Inefficiencies ‘undermining respect’ for tax system

In a damning report into the inefficiencies of Her Majesty’s Revenue and Customs (HMRC), the Treasury Select Committee says that pressure of work and cuts in resources are resulting in “serious concerns”.

The difficulty in contacting HMRC by phone in peak periods, endemic delays in responding to post and an increasing focus on the use of online communication are leading to “considerable dissatisfaction” among the public and tax professionals about the service provided by the department, says the report.

“There is a serious risk that if communicating with HMRC becomes too time-consuming, difficult and expensive, respect for the tax system, and with it voluntary compliance, may be undermined,” it warns.

“There is a serious risk that if communicating with HMRC becomes too time-consuming, difficult and expensive, respect for the tax system, and with it voluntary compliance, may be undermined.” Treasury Select Committee report

The committee, chaired by the Conservative MP Andrew Tyrie, says dissatisfaction with the tax service has been building over a number of years and stresses the importance of meeting targets to clear up open cases and improve performance.

It accepts that HMRC operates under “significant pressures”, partly because of the Government’s spending cuts.

“It has to implement increasingly complex tax legislation, sometimes developed without full account of the practical consequences, whilst undergoing restructuring, delivering substantial resource reductions and job cuts,” adds the report.

“Whilst genuine efficiencies have and will continue to be made, we are concerned that performance may deteriorate further if resource reductions are badly managed: we received disturbing evidence of job cuts being made before the efficiencies that were intended to enable them had been delivered, and of a culture of command and control that disengages staff and prevents potential problems from being dealt with effectively.”

The committee says staff remain dedicated to their work, but have little confidence in the leadership of the department or that change will be for the better.

It recommends improving contact centres and providing alternatives to existing 0845 numbers; it says the department should find more cost-effective ways of providing face-to-face advice, rather than relying on online services; and that any reduction in resources should be managed so as to minimise any loss of tax expertise from the department.

The report also suggests that senior staff should spend time with tax practices, charities and businesses to become more aware of the practical effects of their decisions.