In this article I will pick up on some of the excellent points made by Andrew Hubbard in his short piece ‘HMRC Charter … room for improvement’ reported in Tax Journal (3 February 2016).
A charter which sets out the rights and responsibilities of both the tax authority and of taxpayers should be a key feature of any country that aspires to have a tax system which properly respects the rights and obligations of taxpayers (or customers, as they are called by HMRC).
The UK first had a taxpayers’ charter in 1986. It was amended in 1991 to reflect the then government’s keenness for all public administrations to have Charters, setting out what levels of service citizens should expect from any public body and how they should go about complaining if a particular public body failed to provide the appropriate level of service. Charters fell out of favour with the new, Labour, government in 1997. However, following the amalgamation of Inland Revenue and Customs and Excise in 2005 and the change in powers for the merged department over the next few years, the government decided that a new charter should be a quid pro quo for those new powers.
Your Charter, the 2009 version, emerged after some robust consultation in 2008 and 2009. By statute, there is now a requirement for there to be a ‘charter of standards and values’ and for there to be an annual report ‘reviewing the extent to which HMRC have demonstrated the standards of behaviour and values included in the charter’.
Following reassurances given in parliament in 2009, when the statutory provisions were being debated, it was also agreed that there should be a committee, with a majority of non HMRC members, to keep the charter situation under review.
I was chair of that committee for more than three years, when the ‘level of service citizens should expect from [HMRC]’ was very definitely not being met particularly in relation to the time HMRC was taking to answer phone calls and respond to post. There is a limit to what you can hope to achieve from the outside of an organisation. I could only reflect my frustrations in the Forewords that I wrote in the three years’ of annual charter reports published during my period as chair of the Advisory Committee. At the present time, it would appear that things are getting back on track and HMRC gave reassurances to the Treasury Select Committee in the hearing on 8 June 2016 that during the month of May 2016 90% of phone calls were being answered within an average of 5 minutes.
Towards the end of the period to 2015, I carried out a review of the existing arrangements with John Whiting, who amongst all his other responsibilities was a member of the Committee. In addition to suggesting some rewording of Your Charter, we recommended that the Committee should have greater prominence within HMRC. It has now become the fourth formal sub-committee of the HMRC Board, and all these recommendations that John and I made were accepted by the Board in July last year.
I am sorry that the review that John Whiting and I undertook last year was not as transparent as some would undoubtedly have liked but I firmly believe that we came out with a proposition that, if it is followed by HMRC, will make a real difference to the way in which the UK tax system is experienced by its ‘customers’ in the future.
I think the wording in the latest version of Your Charter is not significantly different to the 2009 version. I would be more than happy to provide any readers with copies of the two versions so that they can make their own judgement on that.
Another point which Andrew Hubbard, the author of your February piece, made was in relation to HMRC’s commitment to treat all taxpayers as honest, ‘unless we have good reason to think otherwise’ as per the 2015 version. This is not too far distant from the 1986 version: ‘You will be presumed to have dealt with your tax affairs honestly, unless there is reason to believe otherwise.’
Andrew noted that taxpayers who find themselves at the start of an HMRC Inquiry will often feel that they are being treated as guilty and be required to prove their innocence. I think the concern goes a bit wider than just Inquiries as in the 2005 Annual Charter Report the statistics that were quoted showed that 61% of taxpayers thought HMRC treated them as honest which means that nearly 40% thought HMRC did not.
It seems clear to me that when HMRC is putting more of its resources into ‘Enforcement and Compliance’ and into tackling ‘those who bend or break the rules’ interactions with HMRC may feel uncomfortable. This was certainly a point that Robert Maas made very forcibly when he gave the ICAEW Hardman lecture 'How should agents work with HMRC?' last November. Robert noted that the relations between high street accountants and HMRC have deteriorated and there is a lack of trust on both sides.
My personal view is that HMRC needs to recognise that tax systems can only work efficiently, and effectively, when the taxpayer and the tax agent are provided with the wherewithal to hold the tax administration to account. That will be a necessary feature if the system is to work as it should. There does also need to be robust policing of the system to make sure that taxpayers cannot exploit the system to their own personal advantage and sometimes there will inevitably be a delicate balance to be struck between what can be contradictory objectives.
I am advising the HMRC Your Charter Committee during the current year to try to help to make Your Charter work to the benefit of the taxpayer/customer and, also, of HMRC itself.
At a time when the tax system is going through a fundamental change, particularly in the move towards digitalisation, it is even more important than ever that the genuine interests of all the major protagonists are respected and upheld; and that there is appropriate redress when that is not the case.
Your Charter can help to underpin the integrity of the system and my perception is that HMRC is now, at last, keen for it to do so.
The devil, as always, lies in the detail. In this case, it will be how HMRC lives up to the implicit promise it has made by making Your Charter so central to its delivery of a well functioning tax system.
If any of your readers have instances where they feel that HMRC has failed to live up to its part of the Your Charter bargain, then I urge them to get in touch with me, with the relevant (anonymised) details. I will try to ensure that such information informs the way HMRC seeks to make the system function better in the future.
