Give the Taxman His Teeth Back

It does seem as if this Government’s policy of sustained cost-cutting at HMRC (not that their predecessors were very much better) is finally coming home to haunt them. Technology is all very well for certain things but people with decades of experience cannot be replaced overnight without the kind of teething problems that usually require full sets of dentures.

Following a column only a few weeks ago in which it became apparent that the taxman is establishing nearly as high a profile as Mr and Mrs Beckham or that other fine double act Cameron and Clegg, two more depressing stories (plus joyous news for pasty lovers who live in caravans) have appeared in the media recently.

On the face of it, neither of them shows our esteemed tax collecting department up in a good light. However, the problem in both cases is probably nothing whatever to do with the Revenue itself but those that fund it (or rather choose not to).

The House of Commons Public Affairs Committee chaired by former Labour Minister, Margaret Hodge was first into the fray with their report on the efforts of the Department over the last year.

Their most significant conclusion does not make pretty reading. "The Department has estimated that, in shedding more than 3,300 staff, it lost £1.1 billion in potential tax revenue: about £10 in tax lost for every £1 in running costs saved".

This should be seen in the context of an overall strategy that is looking to lose a total of 13,000 staff by the end of the current period of cost-cutting. Assuming a similar rate of tax loss, this will lead to a further £4 billion disappearing down the drain each year.

It might be suggested that this is conservative since the losses might not be linear with so many of the staff cuts expected to come via the retirements of experienced staff.

One feared consequence is that the Revenue's credibility could come into question, leading more taxpayers to become tax evaders.

As this column (and predecessor articles in Taxation Magazine) has identified previously, it is we, the taxpayers of this country, who are paying for this misguided strategy.

The second story, tells us that the average time it takes representatives of our taxing authority to answer telephones is over four minutes. That is only an average, as a letter to the Daily Telegraph on 11 May proves "Incidentally, of the two telephone calls [to HMRC following up an unacknowledged letter] the first took 24 minutes to answer, costing £1.32, and the second 29 minutes".

Some of us get fractious when the fourth or fifth ring is not greeted by a happy, welcoming voice and the average business that allowed its customer services representatives to keep customers waiting for more than a couple of minutes would not have a long-term future (other than in telecommunications where ignoring the phone has often been a speciality).

It wouldn't be quite so bad if you could e-mail the only organisation that still regards fax as a significant tool of communication, though HMRC's justifiable security concerns should not be taken lightly.

Once again, there have to be some customers (sic) that give up the ghost and, rather than asking for a tax return to declare additional liabilities, follow HMRC's precedent and keep their heads down.

Without wishing to get overly technical, it will be interesting to know whether a series of unanswered telephone calls could be regarded by the courts as a reasonable excuse for a failure to complete a tax return or make a tricky but potentially very expensive entry. Probably not but it would be great if an enterprising judge took that view.

The debate about the tax gap is also hotting up. There was an article in the Financial Times on 19 May regarding the suggestion by Richard Murphy that the tax gap is really £120 billion rather than the HMRC figure of £35 billion.

Mark Serwotka of HMRC's staff union the Public and Commercial Services Union entered the fray declaring that: “The tens of thousands of staff in HMRC know that Richard [Murphy] is not overstating the tax gap, and they know that as well as it being an issue of political will, the problem is one of staffing.

“With 10,000 more job cuts planned by 2015, the government stands no chance of tackling this, when even a modest dent in the billions lost to our exchequer would change the debate about public spending overnight.”

Since her name is being blackened by these failures, let’s give Her Majesty a Jubilee present to remember. It is unfair and it might be argued embarrassing for our Queen's name to be associated with an organisation that her own Public Accounts Committee is constantly ridiculing.

Surely it must now be time for Mr Osborne to spend to save. Therefore rather than giving the lady who has everything her 300th toaster or yet more rubber bones for the corgis, how about 20,000 shiny, new but highly experienced Revenue and Customs officers?

At £6 billion of extra revenue a year, they will blossom into a new Royal yacht or fleet of private jets in no time.

Comments
listerramjet's picture

vested interests

listerramjet | | Permalink

the tax gap estimate from a union funded source is hardly reliable.  And a more considered analysis of response times over a longer period will hardly support a suggestion that this is a recent problem.  You would probably find a blip when they merged Tax and Customs. 

Efforts to improve working practices and to cut costs are surely welcome.  If you want to attack then surely a better line is the way in which George is making the system more rather than less complex.  Or perhaps the heavy handed way in which HMRC tends to overstep its brief.

Estimates    1 thanks

andrew.hyde | | Permalink

All estimates of the tax gap are open to challenge. It's just the nature of the beast.

Can we all agree in the meantime that

  1. even a £1 tax gap is too big?
  2. the actual gap is a bit bigger than that?
  3. the way things are going, we taxpayers are never going to get our £1 back (and in case anyone baulks at the phrase 'get our £1 back' don't forget that we are all paying for the tax gap, and that if it disappeared overnight we'd pay a few pennies less)?

Meanwhile I'm off for a celebratory lunchtime cornish pastie. If Her Majesty cares to join me I'll gladly buy her one too.

It works both ways

upson | | Permalink

Of course, HMRC’s cost-cutting may sometimes result in their getting a few ounces more than their pound of flesh, not less. For example, a few months ago they claimed out of the blue that I owed several hundred pounds of tax from many years ago, despite having previously sent several statements showing (correctly, I believe) that I owe them nothing. So far, I have written twice and spent two and a half lifetimes (seemingly) on the phone. I have received apparent acceptance of my case on the phone once and written acceptance once but can I get them to take the amount off my statement? No, not yet. I am thus faced with the choice of spending further hours on the phone during office hours (probably not appreciated by my employer) or on the keyboard, with no assurance of success, or just giving in and paying the amount claimed (with penalties and interest) so that they will go away. Letters take months for them to answer, phone calls typically take about 40 minutes and e-mails are not accepted. By depriving taxpayers of a way of getting answers, they hope we will shut up and pay up. It’s unethical.

nogammonsinanundoubledgame's picture

andrew.hyde wrote ...    1 thanks

nogammonsinanun... | | Permalink

... "can we all agree in the meantime that ... even a £1 tax gap is too big?"

Er.  No.  I, for one cannot agree, and would be absolutely delighted with a tax gap of £1.  or £10. or let's face it with one as trivial as £1bn.

Leaving aside the inherent and unavoidable inaccuracies and inevitable margin of error in measuring the tax gap in the first place, not to mention agreeing on some questionable assumptions regarding what should fall within the definition, if it costs £20m in public expenditure on civil servants to reduce the tax gap by £10m, I would rather live with the lesser evil.

The smaller the gap becomes, so the cost of reducing it further becomes exponentially more expensive.  I shudder to think what the cost would be of eliminating the final £1 from the gap.

With kind regards

Clint Westwood.

 

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