that at least one of them must be wrong. I have written to both the HM Treasury and the Federation of Small Businesses to ask for detailed supporting methodology for their estimates.

If the FSB is right, the effects of Making Tax Digital would be crippling for many small businesses. If the government is right, businesses have something to gain in the longer term and one would expect them to be queueing up to join the pilot.”

I suspect that the FSB figure is closer to the mark, what say you?

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

The Secret of HMRC's "Success" Doesn't Stack Up

Unsurprisingly HMRC have received another drubbing, this time from PAC.

In a report issued by PAC, PAC chairwoman Meg Hillier said HMRC's claims about its success "just don't stack up".

Well then, finally people other than the readers of this site are waking up to reality!

Of particular concern to PAC is HMRC's "one rule for the rich, another for the poor" approach to tax collection and enforcement.

Amusingly, HMRC claim that the rich get extra scrutiny; as some loyal readers have already pointed out, "extra scrutiny" appears to mean power lunches/dinners with HMRC top brass.

In an "ironic" twist, since HMRC set up a specialist unit dealing with so-called high net worth individuals in 2009, the amount of income tax they paid had fallen by £1bn. This is despite income tax receipts from the public as a whole rising by £23bn over the same period.

Since 2009, each of the estimated 6,500 individuals worth £20m or more has been assigned a "customer relationship manager" by HMRC to administer their tax affairs.

HMRC said this had resulted in the collection of an additional £2bn in tax. However, it was unable to explain why the income tax they paid fell by 20% - from £4.5bn in 2009-10 to £3.5bn in 2014-15 - when the overall income tax take rose by 9% £23bn.

The BBC reports that in the five years to 31 March 2016, HMRC completed just 72 fraud investigations into high net worth individuals, with all but two having been dealt with using its civil powers. Only one case resulted in a successful criminal prosecution.

Of the 850 penalties issued to the very wealthy since 2012, the average charge was £10,500, a figure the MPs said was unlikely to be a deterrent to multi-millionaires.

PAC chairwoman Meg Hillier said:

"If the public are to have faith in the tax system then it must be seen to have fairness at its heart. It also needs to work properly. In our view, HMRC is failing on both counts.

HMRC's claims about the success of its strategy to deal with the very wealthy just don't stack up."

An HMRC spokesman said:

"In fact we give them additional scrutiny, with one-to-one marking by HMRC's specialist tax collectors, to ensure that they pay everything they owe, just like the rest of us do." 

"Marking" should not mean power lunches/dinners!

As ever though, low hanging fruit is the easiest to pick. Therefore HMRC will continue to bully SME's and individuals of modest means, and increase the number/frequency of automatic fines for minor cock ups on tax returns.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Tax Free Wine

Kudos to Elaine Clark for identifying a means of buying £300 of wine tax free. As per her CA Blog:

"This corker (excuse the pun) of a tax loophole has just come to my attention.

The new “trivial benefits exemption” introduced earlier this year means that, as a director of a limited company, you can purchase multi bottles of wine (costing less than £50 each) up to a maximum of £300 of wine in any one year.

Yes – HMRC have introduced a tax loophole allowing you to buy wine through your limited company – what a result!

Of course if you do not like wine the benefits can be anything else as long as the rules, below, are followed.

The rules
To qualify for this benefit you do need to keep within the rules, which frankly shouldn’t be arduous:

• The benefit must not exceed £50
• It must not be cash or a cash voucher
• The benefit must not be a contractual obligation or in recognition of a service performed – so do not buy yourself wine for doing a good job but buy it because there the sun is shining (or some other ridiculous reason not connected to performance)
• The total benefits are capped at £300 per year

Note – further rules may apply; so it is always best to check the detail with your accountant.

Multi Directorships
And of course if you are a director of more than one limited company you can exploit this rule through each of your directorships.

Presents and Gifts
Within the £300 maximum and £50 per item limit, as a director you can also give “benefits” to members of your household; so you could buy your (living at home) children a computer game (less than £50) or your spouse a pair of socks.

Spouse
Although if your spouse is a director they too get benefit from this loophole – so an extra £300 allowance with a maximum of £50 per “benefit”.

Note for accountants – Brainless HMRC
You have got to wonder why HMRC did not apply the same rules as for the Employment Allowance. Surely someone could have foreseen the potential to exploit this little gem of a tax rule.

