The press have been reporting it and it’s been doing the rounds of Twitter this week as well. “It” is the story of Florence Coke’s bill for unpaid VAT.
The story has, as this type of story often does, generated a certain amount of interest and frivolity. “Oh look, a bill for almost £1bn, how absurd.” Yes, it is totally absurd, certainly given the circumstances. However, what bothers me about the general reaction is that it trivialises the underlying issues.
Florence set up Mama Flo’s Caribbean cafe in 2010, so she’s been trading for around three years. Clearly, no one at HMRC stopped to think that maybe, just maybe, that level of unpaid VAT was ever so slightly unlikely. If we assume that the business has no taxable inputs, that would represent around £4.9bn of taxable supplies. In just three years. Clearly a very popular little cafe.
Why is it that HMRC’s systems of checks and controls allow such blatantly incorrect demands to be issued?
Even if that amount really was outstanding, do HMRC’s systems really allow debts to build up to that level before these letters are sent out? Would any commercial business allow its “customers” such generous extended credit terms before threatening the use of debt collectors? Even with the cuts in resourcing, surely HMRC has someone who could have picked up a phone, or even paid Florence Coke a visit, to discuss the unpaid VAT. Is that level of debt not considered material at HMRC?
These are the issues that concern me about this story. The unbelievable incompetence that appears to underlie the sending of the letter in the first place.
Of course, it is all ok in the end. HMRC has recognised its error (I wonder how long it took before they realised) and apologised to its “customer”. Well, that’s alright then. Had this been a commercial business, of course, Florence Coke would have had the option of taking her business elsewhere. Unfortunately, “customers” of HMRC do not have that choice.