Market leading insight for tax experts
View online issue

Further staff cuts could ‘severely damage’ HMRC, says CIOT President

printer Mail

HMRC is ‘turning the corner’, a spokesman told Tax Journal today after the President of the Chartered Institute of Taxation warned that further cuts in HMRC staff numbers could inflict severe damage on the department.

‘It is clear that HMRC is under-staffed and under-resourced, with further significant cuts on the horizon. Is cutting HMRC staff a sensible strategic move on the part of government? Staff morale and the tax collection engine are now under considerable strain,’ Anthony Thomas wrote in this week’s issue of Tax Journal.

‘HMRC is the UK’s “moneybox” and could end up being severely damaged,’ he said in an article setting out his personal views.

Trust between taxpayers, the tax profession and HMRC has been severely dented and a ‘healthy tension’ between tax practitioners and HMRC is needed before that trust can be restored, Thomas argued, repeating his call, made in a speech to last year’s AGM at the CIOT, for ‘a return to the “healthy tension” that existed 10-20 years ago’.

In unusually forthright public comments for a CIOT President, Thomas called for a ‘fundamental review’ of the governance arrangements for the whole of HMRC, not only in relation to tax disputes. The most important element of trust was, he said, taxpaying citizens having confidence in their tax authority.

Decisions ‘already made’

Consultation was vital to trust and efficiency in the tax system, Thomas said. There had been significant improvement in some areas but ‘it still sometimes appears that the decision has already been made by HMRC or HM Treasury’.

However, a recent consultation that worked ‘particularly well’ was that on Alternative Dispute Resolution. ‘This is the right approach to consultation and should be a model for future work on other consultations. Such an honest and fresh way of working is essential and could be very worthwhile.’

The HMRC spokesman told Tax Journal: ‘We completely agree that consulting properly is essential if we are to make the tax system work at its best.’

Relationship ‘at serious risk’

Thomas warned that the relationship between HMRC, tax agents and their clients was at ‘serious risk of changing irrevocably’. The tax agent strategy posed ‘fundamental questions’ about the role of tax agents, and the role of professional bodies in maintaining professional standards seemed to have been ‘sidestepped’.

HMRC told Tax Journal: ‘Our agent strategy is about making it easier overall for agents to work with HMRC: supporting those who need it, while identifying the small minority who do neither their profession, their clients or HMRC any good. Our strategy is not about finding fault with agents or changing the relationship between agents and their clients.’

Service standards

HMRC was, Thomas said, ‘totally engaged’ with the service level project established in the autumn. ‘Any slowing down in 2012 would be a massive blow to the trust that is slowly being rebuilt.’

HMRC said: ‘We accept that our service standards last year were unacceptable but all the evidence is that we are turning the corner. We want to work closely with the CIOT as we continue to improve.’