More information
Draft guidance from HMRC on this is set out at:
https://www.gov.uk/government/publications/tax-exemption-for-trivial-benefits-in-kind-draft-guidance/tax-exemption-for-trivial-benefits-in-kind-draft-guidance

Make the most of it before it is stopped!

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

HMRC Taskforces Map

The Telegraph reports that HMRC’s army of investigators (the taskforces) trawls through billions of items of data to catch out evaders before carrying out “intense bursts of activity” in a particular area, raking in £540m from sole traders and small companies who have underpaid tax in its five-year history.

The map, above, details when and where taskforces have already taken aim.

Low hanging fruit that may cost more (in terms of time and effort) to pick than it is really worth.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Plans For Quarterly Tax Returns Rubbished

In a report published on 5 April, the Administrative Burdens Advisory Board (ABAB) has warned that the plans announced by George Osborne to introduce a new digital tax system for the self-employed (including mandatory quarterly updates) would create a significant added burden in terms of accounting records and costs for SMEs.

Quoted by the Guardian:

“Compulsory digital record-keeping and quarterly online updates is not an approach we can endorse.

We are concerned that the proposals for quarterly updates will be more burdensome than they currently are with increased record-keeping and compliance costs. This will have a big impact on the smallest of businesses.”

The Federation of Small Businesses doesn't think much of the idea either.

Mike Cherry, national chairman, said:

“Forcing small firms to pay for expensive digital accounting software so they must submit extra tax returns is not going to help anyone. It will simply add to the cost of doing business in the UK. When every independent body and expert is lining up to tell you to stop, slow down and think again, it might be time to take a breather and listen to their concerns.”

A spokesperson from HMRC said:

“We are focussed on creating a tax system that is more effective, more efficient and easier for taxpayers and we will work closely with stakeholders to address their concerns. 99% of businesses already file their corporation tax online and 98% of VAT returns are filed online. 

The new digital accounts, which are not being introduced until 2018, will simply integrate the different information businesses already provide to HMRC into a simpler, streamlined system. This will reduce the burden of updating HMRC for small businesses.”

Let's see how that works out in reality then!

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Quarterly Accounting Will Be So Easy!

Apparently businesses have nothing to fear from quarterly accounting, that is the message coming from the HMRC bunker.

In an interview Theresa Middleton, HMRC director of Business Customer and Strategy, told Accountancy the question of annual adjustments fitting into HMRC's proposals for quarterly digital accounting (eg quarterly stock takes) would be raised in several consultations which will be issued after the Budget.

HMRC says that it wants to take on board the views of businesses and individuals who would use the digital tax accounts.

"We’ve been clear all along that the quarterly update is not designed to be the equivalent of a quarterly tax return and that therefore we are not anticipating that businesses would need to do stock takes and make their capital allowances claims and other reliefs and adjustments at the quarter point."

Were that the case, wrt being "clear all along", people wouldn't have become so worried about it!

"Equally it might be that some businesses might want to be able to do that - we’re not saying that you couldn’t do that – this is very much in the area that we’re going to be consulting on."

LOL, businesses especially SME's have more than enough red tape etc to deal with, without the need to have quarterly stock takes.

"So we’re really keen to make sure that businesses are able to contribute to the shape of how we implement this. So, for example, the point about adjustments, which at the moment are made in the returns for the year, right at the end and sometimes after the end of the relevant period, we will be asking how we can simplify this, especially for the unincorporated.

At the moment, payment is not in scope but we will be consulting on what line items should be included in the quarterly update.

For those in the cash process, adjustments may not amount to much at the end of the year, and so they can simplify.

What we haven’t done is set out what some of these things might mean in practice, and so for example, in some cases [as with quarterly reporting] people have been filling in the gaps for themselves. In these [stakeholder] events we get attendance from a range of professional bodies – we will share this thinking after the budget."

It seems to me that HMRC don't have a clue how businesses actually work, and are only now realising that if not properly handled quarterly accounting will become a nightmare for both the taxpayers and HMRC.


Oh, and for those of you with partnerships HMRC hasn't got a clue how it will work. HMRC has so far not been able to produce any material on what digital tax reporting might mean for partnerships, which will affect a range of entities including accounting and legal partnerships and other professional services who arrange themselves in this way.

‘For partnerships, this is more complicated.’ said Middleton.

 Good luck everyone!

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"