Small Business Red Tape - HMRC

Interesting hearing the UK Prime Minister David Cameron address the Federation of Small Business Conference today stating that he intends to reduce red tape for small businesses. 

While I welcome any reduction in red tape that affects my company but I doubt there will be many on the PM's hit list that will ease our individual burden and I also await with welcome open arms the £2000 Employers PAYE Tax benefit that comes into effect on 1st April, but let me tell you about the type of red tape which he should be easing on small businesses.

Just over year ago we paid by electronic BACS to HMRC our Corporation Tax which importantly goes into the same HMRC bank account as our monthly PAYE payments but just a different reference number.

At our first PAYE payment after our Corporation Tax payment we forgot to change the reference number back to the PAYE one but our payment still went through on time and the HMRC received it.

Shortly afterwards we were contacted by telephone by an abrupt civil servant warning us about telephone conversations being recorded and telling us we had not paid our PAYE but we commented we had, coincidentally that very same day a cheque arrived by post made out to us from HMRC not stating what it was for but it was for the same amount as our PAYE payment.

It didn't take us long to work out what had happened and on explaining this to HMRC we were told that to avoid a fine (remember we had paid on time initially and HMRC had received our payment, we just got the reference number wrong) we had to send to them by BACS within 24 hours another PAYE payment for the initial amount, obviously this time with the correct reference number......but wait the cheque they had sent us would take five days to clear.

So we had to for a short amount of time until the cheque cleared fork out double our PAYE payment all because of bureaucratic rules and a lack of common sense especially as it was obvious we had made our original payment on time.

How can they expect a small business to fork out twice, even for a small amount of time and why could they not reimburse us through our bank by BACS or even more bizarrely why could one HMRC department not speak to another and just swap the amount around into the correct PAYE / Corporation Tax section on their computer system.

Now thats the type of red tape crap that ties us small businesses up and the type that needs to be sorted.