MPs criticise 'smug' HMRC over debt recovery plans

HMRC directors are complacent, smug and are proposing powers that go against the principle of the Magna Carta, MPs claimed. Senior managers were due back for another grilling at the PAC on Wednesday 16 July.

The criticisms were made by the Treasury Committee when they questioned HMRC leaders including Lin Homer, chief executive and Ruth Owen, director general of tax on Tuesday 8 July.

During the session, which lasted for more than three hours, HMRC faced some tough questioning, particularly about the quality of its phone service.

George Mudie, a Labour MP, said Homer was being "complacent and smug" about HMRC not answering one in five calls to its call centres.

He said: "One in five calls unanswered… that’s old people and worried people who are trying to get through. And every year you dismiss it. When the hell are you going to get to the 93[%] industry standard. And if you don’t get to [this target when are you going to] put some resignations on the table?”

Homer denied that HMRC was complacent about not answering calls (a common complaint among accountants including Accounting WEB columnist Philip Fisher) and said it was improving its phone service.

MPs also raised concerns about HMRC's proposal to allow it to take money owed to HMRC direct from their bank accounts.

John Thurso, a Liberal Democrat MP, said the proposal to take tax debts from the bank accounts of an estimated 17,000 people went against the principle of the Magna Carta, a document in 1215, which aimed to protect citizens' rights from the king

Homer defended HMRC's proposal, arguing that it was a fair and efficient way to collect tax owed. 

"[There are] around 17,000 people who don’t dispute the the fact that tax is due, they just don’t pay and we will have written to them and engage with them and they just fold their arms and wait for us to to take other action," Homer said.  

The cost in time and money of going to court will often outweigh or seriously diminish the tax collected, she said.

Tax authorities in other countries including the US and France have similar powers for collecting debts from bank accounts to those proposed by HMRC, she said.

MPs also asked how low morale at HMRC is affecting workers' performance and recruitment.

Homer admitted that worker morale was low but said that its workers' performance within Whitehall was "second to none".

One problem has been that there has not been "a lot of love" for for the "overall organism", of HMRC which created in 2005 by the merger between Inland Revenue and Customs & Excise, Homer said.

Homer was confident and unruffled when answering the committee's questions.

She may face a tougher time on Wednesday (16 July) when she appears before Margaret Hodge's Public Accounts Committee.

Comments
ShirleyM's picture

Why?    5 thanks

ShirleyM | | Permalink

The cost in time and money of going to court will often outweigh or seriously diminish the tax collected, she said.

So why isn't the individual (late paying) taxpayer paying the court costs? I always thought this was a risk of paying late, plus paying bailiffs costs, etc.

We all want to see that tax due is actually collected, but helping yourself to someones bank account is not advisable unless there are some very stringent rules and guidelines (eg. those imposed by the courts) ... and they are adhered to and enforced.

stratty's picture

Deja Vu    7 thanks

stratty | | Permalink

There is a distinct lack of trust with HMRC at the best of times.  Until taxpayers have confidence in the tax authorities to do a good job this kind of legislation is a really bad idea.

Old Greying Accountant's picture

The point is ...    12 thanks

Old Greying Acc... | | Permalink

... HMRC are not a preferential creditor and these measures would give them undue preference over other equallyranked creditors!

taxhound's picture

I don't understand....    15 thanks

taxhound | | Permalink

If the MPs are all so against HMRC having these powers, then surely they don't have to pass the law?  I thought it was the Government that make laws in this country, not HMRC.

surely a joke?    3 thanks

Kazmc | | Permalink

"...and said it was improving its phone service"

She was joking??

 

touchy feely    2 thanks

barry dovey | | Permalink

when was the last time HMRC allowed that advert with "Howard" to be aired, showing a touchy feely attitude towards "tax doesn't have to be taxing". We all knew that the old customs and excise guerrilla tactics and attitude to taxpayers would eventually quash the "Howard" attitude, and so we should not be surprised they intend to just take from taxpayers bank accounts. emigration anyone?

B.R.'s picture

Short termism.    1 thanks

B.R. | | Permalink

Homer and Owen will be gone in a year or so, and new faces will tell new stories to questions targeted - plus ca change!

.    2 thanks

MattG | | Permalink

Kazmc wrote:

"...and said it was improving its phone service"

She was joking??

 

 

Well they are starting from a low base!

 

It reminds me of the start of my second year at university, where the head of undergraduate studies mentioned that a number of us had put ourselves in a very strong position to go for the "biggest improver" award, based on our year one results...

That said recent announcements show that accurately measuring a baseline figure is not a strong point for HMRC.

