TAX CODE
ERROR
I WAITED
MONTHS
‘I’m sorry
but the
delays could
last well
into the
spring’
The deputy chief executive of HMRC said
she was “really sorry” for the delays
suffered by some taxpayers, but warned
that chaos could drag on for months.
Angela MacDonald, above, said that
the department would not be able to
answer the phone or reply to post
promptly for up to six months because
of the impact the pandemic has had on
the department’s staff.
“I am really sorry that these are the
experiences that customers have, and I
never want to be in a position where we
don’t deliver the service that people
expect, because this is how people run
their businesses, this is about people’s
worries about getting their tax right, and
they are concerned when it isn’t,” she
said.
“I am definitely sorry when the
service isn’t delivered as we want, but
what I would also hope is that people
will understand the circumstances that
we have found ourselves in. It’s not an
excuse. Our aim is now that life is
moving on to get back to where we were.
And we are very grateful for people’s
patience in bearing with us.”
MacDonald admitted that the backlog
of post was so great that it would take up
to half a year for the department to meet
its targets again.
“In the short term, our focus is on
moving through this next three to six
months to get ourselves back to the
standards that are at the heart of the
service that we have historically, and
would like to, provide,” she said.
“Now that the Covid schemes have
come to an end... that allows us to move
that resource back into main tax
activity.”
When asked whether staff only
working in the office one day a week had
made delays worse, she said: “Working
from home is utterly irrelevant. All of
our post is scanned. If you walked into
any HMRC building, you will not see
piles of post — those days went many a
year ago.
“Every physical item that comes into
HMRC goes to a scanning organisation
that scans it in digitally, so every
colleague gets their work digitally,
regardless of where they are working.”David ByersChartered Accountants in England and
Wales, which has more than 150,
members, said: “There’s a real delay in
corporation-tax refunds, but this also
applies to income-tax refunds.”
While many appeals for rebates have
been delayed because of administrative
backlogs, others have been deliberately
put on hold while taxpayers are asked to
complete further identity checks.
The annual report, published on
November 4, reveals that HMRC
scrapped all its customer-service targets
in the 2020-21 tax year. If measured
against the previous year’s targets, it
would have missed them all.
Throughout the year it took 33.3 mil-
lion calls, including 2.5 million to a
special Covid helpline. It took an average
of 12 minutes to answer calls, up from six
and a half minutes the year before. Its
target in 2019-20 was five minutes.
About 780,000 electronic forms were
not processed within seven days of being
submitted, while more than 4 million
letters were not cleared within 15 days of
being received.
Despite the UK economy fully reopen-
ing in July, HMRC’s performance levels
deteriorated over the summer after
improving in the spring.
And response times have remained
high. According to HMRC’s monthly
report for September, the average time toanswer a phone call was eleven and a half
minutes — compared with just under nine
minutes in June — and almost half of calls
were not answered within ten minutes.
Staff are still mostly working from
home, going to the office on average one
day a week. HMRC says that all post is
scanned and emailed to staff.Data blunders
While staff struggle to get on top of the
service backlogs there has been a series
of blunders and security breaches that
have compromised the personal infor-
mation of more than 3,000 taxpayers.
HMRC’s annual report identifies data
protection as a “red” risk.
On June 26 last year one staff member
made unauthorised changes to the
personal details of more than 1,000 peo-
ple. Everyone affected was notified.
On March 11 this year an employee was
caught accessing the internal system to
locate his estranged wife and children.
They were notified and it is understood
that the staff member was dismissed.
There was also an incident in which
more than 700 taxpayers had their per-
sonal details changed without permis-
sion, and another involving a taxpayer’s
personal information being lost when a
desk drawer was broken into.
HMRC said: “We take the protection of
our customer information extremelyseriously and continually monitor our
systems and data to make sure
that information is safe. We deal with
millions of customers every year and tens
of millions of paper and electronic inter-
actions, and security and privacy are at
the heart of our work. We investigate all
security incidents, taking immediate
action to minimise the possibility of
recurrence.”Pandemic pressures
Nimesh Shah, the chief executive of the
accountancy firm Blick Rothenberg, said:
“The main issue is the disjointed nature
of HMRC’s teams — the debt collection
and self-assessment teams operate com-
pletely independently of each other.
“The simple fact is that HMRC does not
concern itself with the overall picture,
which makes it impossible to serve the
taxpayer well. It would be like going to a
restaurant to have a starter and having
your main meal somewhere else.”
Sarah Coles, an analyst at the invest-
ment giant Hargreaves Lansdown, said:
“HMRC has been under new pressures at
a time when enormous numbers of staff
are working from home. You can’t under-
estimate the scale of the challenge.
