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What could a new charter do for us? By Rebecca Benneyworth

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22nd Sep 2008
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Rebecca Benneyworth gets chartering: "I believe that the relationship with citizens as taxpayers needs fundamental re-engineering."

At the risk of sounding as if I have completely taken leave of my senses, I have given much thought this summer to the thorny question of a new charter between HMRC and those the authority conducts business with – those commonly referred to by HMRC as “Customers”.

It all started at the Wyman debate – an event held by the Tax Faculty of ICAEW, and this year attended by quite a wide variety of HMRC staff, tax press and members of the Tax Faculty. Francesca Lagerberg spoke most eloquently on the shift of power to HMRC represented by Sch 36 of what is now Finance Act 2008, and of the opposing speakers Simon Norris spoke equally well against the motion “This house believes that powers have shifted too far in favour of the tax authority”.

My own view as an attendee at the debate was that although Sch 36 represents a significant shift in power in favour of the tax authority, that all is not yet lost, and that a new charter between HMRC and taxpayers represents the golden opportunity to tilt the scales back to somewhere around equal. The main concerns of those commenting on this subject (including our esteemed editor) centre on the fact that not every power in the new legislation is met by an equal safeguard. Put simply, there are some new powers that HMRC have to which there is no adequate right of appeal.

The points raised at the debate have rumbled on this summer, and in between writing my detailed commentary on the Finance Act 2008, I have spent much time thinking and talking about what the relationship between the citizen and the tax authority ought to be. Although I have thought mainly about personal taxpayers, that is because my main contact is with individuals – be they my own clients, either in personal tax or as the proprietors of small businesses, or vicariously through the reports and questions from delegates on my courses.

Some readers may shortly decide that I am now suffering from a surfeit of surface water or similar affliction, because I have come to some quite surprising views. I do regard a new charter as an opportunity to “right the wrongs” in Finance Act 2008, but optimistically, I see much more on offer from a new charter.

A new charter presents the opportunity for HMRC to take forward an essential step in developing a better relationship with citizens, as I believe that the relationship with citizens as taxpayers needs fundamental re-engineering. The change in relationship is needed to stimulate wider voluntary compliance with their tax obligations by all citizens, by explaining to them the relationship between the taxes they pay and the services that Government provides. By recognising the benefits that better taxpayers right can bring, those in charge of HMRC now have the opportunity to “go for gold”.

If HMRC can engage with children and young people to change the culture of tax compliance, so that it is not seen as “clever” or “OK” to cheat their tax, and so that young people fully understand what is expected of them as citizens and future taxpayers, then many of the aims of current consultations – and in particular the need to file and pay tax on time – could be met voluntarily. This can only be achieved, I believe, by changing the culture of tax administration so that taxpayers feel that they are treated fairly and with respect. Although many, on an individual level, are not unhappy with the service they receive from HMRC staff, there is a widely held unease about the powers of the “taxman” which if solved would present a sea change in the way our society deals with the necessary evil of funding state expenditure.

If the relationship can be re-engineered to convince citizens that HMRC is performing an essential and valuable role in society by enabling Government to provide essential services, then the role of “the dreaded taxman” can be consigned to history. HMRC needs to be seen as acting on behalf of us all, and aligned with citizens against the dishonest, rather then the other way around. Presently some sections of society see themselves as aligned with the dishonest against HMRC.

A new charter for HMRC therefore presents an unmissable opportunity to appeal to the public by plainly setting out the obligations of all citizens and the basis of the relationship between the taxpayer and the state (here represented by HMRC).

A charter which sets out simple and basic fundamentals of the relationship could then be used as a tool to educate young people (as the taxpayers of the future) and the wider public at large. It would act as a catalyst for the public to appreciate that the authority is serious about changing its image (and perceived role in society) and could set out the highest standards of service in general terms.

I would be cautious about including specific service standards, such as time taken to deal with the post, but a general “mission statement” about the way the authority behaves in relation to the people it deals with would also enable staff working within the authority to be proud to aspire to the service standards expressed in the charter. The charter would then form a key tool in training new staff, explaining to them the relationship between them and the people they deal with on behalf of us all.

Any charter would, in my view, need to be authorised by statute so that it is perceived as “serious”. Anything which appears to be a new fad and easy to dispense with when it becomes inconvenient would not have the authority to engineer the real change that is needed on both sides. There is no need for a charter itself to be embodied in statute – a simple plain statement of the obligations and rights of each person in relation to HMRC would be a much more effective tool for change, but backed up by clear statutory authority and real rights of redress.

A charter could for example include such important rights as:

  • We must treat you with respect
  • We must treat you as honest unless we have specific evidence to the contrary
  • We must use our powers reasonably.

Finally, any new charter would need to be backed up by real rights of redress, and an avenue of appeal that even the lay taxpayer can take up. Appeal to the new “First Tier Tribunal” to me does not seem appropriate for this area, but of course to write a new appeals process and implement it is very likely a pipe dream. The rewards on offer for getting this right are huge, but the effort and will required to achieve it are probably too much to hope for. Sadly, after a summer sojourn in a “perfect world” it is probably time to come back to earth with a bump.

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