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How should HMRC be organised?

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HMRC’s initial public statement made it clear that, from October 2016, the department will be reorganising itself into three new groups:
  • A new customer strategy and tax design group, bringing together customer strategy, tax policy, process design and tax assurance.
  • An expanded customer service group, which includes all of HMRC’s big operational teams.
  • A customer compliance group which will tackle non-compliance and enforcement for all customer groups, including large businesses.
The three new groups will be supported by the existing transformation and corporate service areas. 
HMRC is clearly serious in its intention to become an organisation which is truly focused on customers, even though many of those who are designated ‘customers’ will continue to feel that they are ‘taxpayers’. 
The department can only do its work with the resources made available to it by Parliament. Regrettably it seems that this reorganisation is being undertaken without the benefit of any additional resources. Cynics might say that HMRC is simply rearranging the deck chairs, but that would not do justice to the amount of thought and good intention which has clearly gone into this.
HMRC seems intent on bringing together teams engaged in similar work so that they can improve the speed of response and deal more flexibly and quickly with changing customer needs. Without a doubt, there is a long way to go. We welcome the spirit behind this initiative: keeping things small, simple and customer-focused clearly has much to commend it. 
But there is a need for greater clarity as to what society wants the tax system to achieve, how HMRC should be resourced and how that resource should be applied. The needs of the UK population are diverse, the tax system is complex and technology changes have to be factored into continuing service delivery over the coming years. Once requirements are known, resource levels can be determined. 
By coincidence, Revenue Scotland has recently published its first annual report which notes some key achievements which HMRC might usefully try to replicate. For example, Revenue Scotland reports an average waiting time of ten seconds (yes, ten seconds!) for calls to its support team. And 96% of all written communications were responded to within ten working days. These response figures can only be aspirational for HMRC for the time being, and it will be interesting to see whether Revenue Scotland can maintain this performance record as its responsibilities grow. But they do show what is possible.
We also detect a change in emphasis in HMRC’s approach to the tax gap. In recent years, a high profile has been given to tackling tax avoidance which is estimated to cost the UK around £2.7bn per year. By contrast, tax evasion and the hidden economy are thought to cost the exchequer around £10.6bn per year. Tax avoidance, whether by corporations or wealthy individuals, may be an attractive target for campaigning groups. But HMRC seems to have recognised that deploying existing resources to tackle the continuing seepage of tax through evasion is also important. A spokesman told us ‘we are more determined than ever to deliver an outstanding service to our customers while clamping down on the minority of tax dodgers who try to cheat the system’.
We commend HMRC for aiming high and for genuinely seeking to deliver an improved client service. Enhancing both customer satisfaction and the tax yield at the same time is a tall order. Within 12 to 24 months HMRC’s annual reports should show us all how well they are doing. 
Issue: 1323
Categories: In brief