Struggling businesses are being put at risk because HM Revenue
and Customs is too slow in sorting out tax refunds, according to
accountants and business advisers PKF in Birmingham.
HMRC makes security checks on ten per cent of tax refund claims
to ensure they are not fraudulent. Where a claim does not pass the
initial test it is transferred to a new specialist unit in Bristol
to investigate further without telling the taxpayer.
This special unit only accepts written communications so, once a
case is referred there, there is no way to speed up the process or
find out why a refund has not been made. PKF says the involvement
of the new unit adds at least a month to the refund process.
Helen Randall, a manager at PKF in Birmingham, said: "This two
stage process can make the wait for a tax refund even longer -
struggling taxpayers are having to wait months for their refunds.
Clearly, HMRC have to check that claims are genuine, but officers
should keep taxpayers informed of what is going on and keep delays
for small businesses to an absolute minimum."
In the Pre-Budget Report last year, the Chancellor announced a
temporary extension to the loss carry back rules to allow losses to
be carried back up to three years. But the small print of the
announcement said that any refunds would not be made until Budget
day at the earliest. There is a rumour that even refunds that have
already been submitted may not be paid until the Finance Bill has
received Royal Assent - likely to be in July.
Helen Randall added: "There is a sharp contrast here with the
Government's statements on 'Prompt payment' to suppliers: it aims
to pay suppliers within 10 days and promises to pay within 30 days.
The circumstances may be a little different, but the impact of a
delay on a struggling business can be just the same - a cashflow
crisis.
"While I doubt that HMRC is deliberately delaying tax refunds to
protect the Government's own cashflow, it must improve its
performance on making refunds at this difficult time for many
businesses."
PKF (UK) LLP is a leading firm of accountants and business
advisers with more than 1,500 partners and staff operating in 23
offices in the UK mainland firm, incorporating a wholly-owned
financial planning company and associated offshore practices. The
firm specialises in advising growing and
entrepreneurial/owner-managed businesses, AIM and fully listed
companies, and also has extensive experience in the public and
not-for-profit sectors. Principal services include assurance and
advisory; taxation; consultancy; corporate recovery and insolvency;
corporate finance and forensic. The firm has particular expertise
in advising sectors such as hotels and leisure; mining and
resource; public sector; real estate and construction; professional
practices; not-for-profit; and medical.