While expecting an experience more akin to a visit to ‘Gringotts Bank’ from the Harry Potter films, I was pleasantly surprised to find that while the building itself is suitably imposing and the security as impressive as the aforementioned bank, the place is not inhabited by goblins and other legendary nasty creatures. But unfortunately HMRC do face the issue that in most small businesses’ perception they are seen as the enemy, part of a wider group of government-backed agencies who can descend on a small business and in one fell swoop impose red tape and business-crippling fines.
Because of their own internal mind-set and the way they view their ‘customers’, they do little to change this perception so although they are trying to change, not enough of these changes have reached the SME businesses sector to make a difference.
A big problem is the one-size-fits-all approach; the ‘sheep-dip’ operation that doesn’t differentiate businesses by size, turnover, stage of development and thus inevitably causes issues. HMRC has certain processes and systems that may work for larger business, but cause huge issues for micro and small businesses. As long as they are tying up business owner operators in compliance and red tape issues, rather than allowing them to do what they do best –develop their business and sell their products or services – then George Osbourne will not achieve his aim of improving productivity in the UK.
A prime example would be the warehouse keepers’ licence for drinks manufacturers who want to export abroad. Against a background of growth in microbrewing, microdistilling and micropubs, the processes of getting a WOWGR licence takes months and at the Forum we are building a portfolio of small businesses who lost the opportunity to export because the process took too long and their potential customers found another supplier, or in some cases they just find it too long and give up on the application process. It works for larger producers who have the internal resources or the money to buy the expertise in, but for the little guy or girl the opportunity cost is a problem as much as anything else.
HMRC talks about simplifying things, technology is supposed to be a great enabler in this instance, but my suspicion is that it is as much a cost-saving efficiency as something aimed at simplifying things for their business customers. The reason I say that is that the shift from a huge paper-based system to an online system needs a huge education process for the businesses these changes affect. While there were many stakeholders at the meeting representing the companies who supply advice and services to help businesses in dealing with the changes – at a price – there seemed to be little evidence that HMRC themselves are conducting any of this education. This is a shame as it is the perfect platform for HMRC to be seen to be helping the small business community, rather than just being the big bad wolf who is there to penalise them. Mind you, when you get the chief executive of the organisation saying her staff are suspicious and sceptical: “they would be, because we train them that way”, heaven help us! If they treat us all, business and individuals, like tax-avoiding criminals is it any wonder most people see them as the enemy?
It’s also no wonder that they score so low on staff surveys if their staff are constantly dealing with negatives; punishing, rather than preventing through help and education. If they effectively show businesses the reasons and benefits for getting their tax affairs right in the first place then the need for punishment drops. Help business to avoid mistakes, show them how easy the online system can be and how they can cut down the costs of compliance and red tape if they do it right first time and online, run roadshows, webinars, attend business networking events at a local level, be proactive in the business press, work with organisations like the Forum and then we would be getting somewhere.
Helping business customers needs to be a higher priority on the HMRC agenda and they need to be measured against that objective, government please take note.
Like all government agencies they are under pressure to make savings and increase revenue and unfortunately this seems to impact on the front line staff who are targetted with increasing revenue and not with helping business to be more efficient in their tax dealings. I sense that there is a real desire to change, but as long as HMRC put their resources behind penalising mistakes rather than helping business to prevent them in the first place – which would require a real change of mind-set and culture at HMRC – then all the talk of change will be just that, talk.