12
MONEY
T
axpayers are being threat-
ened with fines and visits
from debt-collection agencies
over money they do not owe
while others are being made
to wait up to seven months
for thousands of pounds in
refunds amid customer-
service chaos at HM Revenue
& Customs (HMRC).
According to its report for the past
tax year, one in five phone calls to HMRC
went unanswered and on average tax-
payers had to wait more than 12 minutes
for a call to be picked up — nearly twice as
long as the previous year.
People using HMRC’s “Where’s my
reply” online tool reported delays of
seven months for responses to even the
most basic questions about self-assess-
ment refunds. Last week anyone asking
about a tax rebate was told to expect a
reply by June 2 next year.
More than a third of letters to HMRC
are not replied to within 15 days, and
30 per cent of online forms are not
processed for at least seven days.
Since the report HMRC has stopped
recording the level of post to which it
responds after repeatedly missing its
customer-service targets.
Accountants say that there are lengthy
delays affecting responses to inquiries
from self-assessment and PAYE tax-payers. HMRC’s customer-service staff
are working from the organisation’s offi-
ces only one day a week despite the econ-
omy having reopened in July, and there
have been complaints about its employ-
ees abusing data-protection rules —
including one that involved a person who
used confidential information to track
down their estranged wife and children.
HMRC admits that its poor levels of
customer service risk “not fulfilling the
ambition to be a trusted, modern tax and
customs department”.
A headteacher from London said that
he was chased by HMRC for months for
money he did not owe, receiving escal-
ating demands that culminated with the
threat of being referred to a debt-collec-
tion agency. He had exceeded his annual
allowance for pension contributions, but
had paid the £2,500 tax owed through his
pension scheme. However, HMRC failed
to register the payment.
“I had a letter from HMRC with a late
payment notice and charge in June,” the
headteacher said. “I tried to call to dis-
cuss as requested, but the phone lines
weren’t open due to a shortage of staff.
“I duly wrote to HMRC and provided
evidence that the payment had been
made. This letter was not acknowledged,
and I had another late payment notice
and further charges.”
In August he wrote and provided themanager at the Low Incomes Tax Reform
Group, said that in March HMRC wrote
to her father Richard, who had died 11
months earlier. She complained about
the letter — addressed to “Mr Sizer
Deceased” — in April, but did not get a
reply until seven months later.
One of her clients who had asked
about national insurance did not get a
reply for four months. “General inquiries
that used to take weeks now take
months,” Sizer said.Behind the scenes
HMRC has 26,000 staff on its customer-
service teams, mostly based at contact
centres in Newcastle, East Kilbride, Liv-
erpool, Manchester and Cardiff.
Problems with the organisation are
longstanding. In 2010 it sent out millions
of incorrect tax codes after merging its
computer systems, and it has made slow
progress in introducing more digital
systems for taxpayers and to speed up
the system.
Accountants and taxpayers report that
the Covid pandemic has pushed HMRC
service levels to the brink. About 5,
of its staff who would usually deal with
customers were moved to handle the
government’s furlough and self-employ-
ment support schemes, and are only now
being reallocated back to their original
jobs. Caroline Miskin from the Institute ofOur lives put
on hold by
HMRC
SLEEPLESS
NIGHTS
AND A BILL
FOR £3K
Marc Wood, 59, had a letter from
HMRC in January 2019, telling him
that he had overclaimed child
benefit for five years while head of
IT at Southampton airport. He paid
his bill of £4,440 — which included
late payment penalties and
interest — on February 17, even
though he had never been told
that he had gone over the £50,
income threshold at which you
have to start paying some of the
benefit back. He later had £1,
in fines and interest repaid
because HMRC admitted sending
two letters to the wrong address.
“This cost me over £3,000 and
caused sleepless nights for my
wife and me,” he said.Marc
HMRC
that h
benef
IT at S
his bil
late p
intere
thoug
that h
incom
have t
benef
in fine
becau
two le
“This
cause
wife aevidence again. “As I received no
response I wrote again in early Sep-
tember — recorded delivery — with the
same information.” At the end of October
he had a “final warning letter” making
demands for late payment charges and
threatening referral to debt collectors.
HMRC said: “We apologise for the
delay in acting upon his correspondence.
We have now put things right.”
Another taxpayer, a landlord, was
bombarded for months with demands
for £383 in tax payments — including
from debt collectors — even though she
was instead owed a rebate.
Her accountant had submitted the
request for a refund, but HMRC did not
respond. She was sent an initial demand
for payment two months later, then a
second three months after that.
Meanwhile, her rebate claim remained
unprocessed. Despite then being
promised that the matter was being
dealt with, she was later contacted by a
debt-collection service.
“I’m angry that one part of HMRC is
pursuing this route at the same time that
another part is reassuring my accountant
the money isn’t owed,” the landlord said.
“It’s completely shambolic, and has left
me extremely frustrated and saddled
with additional costs.”