Hitting bank accounts direct    8 thanks

ashbury | | Permalink

This must be resisted as it will be abused just as it is here in France. I recently had the experience of the French tax man dipping into my bank account without consultation or warning of any kind after he said that I'd failed to respond to previous demands - demands that he'd sent to an address that I've had no connection with for over 2 years. Resolved, but only after he'd grabbed the cash that he thought he was entitled to, to my personal detriment and inconvenience. HMRC's track record to date doesn't inspire confidence that they could be trusted to behave in anything but a bullying and intimidatory manner if they were gifted a similar right.

Above the law    1 thanks

kenatnam | | Permalink

I always get the impression that the mandarins at HMRC think that they are above the law, so it is no wonder Homer was unruffled.

I do hope to catch a glimpse of Homer squirming in front of Margaret Hodge though. It will not make up for the countless hours on the phone, the worry of RTI or the idiocy of the way HMRC does things, but it may bring a fleeting smile.....

Like the Terminator, won't stop and cannot be reasoned with    5 thanks

JSL930 | | Permalink

I was declared bankrupt by these people because I couldn't raise the funds to pay what I owed them because I was in the middle of a divorce and my husband had slapped a home rights order on my property which prevented me from selling it or borrowing against the large amount of equity that is in the property. I have been self employed for 30 years so I am not entitled to any benefits. To cut an extremely long story short I eventually became a victim of the worst housing market for years, and now am in a position where I have had to involve my local MP who wrote to the Revenue to ask them to review my file.  I am selling a house for £400,000 with IVA debt of under £250,000 but the Revenue insist on interest at 8.5% per year.  Other creditors have been canvassed by my IVA supervisors to vary the IVA and drop the interest requirement and guess who was the only one who insisted it stayed?  The end result is that there are 4 adults who are now going to be homeless thanks to HMRC and their totally unreasonable attitude. Even my IVA supervisor said 'this isn't a position I wanted to see you in'.  I have cooperated fully with everyone, the HMRC debt accrued due to a rogue employee who carpet slid my business out from under me taking advantage of the fact I was busy trying to sort out my divorce. I have always paid everything my whole working life, never even had a speeding ticket.  HMRC have agreed I can have £5000 from the sale proceeds, so on the day we move out of here I have to find somewhere to rent, pay the deposit and bond and move all in an afternoon. HMRC are totally unreasonable, they will not listen to anyone or take into account any other circumstances. As they pointed out in writing 'we are not a commercial organisation', no, they most certainly are not. They are totally cold, heartless and greedy. 

Bit Confused    5 thanks

Mehmet | | Permalink

HMRC phone service on a scale of 1-10 is 0.5. Its bad. Lin Homer saying that its improving shows that she does have a funny side to her.

In regards to the Lib Dem MP and his criticsm of HMRC havin powers taking money from peoples bank accounts which go against Magna Carta (which is a fair point), he is asking the question to the wrong person. The MP should be asking Chancellor Gideon and his advisers the question on HMRC powers on bank accounts as HE is the one proposing it even if HMRC recommended it.

 

I Wish!    2 thanks

Michael C Feltham | | Permalink

taxhound wrote:

If the MPs are all so against HMRC having these powers, then surely they don't have to pass the law?  I thought it was the Government that make laws in this country, not HMRC.

 

All that is required is a Statutory Instrument adding a further clause to the latest Finance Act which follows the budget.

The SIs are simply notices posted in the lobby which a majority of MPs do not ever bother to actually bloody read!

No indeed; far too busy fiddling their obscene expenses claims and engaged in extra curricular fee earning activities............

 

nigel's picture

Have the lunatics taken over the asylum?    4 thanks

nigel | | Permalink

I would echo Taxhound's comment - when I read "MPs also raised concerns about HMRC's proposal to allow it to take money owed to HMRC direct from their bank accounts" it makes me want to run for the hills - somewhere outside the UK, that is. Don't these MPs realise that THEY make tax laws, not HMRC? Just who is in charge here? In radio and TV interviews HMRC staff wouldn't answer this type of question, saying that it's for Parliament to decide - interesting that they take a different approach when behind the doors of Parliament!

 

 

Future Implications    5 thanks

Matthew Robert ... | | Permalink

It may start with a core 17,000 people who 'refuse' to pay their tax however I believe the longer term implications are far more serious. Time and time again we have seen legislation introduced initially to only effect a 'small number of people' only for this to be rolled out and introduced as standard practice for everyone a few years later.

Advice:    5 thanks

Michael C Feltham | | Permalink

Bank offshore in another jurisdiction.

No way HMRC can attack this easily. Hold a UK current account and transfer only necessary monthly amount to cover outgoings.

