Plans by HM Revenue and Customs (HMRC) to cut down on sending tax agents copies of some of the mail which is delivered to clients has been criticised for its lack of foresight.
The Chartered Institute of Taxation (CIOT) described the proposals, announced by HMRC as part of its cost-cutting measures, as “short-sighted”.
Under the plan, copies of PAYE coding notices (P2s) and tax calculations (P800s) won’t in future be sent to tax agents.
The savings to HMRC are estimated to be about £1.25 million. But the CIOT has argued that the cut-backs will only result in additional work for HMRC, taxpayers and accountants.
Indeed, the extra costs involved in coping with the change could end up outweighing the sums actually saved.
Anthony Thomas, the CIOT’s deputy president, acknowledged the pressure on all government departments to reduce costs but attacked the announcement on the grounds that keeping accountants less well-informed about their clients’ tax obligations would see HMRC losing more money.
Mr Thomas was particularly concerned that the change in procedure was being sprung on taxpayers and agents with more or less immediate effect and no consultation.
He continued: “HMRC estimate that not sending copies of of PAYE coding notices (P2s) and tax calculations (P800s) will save them £1.25 million. But they have not estimated the cost of dealing with an increased number of enquiries let alone that of dealing with the higher number of erroneous tax returns which is likely to result.
“We are calling on HMRC to reverse this short-sighted decision or at least halt it for proper consultation.”
Mr Thomas also urged HMRC, if the tax authority decides to press ahead with the decision, to make greater efforts to inform all taxpayers of the change.
As plans stand at the moment, the only alert is a message to be included in letters from HMRC to taxpayers telling them to share the information with their accountants and agents.
However, the CIOT argued that if taxpayers do not pay close attention to letters from HMRC on the assumption that their accountants will have received the same communication, then they may well miss the message.
Mr Thomas called for consultation on the matter and suggested an electronic solution: “Given that the vast majority of the costs involved in sending this information to agents come from paper, printing and postage, a consultation could look at whether sending the information by email offers a possible cheaper alternative to sending it by post.”