Even accountants are struggling to
obtain responses. Kelly Sizer, a technical0 Calls unanswered
0 Seven-month waits
0 Unfair tax demands
The tax office is in
turmoil, reports
David Byers
Annuity payouts are at their
highest rate since 2018
because of the prospect of
rising interest rates, but still
fall short of what you could
get a decade ago.
An annuity lets you swap
some or all of your pension
savings for a regular income
that’s guaranteed for the rest
of your life.
A 75-year-old with a
£100,000 pension pot can
now get a level annuity of
£7,218 a year compared with
£6,736 a year ago. In 2012,
they could have got £8,289.Imogen Tew A 65-year-old can now get
£5,163 a year, up from £4,
a year ago but less than the
£5,859 available in 2012,
according to the wealth
manager Hargreaves
Lansdown.
Annuity rates, which are
linked to the interest rate on
government bonds (gilts)
have tumbled over the past
decade as interest rates have
lingered at historic lows.
Alternatives are leaving
your money in your pension
scheme, taking a lump sum or
entering what is known as
drawdown, where your
pension stays invested but£
The increase in
annuity income
for a 75-year-oldPension incomes
just got bigger, but
only by £400 a year
you can withdraw income
from the pot. You can also
choose a combination of
these options.
“It is good news that
annuity rates are creeping up,
but we will need further rises
before they become attractive
again,” said Scott Gallacher,
from the financial advice firm
Rowley Turton.
The income you get from
an annuity depends on the
size of your pension pot, your
health, age and the type of
annuity. A level annuity will
often have a higher starting
income, but will stay the
same throughout your
retirement, so inflation willeat into your spending power.
An escalating annuity will
have a lower starting income
but will increase each year at
a fixed rate. An inflation-
linked annuity will increase
with inflation each year.
A £500,000 pension pot
would buy you a level annuity
that pays £21,249 a year at 60,
while an inflation-linked
product would start at
£11,508 but increase each
year, according to Hargreaves
Lansdown. You can buy joint
life annuities, which pay an
income to your partner after
your death, or short-term
annuities, if you do not want
to commit at today’s rates for
the long-term.
Alistair Cunningham from
Wingate Financial Planning
said: “While rates are
creeping up, there is a very
real risk of inflation. Anyone
who does not buy an
inflation-protected annuity
would be significantly
exposed to this risk.”How to invest in
China... without
investing in China
investment company,
Comgest recommended
Japan as a way into Chinese
growth. The robotics firm
Fanuc, the chemicals
company Shin-Etsu and the
sensor maker Keyence all
have large and fast-growing
Chinese businesses that have
been unaffected by
regulation.
Kaye said that more
Chinese mothers are using
powdered milk to feed their
children and the brand that
they prefer is Pigeon, which is
listed in Japan. “China is
overwhelmingly more
important to Pigeon’s profit
than Japan now.”
The same is true for the
skincare product companies
KOSÉ and Pola Orbis, as wellas the clothing manufacturer
Uniqlo, which makes more
money, and sells at higher
prices, in China than in Japan.
Thomson said: “If you’re
looking for a resilient, better
way to play Chinese
investment exposure, going
through large companies
selling goods to China is a
good way to do it. The
management teams of these
companies know how to
navigate the nuances of
emerging nations. You’re
much better backing their
skills and expertise in trying
to navigate the vagaries of
Chinese regulation.”
International investors
have piled $120 billion
(£88 billion) directly into
Chinese stocks and bonds in
2021 according to the
Financial Times.
But many global fund
managers who previously had
big positions in China have,
like Thomson, sold out.
Artemis’s Simon Edelsten
sold off almost all of his
Chinese stocks earlier this
year.
Retail investors seem
reluctant to invest directly in
China, too — but the country
is too big to ignore. “There is
still long-term growth
potential here,” said Mould.Some investors seek
to avoid Chinese firmsSavers reluctant to back
Chinese stocks because of the
country’s human rights
record can look to companies
listed on US, UK and
European stock markets to
profit indirectly from China’s
growth.
One option is to invest in
businesses that sell to China,
and the luxury goods
industry is a key player here.
Russ Mould at the investment
platform AJ Bell said that the
UK and European companies
Burberry, Louis Vuitton
(owned by LVMH) and Gucci
(owned by Kering) have a
strong presence in China, as
do Nike, Adidas, Apple and
Tesla from the US.
James Thomson at the fund
manager Rathbones
offloaded his sole China
stock, the video games
publisher and social mediaDavid Brenchley platform Tencent, in July. He
has invested his clients’
money in Costco, the
American big-box wholesale
company that has begun
opening stores in China. Its
Shanghai shop caused traffic
congestion and hours of
queuing on opening day.
Another option is
semiconductor companies,
which make microchips for
smartphones and electric
vehicles. The fact that China
remains fully committed to
technology could play to
these companies’ strengths.
They include the precision
engineers Renishaw and
Spectris, listed in London;
Amsterdam’s ASML; and
Applied Materials from the
US. Be careful with the latter,
though: any ramping up of
tension between Washington
and Beijing could restrict its
ability to sell into China.
Richard Kaye from the