“However, it’s worrying to see that
things were getting worse rather than
better more recently, and that all of their
service measures — from the length ofAndy Caldwell, right with his
wife, was made redundant in
November 2019 and after
investing his compensation
payout in a venture capital trust
and his pension he was due a tax
refund of £28,000, which he
claimed last December. HMRC’s
charter says repayments should
be processed in 30 days but by
July Caldwell, from Essex, had
not had any money or an
explanation. “If this were a
commercial company I would
have taken them to the small
claims court,” he said. After The
Sunday Times intervened, HMRC
paid up and blamed anti-fraud
checks for the delay.HMRC
DELAY
MY MISSING
£28,
It took Mark Jones, right with his partner
Shaun, seven months to get a £2,
rebate after HMRC gave him the wrong
tax code. Dr Jones, 58, a psychiatrist
from Durham, said he often spent five
hours on hold or being bounced between
departments after his accountant
realised he had been overtaxed for the
2020-21 year and applied for a refund.
After months Dr Jones was asked to fill in
some extra forms, which he did but then
he again heard nothing for months. It was
only after Money called HMRC that he got
his refund. Dr Jones said: “I feel that I give
a lot to my patients and the NHS, but
HMRC seems to be either uncaring or
incompetent when it comes to sorting
out my tax refund. Doctors, like anyone
else, do not live on thin air.”renn
n
as
ot
vetime it takes to answer calls to the time
taken to reply to emails or answer post —
are below their own expectations.”
HMRC said there has been a 70 per
cent increase in P87 expenses claims for
those working from home, and a surge in
new claims for people who are owed a tax
refund for interest paid on payment
protection insurance after a successful
legal case.
It said: “Our teams work together, and
those who work in our debt management
team have the same IT system as other
areas of HMRC, where they can see cor-
respondence from the customers. This
means that the various customer-service
teams in HMRC are on the same page.
“As the UK’s tax authority, we serve
millions of people, helping them to get
their tax right, and our teams work
closely on a daily basis to achieve this. In
the small minority of instances where we
make a mistake with someone’s tax
affairs, we will take action to put it right as
soon as we become aware of it. We also
continually seek to improve our engage-
ment with taxpayers so that they pay the
tax that is due — no more or less.
“HMRC takes an understanding and
supportive approach to dealing with
those who have tax debts, and wants to
work with taxpayers to find the best
possible solution, based on their specific
financial circumstances.”risk of catastrophic loss and I can sleep
easy at night.
CGI certainly diminishes risk by
diversification, with assets spread over
60 holdings, including several I would
never dare access directly. The most
valuable is Shopify (SHOP), the Canadian
ecommerce platform, similar to Amazon
(AMZN) or Alphabet (GOOGL), that
enables individual crafters to industrial
chemists to trade online. This business
might continue to do well in a country
where everything is so far apart.
But there is nothing rusticated about
the artificial intelligence blue chipNVIDIA (NVDA) or the small and
medium-sized business software
provider Lightspeed Commerce (LSPD),
which rank second and third by value in
CGI. Amazon and the software provider
Square (SQ) also feature among the top
ten holdings in a portfolio where 29 per
cent of assets are allocated to
information technology.
Elsewhere, Franco Nevada (FNV) is its
fourth biggest holding, giving exposure
to gold production in North and South
America. First Quantum Minerals (FM)
extends the range of resources to
include copper, nickel and silver.N
ow for something
completely different. More
than a decade since share
prices began to bounce
back from the global
financial crisis, not many
companies with very long
records of distributing
dividends still trade at
reasonable valuations. Even
fewer do so with a focus on information
technology and remain priced 35 per
cent below their net asset value (NAV).
But I have just bought shares in an
investment company that ticks all those
boxes and also gives some access to
forestry, gold and other interesting
assets at a double-digit discount to NAV.
That’s some comfort for those of us
fearful about how this long bull run — or
period of rising prices — will end and
who are keen to diminish risk by
diversification.
While the past is not necessarily a
guide to the future, the facts remain that
Canadian General Investments (stock
market ticker: CGI) was launched into
the teeth of the Great Depression in
1930 and it has distributed annual
dividends every year since then. More
recently, this C$1.45 billion (£865,000)
pooled fund increased investors’ income
by an annual average of 6.6 per cent over
the past five years and there could be
more to come because it retains
C$899 million of unrealised gains on its
balance sheet.
So I paid £24.39 each for London-
listed shares in CGI, investing nearly
2 per cent of my “forever fund”, utilising
the remainder of the cash raised when I
took profits from the technology giant
Apple (AAPL) and the tractor-maker
Deere (DE), as I reported in September.
