HMRC needs a review
On the tenth anniversary of HMRC's formation, is a wide-ranging review of the Revenue still necessary? Paul Aplin argues it is
Earlier this year, the then leader of the Labour party Ed Milliband announced that if Labour formed the next government he would launch a review of HMRC. That review is now clearly not going to happen, but is there still a case for a review of some kind?
Personally I believe that there is.
HMRC was formed 10 years ago and much has happened that was never envisaged by Gus O’Donnell when he proposed its creation through the merger of the Inland Revenue and H M Customs & Excise. There have been years of resource cuts – the department’s headcount has fallen by around 40% – there has been a significant increase in press and political interest in tax avoidance, service standards have attracted repeated criticism, public confidence has been eroded, the volume of tax legislation has mushroomed. HMRC has acquired new powers through a powers review that (unlike the Keith Committee) was run by HMRC itself and not independent of it; over the past year or so HMRC has sought and in some cases gained powers that would once have been unthinkable and many feel that the balance of power between citizen and state in tax matters has tilted too far towards the state.
There has also been an increase in the pace of HMRC’s transition to digital channels, thanks in part to Lord Carter’s recommendations in his 2006 review of HMRC’s electronic services: most business returns are now delivered electronically and we have seen the introduction of the centralised NPS PAYE database and of RTI. Electronic filing of personal self-assessment returns is now the norm. The next few years will see an even bigger move to digital channels.
I do not envy HMRC’s board and executive committee the job they have to do. Constantly to be asked to do more with less, while at the same time facing criticism for failing to deliver adequate service levels must be galling in the extreme.
The review I would like to see would not be focused on a single area but would look at HMRC as a whole; it would look at the governance structure, the level of investment in skills and training, service delivery, the use of powers and HMRC’s culture and performance. It would consider whether the department has adequate resources. It would be independent and conducted in a way that commanded public confidence as well as the confidence of those working within HMRC. It would be given adequate time to reach conclusions.
I raised the idea of such a wide-ranging review in a letter to The Times back in February. I remain firmly of the view that it is necessary and I am pleased that the chairman of the CIoT’s technical committee, Bill Dodwell, has also now advocated a review. I hope that others will add their voices.
On New Year’s Eve, walking my border collie on the moor, I always reflect on the year gone by: what happened, what went well, what went badly; then on New Year’s Day I turn my thoughts to my plans for the year ahead. My reflections on the past year inform my plans and thinking for the year to come. The tenth anniversary of its formation presents an ideal opportunity for someone to do the same in relation to HMRC: to reflect on what has gone well and on what hasn’t and to consider how the lessons learned might be used to shape the department for the next 10 years.
Paul Aplin is a partner with A C Mole & Sons in Taunton and chairman of the ICAEW Tax Faculty technical committee.
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Comments
'9' comments
Colin Corrigan
Friday, June 26, 2015 12:32:44 PMThe problem with a "review" is that the Revenue and the government can both bat away questions on this by saying that they have instigated said review. No doubt, the review will then roll and roll as these things tend to do. More useful would be a dialogue between the Revenue and the Institute (as thankfully currently takes place) and George Osborne (rather than one of his team). Only by assigning a clear line of responsibility to the Chancellor and the top of government will anything perhaps be done.
Stuart Jones
Monday, June 1, 2015 5:04:47 PMI agree totally Paul and I'm sure that most, if not all, members in practice will agree as well. The ICAEW must make the Government understand the sheer weight of opinion wanting such a review. When I say yes it isn't just for me, it's also for the hundreds of my clients affected by what has happened to HMRC over the last ten years. My clients won't be signing petitions or adding comments here but 99% would support such a review. Politicians, unlike chartered accountants, are only interested in numbers. Numbers equate to votes.
Nigel Eastaway OBE
Monday, June 1, 2015 3:17:31 PMI think that Paul is correct and the time for an independent review of the tax system and how it is operated by HMRC, including how it fits with, or doesn't, the benefits system under the control of the DWP, is overdue. Nigel Eastaway OBE
Jenny Marks
Monday, June 1, 2015 2:27:31 PMI agree that a review is well overdue not only to ensure HMRC remains fit for purpose but to restore public confidence.
David Heaton
Thursday, May 28, 2015 2:32:27 PMHaving recently spent several hours to find out how to help a client fulfil a simple statutory duty in somewhat unusual circumstances that did not fit the straitjacket of HMRC's digital portals, having been passed between four HMRC helplines who did not help, and having been referred several times to its website, which did not contain the required information, I wholeheartedly support the call for an independent review of HMRC. It is clear that HMRC's management and its staff are being asked by ministers to perform miracles without being given the resources they need. Instead, we see a resort to extra powers to bring in cash (such as APNs) without the basics being done to what many would regard as an acceptable standard.
Simon Denton
Thursday, May 28, 2015 2:28:25 PMI agree with Paul. Considering the effort being devoted by parliament in dealing with avoidance which, according to HMRC's own figures, amounts to about £3.1bn or 9.1% of the tax gap it seems illogical that they should not be addressing the tax lost through error and failure to take reasonable care which amount to £7.1bn and which could be addressed through such a review
Andrew Tall
Thursday, May 28, 2015 2:20:50 PMThe review should also cover the role of HMRC in the operation of consultations over legislation that it will be responsible for policing and, in a clear conflict of interest, the powers that HMRC requires to carry out that role. Consultation is a process designed to identify potential problems with legislation and powers, it is an abject failure of the consultation process that we have seen organisations respond to a consultation with plans for judicial review rather than via the consultation itself due to the belief the consultation was a sham.
Rebecca Cave
Wednesday, May 27, 2015 2:16:30 PMI agree HMRC needs a review to shake up some self-monitored targets such as whether it complies with "Your Charter" in its attitude to taxpayers, and the quality of the services it delivers. Also the review should cover whether taking taxapyers to tribunal for very small amounts of penalty is value for money.
Carl Bayley
Wednesday, May 27, 2015 1:37:51 PMA thorough, independent, review of one of the UK's most important institutions is an excellent idea: so much has happened in the LAST ten years, now is a good time to take a look at how the department needs to prepare for the challenges of the NEXT ten years - as well as how it is coping with the challenges it already faces today.
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