There are around 170,000 mid-sized businesses in the UK. For HMRC, a mid-sized business is defined as one that has a UK turnover over £10 million and more than 20 employees. Given their importance to the UK economy, HMRC has been undertaking a number of research studies over the last few years to understand better the specific needs and challenges for mid-sized businesses when it comes to tax.
In relation to these findings, HMRC set up the mid-sized business team in 2014 to provide a tailored service to this section of the UK business population and to help them continue to play their important role in the UK economy.
The mid-sized business team’s aims are to:
- help taxpayers locate the right tax guidance
- support growing businesses
- efficiently promote and administer tax incentives and reliefs
- improve compliance and tackle tax evasion.
In response to the work of the mid-sized business team, HMRC subsequently launched its new Growth Support Service on 20 September 2017. The service is part of a wider set of initiatives to support mid-sized businesses as they grow, and to help them to pay the right amount of tax at the right time.
The Growth Support Service allows mid-sized businesses to submit an online request for a dedicated HMRC tax specialist who will work with the business or its tax agents during periods of growth. HMRC defines periods of growth as including a range of key transactions or business changes, such as a significant increase in turnover, listing on a stock market, mergers and acquisitions, or making a Senior Accounting Officer report for the first time, among others.
The Growth Support Service promises to provide a named individual to advise on the growth tax issue a business is facing. Having access to a person with whom a business can discuss their tax matters will be welcomed by most mid-sized businesses, helping them to avoid getting caught up in HMRC’s general enquiries system. However, unlike the Customer Relationship Manager (CRM) for larger companies, mid-sized businesses are not being offered ongoing access to the named individual, so mid-sized businesses will not benefit from the continuity that large businesses enjoy from building a good relationship with their CRM.
In periods of growth, businesses need relevant and timely tax guidance to avoid missing commercial or legal deadlines. However, there is no detail on how much time the named HMRC individual will be able to dedicate to each case and for how long their involvement in any one period of growth will be. There is also no service level commitment about response times. HMRC say they have employed 800 people to support the 170,000 mid-sized businesses but the test of the service will be whether they have enough people in the team to provide the customer service that mid-sized businesses will expect and need.
The Growth Support Service team specialist can give support in tax, but not in general business advice, tax planning or strategic growth advice. HMRC is, rightly, clear about focusing only on their area of expertise. However, providing a tax answer to the tax question asked may not always result in the right outcome for a tax payer. A good tax advisor will want to understand the broader commercial context of any question they are asked, so they can answer the tax (and other) questions their client should have asked, as well as the questions posed by their clients. Understanding why clients are doing something can often unlock better, simpler, more cost effective alternatives.
The ability to access HMRC views, at no charge on the tax issues that arise for typical growth transactions, could give welcome clarity to taxpayers as they navigate complex tax matters, often for the first time. It is also important to remember however, that the service is provided by HMRC, so it is not independent. Taxpayers should retain a healthy scepticism in their dealings with the service, and should accept that it is not likely to replace the benefits of seeking professional, independent and tailored tax advice from a trusted tax advisor, other than in straightforward situations.
The Growth Support Service is a welcome addition to the suite of information and help HMRC have made available to businesses. Its success will depend on the responsiveness of the team, and the commercial awareness they can display.
This article first appeared on CCH Daily / Accountancy Live on 12 October.