It would be fair to say my fears of an
October stock market setback proved
unfounded, so I have abandoned any
attempt at emulating Mystic Meg and see
no benefit in this cash lying idle.
From a purely financial point of view,
it might have been better to have left
it all in AAPL and DE, which remain
my two most valuable holdings, but
I do not want to have too many eggs in
too few baskets. Some reduction in
investment returns from my life savings
is fine by me, so long as it reduces the34%
The discount at Canadian
General Investments (the
percentage by which its
shares are priced below
their net asset value)Don’t mention the Lumberjack Song
but West Fraser Timber (WFT) dances
into the top ten with a wide range of
wood products. Nearly 16 per cent of
CGI’s assets are described as “materials”.
Perhaps most picturesque, Canadian
Pacific Railway (CP), the transcontinental
freight transport system, is CGI’s sixth
most valuable asset and a relatively
cleaner, greener way than trucks or
planes to move stuff long distances. The
purchase by the well-known investor
Warren Buffett of Burlington Northern
Santa Fe, America’s second-largest
railway, helped stimulate interest in this
sector long before many folk worried
about carbon dioxide emissions.
Canada still scarcely registers on most
international investors’ radar, being
overshadowed by the bigger economy
next door. Despite CGI’s size and nine
decades of trading, it does not even get a
mention in the influential Investec “skin
in the game” annual survey of
shareholdings in investment companies.
That’s a pity because its fund
managers since 1956, Morgan Meighen,
put their money where their mouth is,
and the Morgan family owns 53 per cent
of this investment trust. This has worked
well enough, with compound annual
average growth of 12 per cent over the
past 50 years, meaning stock that cost
£10,000 in 1970 would be worth
£2.9 million today.
Against all that, CGI did nothing to
raise awareness of its attractions by
shunning the Association of Investment
Companies (AIC) until recently. Many
potential investors, including me, were
wary of its primary listing in Toronto,
with limited exposure to London’s
checks and balances.
These worries were eased when CGI
joined the AIC in June, which could
increase interest from intermediaries
and wealth managers. Its eclectic
portfolio is priced at C$41.02, well below
its NAV of C$63.03. It yields just over
2 per cent after costs of 1.49 per cent with
dividends paid quarterly.
There is no guarantee the discount
will narrow — it might even widen — but
this tried-and-tested source of rising
income seems overlooked and
underpriced, with scope for growth
in the future.News that BHP, the world’s biggest
miner, has agreed to sell two of its
Australian coal operations for
$1.35 billion (£730 million) raises a
couple of questions for shareholders.
Can BHP clean up its act by getting out
of fossil fuels? Who will benefit if it does?
Yes, would appear to be the short
answer to the first question. BHP’s
disposal of two mines in Queensland
follows the sale of its stake in a huge
Colombian coal mine and it is seeking a
buyer for its remaining thermal coal
asset, New South Wales Energy Coal.
Among other operations, BHP will
remain one of the world’s biggest
producers of copper, the metal vital for
electrification, just behind nationalised
mines in Chile, where the largest
reserves have been found. Some of the
cash BHP raises by selling its coal assets
will go towards boosting copper output
and funding a Canadian potash fertiliser
project, but much of it is expected to be
distributed to shareholders.
That brings us to the trickier question
of who will benefit.
As discussed here in August, BHP has
proposed scrapping its dual-listed status
in Australia and Britain in favour of a
single listing on the Australian stock
market. Bear in mind that before the
coal mines were sold, BHP was forecast
to pay out $17.7 billion in dividends next
year, with half being sent to British
shareholders. So it could account for
10 per cent of all dividends distributed
by the FTSE 100 index of Britain’s
biggest businesses.
Missing that would hurt passive
investors or tracker funds following the
Footsie. All the more reason to vote
against BHP’s departure down under,
which will require the support of 75 per
cent of UK shareholders.Vote leave?
Not when it
comes to BHP
My latest tip for success was founded
in the depths of the Great Depression
Ian Cowie Personal Account
6 January 16, 2020
HMRC discovers
that 326 taxpayer
records have
been changed
without
authorisation
when someone
accessed their
personal data6 March 26
It is found that
personal data,
including contact
details, was lost
when a locked
pedestal was
broken into
during an office
move6 June 26
Another 1,
taxpayer records
holding personal
data were
changed without
their
authorisation6 July 21
Taxpayers’
personal data
was used to make
changes to their
records without
authorisation,
affecting 712
people6 September 9
and 24
More customer
records altered,
affecting 363
people6 March 11, 2021
An employee
accessed an
internal system
to locate his
estranged wife
and children6 March 22
Bank statements
of one taxpayer
are returned to
the wrong personSECURITY BREACHES