In this article I will pick up on some of the excellent points made by Andrew Hubbard in his short piece ‘HMRC Charter … room for improvement’ reported in Tax Journal (3 February 2016).
A charter which sets out the rights and responsibilities of both the tax authority and of taxpayers should be a key feature of any country that aspires to have a tax system which properly respects the rights and obligations of taxpayers (or customers, as they are called by HMRC).
The UK first had a taxpayers’ charter in 1986. It was amended in 1991 to reflect the then government’s keenness for all public administrations to have Charters, setting out what levels of service citizens should expect from any public body and how they should go about complaining if a particular public body failed to provide the appropriate level of service. Charters fell out of favour with the new, Labour, government in 1997. However, following the amalgamation of Inland Revenue and Customs and Excise in 2005 and the change in powers for the merged department over the next few years, the government decided that a new charter should be a quid pro quo for those new powers.
Your Charter, the 2009 version, emerged after some robust consultation in 2008 and 2009. By statute, there is now a requirement for there to be a ‘charter of standards and values’ and for there to be an annual report ‘reviewing the extent to which HMRC have demonstrated the standards of behaviour and values included in the charter’.
Following reassurances given in parliament in 2009, when the statutory provisions were being debated, it was also agreed that there should be a committee, with a majority of non HMRC members, to keep the charter situation under review.
I was chair of that committee for more than three years, when the ‘level of service citizens should expect from [HMRC]’ was very definitely not being met particularly in relation to the time HMRC was taking to answer phone calls and respond to post. There is a limit to what you can hope to achieve from the outside of an organisation. I could only reflect my frustrations in the Forewords that I wrote in the three years’ of annual charter reports published during my period as chair of the Advisory Committee. At the present time, it would appear that things are getting back on track and HMRC gave reassurances to the Treasury Select Committee in the hearing on 8 June 2016 that during the month of May 2016 90% of phone calls were being answered within an average of 5 minutes.
Towards the end of the period to 2015, I carried out a review of the existing arrangements with John Whiting, who amongst all his other responsibilities was a member of the Committee. In addition to suggesting some rewording of Your Charter, we recommended that the Committee should have greater prominence within HMRC. It has now become the fourth formal sub-committee of the HMRC Board, and all these recommendations that John and I made were accepted by the Board in July last year.
I am sorry that the review that John Whiting and I undertook last year was not as transparent as some would undoubtedly have liked but I firmly believe that we came out with a proposition that, if it is followed by HMRC, will make a real difference to the way in which the UK tax system is experienced by its ‘customers’ in the future.
I think the wording in the latest version of Your Charter is not significantly different to the 2009 version. I would be more than happy to provide any readers with copies of the two versions so that they can make their own judgement on that.
Another point which Andrew Hubbard, the author of your February piece, made was in relation to HMRC’s commitment to treat all taxpayers as honest, ‘unless we have good reason to think otherwise’ as per the 2015 version. This is not too far distant from the 1986 version: ‘You will be presumed to have dealt with your tax affairs honestly, unless there is reason to believe otherwise.’
Andrew noted that taxpayers who find themselves at the start of an HMRC Inquiry will often feel that they are being treated as guilty and be required to prove their innocence. I think the concern goes a bit wider than just Inquiries as in the 2005 Annual Charter Report the statistics that were quoted showed that 61% of taxpayers thought HMRC treated them as honest which means that nearly 40% thought HMRC did not.
It seems clear to me that when HMRC is putting more of its resources into ‘Enforcement and Compliance’ and into tackling ‘those who bend or break the rules’ interactions with HMRC may feel uncomfortable. This was certainly a point that Robert Maas made very forcibly when he gave the ICAEW Hardman lecture 'How should agents work with HMRC?' last November. Robert noted that the relations between high street accountants and HMRC have deteriorated and there is a lack of trust on both sides.
My personal view is that HMRC needs to recognise that tax systems can only work efficiently, and effectively, when the taxpayer and the tax agent are provided with the wherewithal to hold the tax administration to account. That will be a necessary feature if the system is to work as it should. There does also need to be robust policing of the system to make sure that taxpayers cannot exploit the system to their own personal advantage and sometimes there will inevitably be a delicate balance to be struck between what can be contradictory objectives.
I am advising the HMRC Your Charter Committee during the current year to try to help to make Your Charter work to the benefit of the taxpayer/customer and, also, of HMRC itself.
At a time when the tax system is going through a fundamental change, particularly in the move towards digitalisation, it is even more important than ever that the genuine interests of all the major protagonists are respected and upheld; and that there is appropriate redress when that is not the case.
Your Charter can help to underpin the integrity of the system and my perception is that HMRC is now, at last, keen for it to do so.
The devil, as always, lies in the detail. In this case, it will be how HMRC lives up to the implicit promise it has made by making Your Charter so central to its delivery of a well functioning tax system.
If any of your readers have instances where they feel that HMRC has failed to live up to its part of the Your Charter bargain, then I urge them to get in touch with me, with the relevant (anonymised) details. I will try to ensure that such information informs the way HMRC seeks to make the system function better in the future.
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