Speaking in 2003, John Healy, the Treasury Minister for Customs, stated "Customs is also an ancient service, with legal roots stretching back to the 11th Century". To the cynical, tracing the history of HMRC back to the dark ages might confirm their suspicions about the role and function of the organisation. Indeed, when you look at the very narrow definition of it's objectives you might be forgiven for assuming they've never been altered. They simply state: "We are here to ensure that the correct tax is paid at the right time". The powers HMRC use and apply are based on this one simple objective.

Defined in this way, this Government Department, is able to detach itself from both circumstance and consequence. Rules can be blindly applied as they are not limited by any economic context. This may also go some way in explaining why there does not exist a Taxpayers charter. There is no downward pressure from the organisations goals to have one. Although it's been discussed at the Consultative Committee Meetings it seems to have been reduced to a carry forward meeting minute. It needs further thought.

Suppose we added one more aim to their objectives, and this was "To not inhibit or impede economic growth."  This goal might accomplish a number of things, including a need by HMRC to understand the wider economic impact of applying it's powers.

Let's look at an example. In it's current form it is perfectly permissible for a company to have to wait over four months to be VAT registered. If the registration process were governed by an objective to not impede economic growth this timeframe would be unacceptable. I can almost hear Donald Trump exclaim,  "It's a disaster".  The organisational structure and practices would have to change so that the process be completed in an acceptable period, a period to which the organisation is accountable.

At the moment there is none. Guidance booklets from HMRC suggest the registration process to be three weeks, however, owing to their single objective,  and the lack of a tax payers charter, they can legitimately take as long as they like. There will be some reason or power they can apply which supersedes any prior commitment.  At the moment, this reason is Missing Trader Intra-Community (MTIC) VAT fraud estimated to cost the Exchequer 0.6% of total Government revenue, almost the same still being lost through tobacco smuggling, or estimated to be lost in identity fraud. The spin put on MTIC fraud is that it diverts vital funding intended for public services, like hospitals and schools, on which we all rely.

I say "spin" as we should not forget these losses are less than the £3.3billion in unpaid taxes avoided by over half a million illegal workers, and less than the amount the Government has spend on the Iraq war. It's a spin, should it be used to lower standards of public service? Long, undue delays in VAT registration are explained away as part of Customs strategy  to combat MTIC fraud.  This, for some reason, seems to make it okay.

Lets look at another example. HMRC have redeployed an additional six hundred staff to help with validating the VAT repayment returns of companies trading in industries tainted with MTIC fraud. When we look at the numbers it just doesn't seem to stack up. The Department processes approximately 170,000 repayment returns per annum. Of these, only a small minority relate to returns submitted by companies trading in tainted markets. If this small minority were 5% then there would be some 8,500 returns per year to apply increased validation to.

With these numbers, each repayment return would have one Customs Officer working full time on it for four weeks. You would be forgiven for concluding , with this level of resource, returns would be validated quickly. This is not the case. In a letter leaked to me, from a reader, a senior Customs Officer writes, "HMRC is under no statutory obligation to complete these verifications within any fixed timeframe" and further "the case officer will normally provide at least monthly updates", which would suggest the process is going to be a siege.

Cashflows of legitimate businesses are squeezed as Customs retain their VAT repayments as part of their strategy to combat MTIC fraud. This makes it okay. Where the single objective of the organisation is "to ensure the correct tax is paid at the right time", it becomes acceptable to implement a strategy to "disrupt.... all points in the supply chains". The collateral damage is not considered.

Are these the "legal roots stretching back to the 11th Century"?

Ok, so where were we?

To recap, I was registering a start-up business for VAT. The application was submitted online on the 4th of July. The application prompted a request for further information, the majority of which just does not apply to a home business. I replied to the answers and posted my blog on the subject towards the end of August.

• VAT Registration (Part 2)
• VAT Registration

The next contact I have with Customs & Excise consists of a business card put through my letterbox. A meeting hadn't been arranged with me. They had seemingly "given it a whirl" on the off chance I might be in.

I held the card in my hand thinking whether this was indeed a good use of tax payers money. It must have taken two staff a round trip of three hours to make the visit. That makes six hours or almost a day, which could have been avoided with a simple call beforehand.

My eyes linger on the card before I turn it over. There is a note on the reverse asking me to call. I do. A meeting is arranged for Tuesday, the following week, the 27th of September, at "morning".

I listen to James O'Brien on LBC while I wait. Occasionally, I look through the front window to see if anyone is there. Then I see a convertible pull up, park outside next doors, raise the roof, and two Customs Officers get out.

They explain that HMRC need to apply more detailed verification to businesses registering for VAT owing to abuse of the system, an abuse that has led to substantial losses for the UK exchequer. They are well mannered. I show them samples of some products I am looking to import from the Far East. One of them is a redesign of a popular Asian product I am planning to manufacture. They seem satisfied and exclaim, "you're obviously not the type of company we're looking for". All in all they stay about twenty minutes.

The application is referred back to the Registration Unit at Deansgate. I feel assured the VAT number will be issued, finally, after three months. Three weeks later, on the 23rd October, an HMRC brown envelope arrives through the letter box.

Instead of the expected VAT certificate there is an "Advice of Non-Registration". The letter says "for the time being you will not be registered". The letter contains a table of reasons an application cannot be processed.

There is an X against "Your application form has failed pre-registration checks, please contact the office for further information".

My first thought was of customer service. Wouldn't it have been helpful to include the "further information" with the letter? Instead, I have to write to them and request it, they will send it, then I have to respond to it and ask them to reconsider the application. Was this the most efficient or effective way to do this? If there had been other questions couldn't the visiting officers have asked them? I can foresee another six to eight weeks delay.

Interestingly this is the first letter, which doesn't give advice about invoicing. Previously you are reminded to add VAT to the sales price and tell the customer you will sort him out with a tax invoice later. Having done so, and being advised of non-registration, what do you now tell the customer? If you are appealing the decision do you still need to follow this process? My first thought was of customer service, but the letter offers no help.

To say I am baffled as to how a VAT application can take four months is an understatement. What can possibly take so long? Whatever it is, it can't be good news for UK entrepreneurs.

The unwieldly tool HMRC applies to combat fraud partly creates the problem they try to solve. In order to VAT register a company, businesses are being encouraged, or should I say being cornered into, buying already registered companies, which are dormant, or being liquidated or are worth nothing. Or they register companies with different trade classifications, such as a plumber, and then change the classification after being registered.

Where the alternative is to wait over four months for an application to be processed I can understand why business owners do this. Is it wrong? You know, I don't think it is anymore. Why should new, legitimate businesses in the UK be choked with red tape and be criminalized?

Was it really Tony Blair who said we ".. should receive, high quality service from the Government"?