Return call: HMRC reverses decision to close self-assessment helpline

What a difference a day makes. In an unbelievable turn of events, HMRC has repealed its decision to reduce phone support for taxpayers – just one day after it was announced. 

On Tuesday, HMRC announced that the key helpline for those filing self-assessment tax forms would be closed entirely from early April to September 30th. During the remaining months, the service would only answer “priority queries.” 

That was yesterday. Today, all of this changed again, with Chancellor Jeremy Hunt personally intervening to prevent the proposed move. Amid the broader context of recent tax changes, crucial concerns raised by Hunt and other critics just might have saved the day for sole traders and others needing support with filing their taxes correctly.

Online self-service is not the answer

HMRC’s flip-flopping came just after a parliamentary report highlighted their poor customer service levels last month. 

In response to this, HMRC emphasised the cost-effectiveness of their online knowledge base – such as webinars, YouTube videos, and chatbots – that they claimed were readily available to all taxpayers. Critics argued that this approach overlooks several key issues, however, including the fact that the user-friendliness of HMRC’s online resources is already a huge point of contention. 

The tax system is inherently complex, and navigating HMRC’s website is often daunting for those unfamiliar with tax jargon and procedures. A staggering 62% of callers waited over 10 minutes to speak to an advisor in 2022-23 – and that number has been steadily increasing, which suggests that HMRC’s online resources may not be as user-friendly or comprehensive as they claim. 

Some people simply prefer or require human interaction to understand complex information, no matter how annoying the customer wait times may be. Phone support allows taxpayers to ask clarifying questions and receive tailored guidance, which can be invaluable for those with unique tax situations.

HMRC argued that the changes would allow it to focus on supporting taxpayers with complex needs and those who require additional assistance. They also highlighted the need to improve efficiency.  However, critics argued that these goals should not come at the expense of effective support for all taxpayers.

Navigating complex online resources, deciphering tax regulations alone or having to pay a financial advisor or accountant to help with it all would most likely have led to delays, errors, or even penalties. 

Small businesses and sole traders who often rely on occasional phone support for questions throughout the year may have also struggled with the reduced access, as similar reductions had been planned for VAT and PAYE helplines. While larger businesses with dedicated accounting software would have potentially navigated the system better, the overall effect would have impacted all forms of small business owners needing time sensitive support.

Potential impact for side hustlers averted

Had the 6-month closure of the phone line gone through, the timing couldn’t have been worse for aspiring side hustlers. 

In January, HMRC introduced the side hustle tax, requiring digital platforms like Etsy and Uber to report users’ earnings directly to them. While this aimed to improve tax collection, it added another layer of complexity for casual sellers and freelancers, many of whom operate on a smaller scale. It’s no niche group, either – nearly half of all Brits engaged in some form of side hustle currently. 

On top of navigating these tax regulations, side hustlers would have had to face this significant reduction in phone support from HMRC during crucial filing periods (like the stressful two weeks before having to file accounts), which was very likely to prove significantly challenging and confusing for many.

For many, side hustles have become a way of life. Whether it’s selling crafts online, freelancing after hours, or renting out a spare room, these ventures provide a financial safety net or a path to financial freedom. 

These kinds of sellers, already facing numerous challenges, would have had to navigate a complex tax system with extremely limited support, which may have discouraged individuals from pursuing entrepreneurial endeavours. While online resources can be informative, they are no substitute for human interaction, especially when dealing with complex tax situations. 

Despite its strained resources, HMRC must find the balance between promoting online self-service and ensuring adequate support for taxpayers of all levels of experience and digital literacy. The future of side hustles and small businesses depends on it.

What can HMRC do to improve?

HMRC needs to find a balance between cost efficiency and accessibility. 

This could involve improving the user experience of online resources, offering tiered phone support with priority lines for complex inquiries, or providing alternative support options like in-person workshops or extended online chat support hours.

The future of side hustles in the UK hinges on creating an environment that fosters entrepreneurship, not discourages it. If HMRC can acknowledge the challenges faced by new businesses and side hustlers, and implement a more balanced support system, they can ensure that everyone has a fair shot at success in the gig economy.