The Struggle of Small Business Owners with HMRC: Three Months Waiting for VAT Number.

Small Businesses in Britain Struggle as HMRC Delays VAT Requests

Despite economic uncertainty, more businesses are launching in Britain; however, they are facing delays due to the HM Revenue and Customs (HMRC), the taxman. HMRC has been experiencing delays since the pandemic, having cut down its customer services workforce from 25,000 to 19,500 within five years. For some businesses, the wait for value-added tax (VAT) registration has been much longer than the usual 40 working days. This delay has resulted in business owners losing out. For instance, Bill* registered his fire safety business at the end of February, and as of the third week of May, he still had not heard back from HMRC.

The Struggle of Starting a Business

Bill* is a social-housing fire safety consultant who launched his first-ever business without prior business knowledge. He has been waiting for months for his VAT number application to be processed by HMRC to no avail. He has had to spend over six hours on phone calls with HMRC‘s customer service. Initially, Bill* was due to hear back before 4 May. Still, many days after the deadline, he reached out to HMRC, which told him to contact them after the due date.

Bill*’s case is not unique. Businesses can only trade without a VAT number, but starting without it puts a business through unnecessary hurdles. For instance, one client was ready to pay Bill* £650 per day but had to delay payment as Bill* could not provide his VAT number for the procurement process. As a new business owner, this has cost Bill* up to a third of his income. He has other projects he is working on, but not hearing from HMRC, as promised, has set the business a few steps back.

The Impact of HMRC‘s Delay on Small Business

The impact of HMRC‘s delay on small businesses cannot be overemphasized. One business owner, Bill*, has lost a large portion of his income due to the delay in his VAT application. This delay has halted his work, pushing his business’s progress back significantly. It’s not uncommon for business owners to experience similar struggles. Unfortunately, these delays have gone on for months, with many business owners still uncertain when their application would be processed.

HMRC‘s Response to Business Owners’ Struggle

HMRC recently closed its VAT registration helpline, which has been the hallmark of previous communique with business owners over the years. However, this move has received criticism from many business owners, including Bill*, who registered before the new digital system. After raising concerns via phone calls to HMRC‘s customer service, Bill* was given a number to call someone in the registration team but received an answer phone message, stating that the team was too busy to handle a call.

While HMRC has promised to complete VAT registration applications within 40 working days, Bill*’s case shows that some businesses are still waiting months, hindering progress and costing them financially. Bill* has raised an official complaint, but this complaint will take two to three weeks to process. It’s unpredictable how much longer he has to wait or how many more calls he has to make to receive his VAT number. HMRC‘s digital system also requires a confirmation of the application via post, which further delays the registration process, causing business owners to lose out on potential business and revenue.

Conclusion

The delay in processing VAT registration by HMRC has adversely affected many small business owners, causing them to lose a large proportion of their income. The HMRC‘s digital system has made it difficult for business owners to register their companies with ease. Several businesses have to wait for months, further delaying progress, costing businesses financially, and causing them to lose potential business and revenue. The situation calls for HMRC to put in place a better system that caters to and supports small businesses. Business owners should also investigate and incorporate alternatives to VAT registration where necessary to avoid losing potential revenue.

*The name was changed to protect the identity of the business owner mentioned in the article.