NAO report 'disappoints' tax advisers
Having lit the fuse for September’s media monstering of HMRC over the PAYE reconciliation backlog, the National Audit Office released a report on Wednesday identifying weak support for advisers as a source of lost tax revenue.
The headline conclusions of the NAO’s HMRC: Engaging with Tax Agents report focused on the a higher proportion of under-declared tax among represented tax payers than those who are not represented.
“A 3% reduction in the average amount of tax under-declared by represented taxpayers could lead to over £100m extra revenue each year,” the NAO concluded.
Lack of data on individual tax agents prevents HMRC from giving performance feedback to advisers, and stops it from adopting a more flexible approach to agents with differing levels of competency. “With better use of data, HMRC could make more targeted interventions based on risk and achieve greater value for money,” the NAO said.
CIOT deputy president Anthony Thomas characterised the NAO report as a “missed opportunity” as the institute picked holes in the quoted figures. Despite their tax affairs tending to be more complicated, under-declarations from represented taxpayers made up a much lower proportion of their total tax liability, compared to figures for unrepresented taxpayers, it argued.
The CIOT added that it was “disappointed” the study relied on five-year-old data and its lack of in-depth analysis.
Thomas commented: “We see this as a missed opportunity. It would have been really useful to have had proper analysis of who are making these errors and why. We have been working with HMRC for many years on these issues; it is unfortunate that the report does not reflect this. Nor does it look at HMRC’s own error rate.
“We welcome the acknowledgement in the report that were it not for the work of good agents in ensuring clients get their tax right, the level of under-declarations could be significantly larger. Overall tax agents save the government money both by helping their clients get their tax bills right and by taking on tasks that would otherwise fall to HMRC.”