Article by Irit Herzenshtein, a VAT at accountants and business advisers PKF. Published in the January 2002 issue of Tax Adviser. Customs & Excise’s recent streamlining of VAT procedures means that a tax practitioner now needs a large measure of luck, a client in no desperate hurry, and a good deal of persistence, writes the author.
How soon can I be registered for VAT? Can I buy a let property without VAT? I am due a VAT repayment, but when can I get it back? These are just some of the routine questions from clients that, unfortunately, now seem to take longer to resolve as a result of Customs & Excise’s new resourcing regime.
In an attempt to collect more taxes more efficiently, and at reduced costs, Customs has centralised its tax registration and customer services operations. Theoretically, this sounds promising but, in practice, apparent teething problems are slowing procedures down and leaving tax practitioners in the industry somewhat frustrated.
Instead of making the VAT registration process more straightforward, the new centralised structure appears, conversely, to have made things more complicated. After a VAT registration application is made, it is now followed up with requests for further information and visits from tax officials. This may be a good way of keeping overall control of the process. However, the result is that it becomes weighed down and you may end up not only receiving unexpected tax visits but also having to speak to several individuals at registration and local offices to get some action.
The problem is amplified when attempting to register for VAT for a property transaction, as such an application must go through numerous channels. Firstly, it gets processed at the registration unit and then, before the VAT is confirmed, the details are passed to a local office to undertake any election to waive exemptions. Finally, the details are returned to the registration unit for completion.
One of the main factors attributable to creating the slowdown is that, while Customs VAT registration has now been taken out of local offices and centralised into larger units, this seems to have been done without the required level of resources for dealing with the necessary workload. The average time to register for VAT has now increased from 15 to 25 days and international or property registrations can take considerably longer. The lack of resources particularly extends to the ‘phone system, which cannot cope with the increased amount of incoming calls, resulting in people being put on hold - at the national call rate - for lengthy periods of time. This not only costs time but also money.
It would also be helpful if Customs introduced a central customer database. Although this costs money, and can be time-consuming to install, the benefits would be enormous in terms of being able to assist Customs, taxpayers and their advisors when dealing with property transactions. Not only could it be used as a quick reference tool but could also ensure that properties subject to an election are treated correctly for VAT and speed up property VAT registrations.
Another area that is suffering from the new streamlined structure is customer services. This particularly visible aspect of the operation is not something that Customs would, ideally, want to get wrong, and is an area that - were it operating in the commercial world - could potentially cost a lot of business and damage to reputation.
In order to help customers with the new procedures, Customs’ Guidance notes and web site (www.hmce.gov.uk) should be updated. It is, therefore, of some concern that this does not seem to occur on a regular basis. It took a couple of weeks after VAT registration and deregistration caseloads were transferred from Liverpool VAT office to Wolverhampton for the Customs’ web site to be updated informing the public that inquiries should now be addressed to Wolverhampton. Perhaps, in future, it would be more useful to notify such changes of workload in advance.
More worrying is the lack of knowledge and certainty with which this is expressed at central advice centres where, clearly, training is an issue and wrong advice is not rare or isolated. These centres work well in providing forms or notices but anything else can be a problem. It is now commonplace for the national advice telephone lines to be manned by clerical staff who have no practical experience of administering VAT. This would be fine if it were just a reception service but how are such staff expected to answer inquiries without the necessary training on the basics of VAT and how the tax operates? Then there is the time it takes to get through the central telephone system and the unanswered calls – which does little help ease the tax practitioner’s current frustrations.
Where complex issues need resolving it would be helpful to have a fast track to more experienced support. The current process for accessing such assistance creates unnecessary obstacles to the business need in areas of doubt to obtain Customs’ view.
Clearly, there are issues of efficiency resulting from the Customs restructure that leave much to be desired. However, these should be viewed as teething problems which are purely administrative and can be resolved over time through self-testing and education. With a bit of work and time, the dual aims of speeding up VAT administration and reducing costs could become a welcome reality.
020 7235 9381
January 2002 by