Views from 100 tax professionals on HMRC resource

100 tax professionals took part in a Tax Journal poll designed to gauge the view of the profession on the HMRC resource.

 

They gave their views on two questions:

Ninety-two of the 100 tax professionals said that HMRC is under-resourced, and 88 thought the independent review would be helpful.

The 100 tax professionals were from accountancy firms (68), tax boutiques (8), law firms (3) and chambers (1), as well as those working in-house (11), at HMRC (6) and at other organisations (3). 

 

The poll was taken after some calls from within the profession for an independent review of HMRC. It also comes after the government’s recent announcement in the 2015 Autumn Statement to reuse the £800m savings to deliver an additional £7.2bn from tackling tax evasion and non-compliance over the next five years; and HMRC’s announcement of its office closure programme, which will see its 170 UK offices consolidated into 13 regional centres, with plans to retain 90% of its 58,000 strong workforce.

 

While most survey respondents appeared to agree that HMRC needed an independent review, some qualified their answers. ‘Instead of wasting money on an independent review, they would be better investing that money in more HMRC services,’ said one. Another said: ‘I answered “yes” to an independent review of HMRC, but in reality I think that the tax profession already has all the information available to say what changes should be made. Money could be saved by just asking the tax and accounting profession how HMRC can be improved and inefficiencies reduced.’

 

Many commented on the lack of knowledge of many of the staff they dealt with. Customer service was another frequent gripe. 

 

Keith Gordon, barrister at Temple Tax Chambers, said the institution was ‘tainted’ by its attitude. ‘Whilst I would not point the blame at individual officers, the mindset of the institution is in the wrong place. HMRC should aim to collect “the right amount of tax”, but its stated objectives now include “maximising revenues”,’ he said. ‘This mismatch is at the core of much of what HMRC does, what it says and how ministers are advised. More worryingly, it affects how HMRC treats taxpayers – effectively denying them their statutory or common law rights, where to do so will help to maximise revenues. HMRC’s frequent attempts to sidestep agents are part of this, whereas fairness requires independent tax advisers to stand up to HMRC more than ever on behalf of their clients.’

 

Commenting on the overall level of HMRC resources, Tony Wallace, president of the Association of Revenue and Cutoms (ARC), the union representing senior staff in HMRC, said: 'There is no getting away from the fact that HMRC faces a further 15% cut in its resources during this Parliament and whilst performance against targets for increased tax from avoidance and evasion work continue to be met, compliance is everybody’s job in HMRC.'

 

‘The results do not surprise me in the least’, said Paul Aplin, partner at A C Mole & Sons and chairman of the ICAEW Tax Faculty Technical Committee. ‘Few outside Whitehall believe that HMRC has the resource it needs to do the job. Service standards remain a cause for concern and while I welcome the recent announcement of significant new investment in digital technology, that is not a complete solution. Greater investment is needed in training and in front line service delivery. I am also not surprised to see the huge majority backing a constructive, independent review of HMRC to assess its success against the aspirations set out in the O’Donnell review which created it, to consider its governance, powers, modus operandi and resources and to look at its aspirations for the next ten years.’ 

 

Jonathan Riley, head of tax at Grant Thornton, has previously called for a full independent review of HMRC. Only this, he said, ‘can really move the dial forward in terms of its performance and reputation’. He added: ‘HMRC has to deal with so many aspects of law, not just tax – my guess is that compliance with the apprenticeship levy will fall to HMRC.  And now it has to juggle with the next stages of Building our future – HMRC’s strategy to digitise, as well as digitisation in itself. Add the current customer service performance and it is hard to see how much longer HMRC can keep “in the game”.’ 

 

However, Tina Riches, national tax partner at Smith & Williamson, pointed out HMRC’s success in tax collection compared to some other countries. ‘The level of debt is low and envied by many commercial entities, while the tax gap level is comparable on an international basis.’

 

‘I do however think the key problem is not just the volume of resources but having the right resources in the right areas,’ Riches said. ‘There has been a sea change in what HMRC does, and what it is expected to do going forward, which means it needs a different profile of staff. Years of shedding staff means there seems to be an experience gap between good new recruits and those approaching retirement, some of which portrays itself in a need to better understand what taxpayers and tax agents do, and do today rather than ten years ago, and the impact of proposed changes.  

 

‘So, in the same way that there has been a long consultation on tax agents, perhaps what is required is an open consultation between government, HMRC, taxpayers and their agents on what we, as a country, want HMRC to do and how it does this.’  

 

HMRC staff numbers 

Year                    Staff numbers

2004/05	99,179
2005/06	94,225
2006/07	91,373
2007/08	85,769
2008/09	77,162
2009/10	73,695
2010/11	67,797
2011/12	67,074
2012/13	64,476
2013/14	61,370
2014/15	56,000
From business plan
2015/16	58,900 (estimate)
Source: HMRC annual accounts