What government and HMRC are doing in clumsily trying to combat tax avoidance, is actually going to increase it!

As always the law of unintended consequences proves correct one again.

And this is because idiots like Osborne and the Treasury Mandarins and the top honchos at HMRC have never ever actually had to create capital themselves by their own sweat, risk and graft.

One day, when it is all too late they might realise how essential SMEs were to the UK economy; that they generate circa 48% of total private sector (or real!!) GDP and around 50% of employment.

 

Madness    2 thanks

Marlinman | | Permalink

Giving HMRC the power to raid bank accounts will see a lot of money disappearing offshore or held in cash and could see collapse of the UK banking system.

HMRC are..    4 thanks

jamiea4f | | Permalink

A law unto themselves.  Having met some of the upper echelons in person I can confirm that they are on the verge of disappearing up their own backsides, such is their belief in their importance to the taxpayer, the country and most of all themselves.

Preferential debt    2 thanks

sherodwilliams | | Permalink

HMRC never quite got over the loss of preference which from memory goes back to the Enterprise Act.

It would be interesting to know how HMRC will react once Administrators & Liquidators start to ask for repayment of any monies taken in this proposed way.

Old Greying Accountant's picture

This thread makes me want to say ...

Old Greying Acc... | | Permalink

... Doh!

Vote Loser    1 thanks

Marlinman | | Permalink

With a general election next year,this is a sure-fire vote loser. God help us all if Labour ever get elected again.

"Magna Carta - did she die in vain..?"    3 thanks

Bagel | | Permalink

Thanks to Tony Hancock.

 

Nick Graves's picture

To the workhouse with you!    2 thanks

Nick Graves | | Permalink

Old Greying Accountant wrote:

... HMRC are not a preferential creditor and these measures would give them undue preference over other equally ranked creditors!

Exactly - and how many people really refuse to pay, but simply cannot?

As with the case of the unfortunate lady above, are they going to open workhouses for the people they dispossess?

Civil rights really are being returned to the days of the robber barons.

 

 

 

Phone 'service' who are they kidding    1 thanks

RobHartshorn | | Permalink

So having spent several hours (on their phone 'service' trying to find out what happened about a company CT return that I had a submission receipt for but had never been logged I was asked to send an email. I asked when I could expect a response...couldn't even get an indication. After chasing I got a vm message...hooray. Tried to call back...another endless wair and no reply. Emailed again and got an email response that said...

'With respect to your call on 27/06/2014, we are pleased to advise the issue you identified has now been resolved and the case closed. If you continue to have problems with this particular issue please telephone the helpdesk on the number below and the case can be re-opened if you call within 7 days.' and 'Please do not respond to this email as this "noreply" mail box is not monitored.'

 

 

I have no idea 'how' it has been resolved. I am being chased for late filing penalties by Companies House for not having filed my return on time despite it having been done as a 'joint submission' I made this clear to HMRC but they just respond with 'it's not our resposnibility so you need to speak to CH....pillars and posts galore!!

 

So I'm looking forward to another few hours on the phone to try and find out what the hell has happened and I have no great confidence I'll get to speak to them within the next 7 days so will probably have to start all over....geez how do these lot get through the day!!

Respond to the "consultation"    2 thanks

mbuffery | | Permalink

There is a so called "consultation" on these proposed powers and in particular the non-existent safeguards proposed.  Deadline tail end of July.  I will be responding, with numerous no name examples of why this does not work.  While this may be a sham of a consultation, if most agents were to respond, and explain why this is simply unacceptable, the sheer volume of comments will either force them to drop it, or demonstrate that as agents we should cease all co-operation with HMRC moving forwards. 

 

carnmores's picture

the civil service    4 thanks

carnmores | | Permalink

now theres a misnomer. Homer is overpromoted institutionalised and pretty useless. Thank God they have got rid of Kerslake another over paid over promoted civil servant . oh yes and he got a knighthood

Do they want me to keep all my funds in Bitcoin?

Mekabear | | Permalink

I'm slightly joking, as they are still high risk, but its things like this that could tempt people to move away from our current financial systems.  

However one thing is true, they couldn't get at my money if it was.

A further point

pauljohnston | | Permalink

may be that more " business" will not be declared effectively back to the two books senario one for the Taxman and one real.

Surely any person at the point that they wont pay the tax, rather than cant pay. Will move assets and cash offshore.  I suspect that the amount that HMRC hopes to recover will be somewhat less than it has estimated

 

HMRC

AndrewV12 | | Permalink

With HMRC overall I think its better the devil you know, they could be worse a lot worse.