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.