Gabelle Tax Analysis: Restoring Trust

Anthony Thomas, the immediate past president of the CIOT continues to have concern about the lack of trust between HMRC, tax practitioners and citizens. During his time as CIOT president he has been campaigning for the restoration of trust: that is trust between HMRC, the professions and taxpayers. There is a concern that HMRC have not been wholly beyond reproach in their pursuit to maximise tax revenues. Headlines in the press which include “HMRC tells school children: Tell your teacher if a neighbour is evading tax” and “whistle-blowers on tax evasion paid £1m.” Practitioners in smaller firms have been concerned about a perceived 'close' relationship between HMRC and parts of the profession. They worry that larger firms have been able to negotiate "better deals" with HMRC for their clients and examples reported include Goldman Sachs and Vodafone.

Dealing with HMRC is a large part of every tax practitioner's job. So what are the main issues in developing trust between HMRC and the tax practitioner and how does this affect you? Priya speaks with Anthony Thomas to find out.

PD: You famously said that ‘the relationship between HMRC and members has never been worse’ and ‘we as an Institute must attempt to get relationships back on an even keel’ in your opening comments as president of the CIOT back in May 2011. Following your efforts how far have we come since then?

AT: HMRC have been properly challenged during my year as CIOT president. HMRC seemed to have listened to what I have been saying and are trying very hard to win back and restore trust which is critical. Following new appointments to the top team at HMRC including a new Chief Executive Lin Homer, I am confident that the new team understands the key issues and is keen to engage with tax practitioners. Lin Homer will prove to be an outstanding CEO at HMRC.

PD: What gaps still exist in that trust relationship?

AT: HMRC despite all the bad press from time to time are actually doing a good job. Like most things in life there is always room for improvement. A change of culture is needed in relationships and clearly that can be a long process but the initial signs are promising.

It is though absolutely essential that HMRC are perceived as fair and seen to be doing the right thing.

Doing the right thing includes:

  • Being upfront about HMRC's failings.
  • Being ready to speak out when unacceptable proposals are put forward by HMRC/HMT.
  • Voice concern at the highest level that HMRC must be properly funded in order to recruit and retain highly trained staff.
  • Recognising that the tax profession and HMRC are not always going to agree on everything.
  • Have an open and honest relationship based on integrity.

PD: What should the tax practitioner be doing to restore that trust?

AT: Tax practitioners are powerless to do anything other than voice concern to their professional institutes in the hope of something happening. There is far too much tax legislation as evidenced by this year’s Finance Act and the legislation is just too complicated. I suspect there needs to be a Commission set up to look at the whole of the tax system in order to simplify tax legislation. This would be a huge undertaking which could likely take at least four years to complete. The OTS are doing a good job but only “tinkering” at the edges. That is not their fault as the OTS relies on HMRC funding which as we all know is somewhat lacking.

PD: What advice would you offer our tax practitioners?

AT: Tax practitioners should not allow themselves to be bullied by HMRC. Many smaller tax advisers are threatened by HMRC and this sometimes results in practitioners providing more information to HMRC than they are legally obliged to provide. Care should be taken by advisers as the provision of too much information may at some stage be challenged by their clients leading to potential legal action for negligence.

PD: What is your key message to our tax practitioners?

AT: Protect your client, stand up to HMRC and defend your corner! You have a responsibility to your client and we should never forget this important fact.

Priya Dutta is a Senior Tax Consultant at Gabelle LLP. She can be contacted at priya.dutta@gabelletax.com or via TaxDesk on 0845 4900 509.