Wednesday, January 07, 2009

So How Much Help is No Help?

I was going to call this post 'First of many?' but then things took a strange twist this afternoon, I'd better explain.

Yesterday afternoon I received a phone call from a clearly distressed client. Having just enjoyed their best financial year ever, the year end was 31st October, they've just experienced their worst ever quarter and don't have any work left and will have to make five out of six employees redundant. Now in the big scheme of things five people losing their job might not seem a big statistic but the fact that in the U.K around 95% of businesses employ 10 or fewer people puts into some sort of perspective. Those five people have mortgages, families, debts etc and I've no doubt that in each case they are the main breadwinner. The business is bespoke furniture making, this is a high end product as they say on t.v, the clientele are not the sort of people (like me) who when thinking about buying a new chest of drawers think Homebase, MFI (now gone) or Ikea, we are talking 'old' money. The client gets business by what I still regard as the best method, word of mouth - they only advertise in select magazines on a quarterly basis but it seems that people are deciding they can put off buying a new dining room table or having a set of chair recovered.

Anyway we had a conference call, which I always find weird because of the echo, and decided a plan of action. It was a simple five point plan one point of which was to approach the governments much touted Business Support Team, you know the one that Alastair Darling and Gordon Brown were so enthused about before Christmas, and ask for some time to pay off the VAT and PAYE liabilities. That was yesterday afternoon.

This afternoon the client phoned me, well actually the client's wife who is one of those being made redundant, and was almost hyperventilating. Now I must come clean here and say that the lady in question has a wonderful way of rubbing everybody in our office who she comes into contact with up the wrong way - it must be the New Zealand accent she has, but I felt genuinely sorry for her, not just as her accountant but as another human being. HMRC had told her that their help went as far as allowing her to pay the VAT off over three months but with interest added on the amount due, which is fair enough but the PAYE must be settled immediately or they will try and wind the company up and pursue the directors personally. So far from being a Helpline it has, for this client anyway, turned out to be a distress line.

Now the New Zealand accent coupled with genuine disgust and almost hatred directed towards Gordon Brown was briefly a thing of beauty.

I came up with a workable solution: the P35, the company's annual return of tax and national insurance, for 2008-9 doesn't have to be filed until mid April so HMRC won't know until then how much the company should have paid and how much they have paid, by that point the business will hopefully have obtained some work and then they can renegotiate the terms of repayment, the client won't be employing anybody under PAYE and things may look a little better.

The point here, or rather the points, are that this sort of attitude doesn't engender any confidence in the system. I have clients who have approached the Corporation Tax part of HMRC and they have been very helpful, in fact on Monday I had a similar conversation about deferral with one client who said he had such a good response from the helpline that he was off down the pub to celebrate - he's a Pompey fan so he needs to do it whilst he can still remember what celebrating means.

I've said before that we are living in a time when tax revenues are falling, you would think therefore that HMRC would revert to the idea of 'little and often' when it came to debt collection, instead it seems they would rather take a hammer to crack a nut.


Span Ows said...

You don´t really need me to say I´m not surproised, do you? A sad tale but the help in the 'tax helpline' is help the gov get as much as it can out of what's available.

Added to the 'shock' news that darling's growth forcast was way off (oh my giddy aunt, [back of hand on forehead] who would have guessed it?)

Heads on spikes at the city gates...I tell ya, it's the only way to appease the masses...

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