Despite economic uncertainty, more businesses than ever are launching in Britain, but they’re facing months of delays getting off the ground because of the taxman.
HMRC has been plagued with delays since the pandemic, having cut its customer service workforce from 25,000 to 19,500 over five years.
Now, we’ve spoken to one business owner who has had to wait over three months to even receive his VAT number, and has lost out on business as a result.
One business owner has been waiting for three months to receive his VAT number and has lost a third of his income as a result
Currently, HMRC tells business owners and accountants it could take up to 40 working days, around eight weeks, to deal with a VAT registration request.
The taxman says it usually deals within this period. For some, the wait has been much longer.
Bill* registered his fire safety business at the end of February and as of the third week of May, still had not heard back from the taxman.
It his first time launching his own business, which involves working in social housing as a fire safety consultant, including Grenfell, but has been unable to properly start working because of the wait.
‘I took the opportunity this year to go out on my own… I did it without any knowledge of running a business at all. I was hoping HMRC was going to support me through the process.’
The process has been far from easy. While Bill* had no problem with his self-assessment or payee registrations, he has been left waiting for his VAT number for months.
He was due to hear back before 4 May, over two months after he first registered, but there had been no word by 23 May.
Bill* has said he got in touch at the start of May but was told by the taxman to contact them after the deadline.
Since then, he says he has clocked out over six and a half hours on the phone, waiting for someone to pick up.
‘It’s almost comedy value now because I’ll ring them and I’ll go about my business. I know I can come back to the kitchen and my phone’s sat there, still with the hold music on.’
HMRC recently chose to close its VAT registration helpline and has guided business owners and accountants online.
For Bill*, who registered before the helpline closed, this has been of little help and he has spent hours on the phone to the taxman.
‘The straw that broke the camel’s back was, after I raised my concerns on the phone I was given a number to call someone in the registration team… I got an answer phone message that basically said, sorry we’re too busy right now. Then they hung up.
‘I was left there sat in my office with invoices waiting to be paid, having spent another hour and a half [on the phone], feeling completely and utterly gobsmacked.’
While HMRC might have found a move online easier, Bill* has been left in the dark.
‘I can accept the delay if someone came back to me and said there’s been covid, bank holidays, all of that… When I go to the HMRC website and put my reference number in, it says I should have heard from them by now and to get in touch.
‘Then you spend an hour and a half on the phone, being completely frustrated.’
What’s even more farcical is that Bill* says he raised an official complaint and was told it would take two to three weeks for that to be processed.
I’ll ring them and I’ll go about my business. I know I can come back to the kitchen and my phone’s sat there, still with the hold music on!’
The long wait has meant Bill* has lost out on business just as he’s starting up. While businesses can trade without a VAT number, it’s another headache to contend with when starting out.
‘One client was looking to pay me perhaps £650 a day… has said they’re not willing to start yet because I can’t finish the procurement exercise because I can’t give them the VAT number. Part of that procurement is that I’m registered for VAT so that’s on the backburner at the moment.
‘I do have other work but it’s probably taking about a third of my income away that I could be earning right now.
‘It’s not credible for my image as a startup business – going to clients, selling my product and when it comes to your procurement exercise… I can’t supply the information that they require. I’m not exactly looking like a business up and running.’
Thankfully, HMRC has now rectified the issue after This Is Money got in touch.
A spokesman said: ‘We apologise for the delay in dealing with their registration. The application has since been approved and a VAT number generated.’
However, the sorry saga doesn’t end here. After This Is Money informed Bill* his application had been processed, he is still yet to receive his VAT number.
After a lengthy phone call, HMRC confirmed the VAT application had been completed on 25 May, but Bill* still doesn’t have his VAT number.
Despite HMRC’s push to moving its customers online, business owners have to wait to receive confirmation of the application via post, rather than its secure online system. HMRC says it’s an anti-fraud measure.
Bill* said: ‘I am now at the mercy of Royal Mail with a substantial amount of invoice value waiting to be sent.’
*Name has been changed to protect the identity of the business owner
Have you had to wait a long time for HMRC to get back to you? Email [email protected] with HMRC in the subject line
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