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image of handwritten sale sign | accountingweb | is it time to sell off HMRC?
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Has the time come to privatise HMRC?

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Since HMRC misses every performance target by a mile, Philip Fisher wonders if it’s time for a radical solution. Should we add the tax authority to the list of things to sell off?

6th Jun 2024
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Selling off HMRC might sound like a radical suggestion but we have reached the point where it’s hard to imagine how its performance could get any worse.

Sometimes it is necessary to do a sanity check. When the average time for a telephone to be answered is 23 minutes, while one-third of calls don’t even get through, there is a serious problem.

Some of us remember the days when a phone might be engaged but, typically it was answered in seconds by a human being rather than a recording sending you into a doom loop. Inspectors of Taxes were also good at answering letters and it was even possible to roll up at a tax office and meet somebody who would understand your issue and assist.

The Great British sell-off

All of that has been swept aside in an effort to cut costs to the bone, then cut them further, attempting to computerise everything in sight but quite often getting it pretty seriously wrong.

I’m not a big follower of the Making Tax Digital saga but that appeared to go off the rails years ago and may not open fully before HS2 eventually connects Birmingham with a London suburb.

We now live in a brave new world where Royal Mail can be sold off to a Czech billionaire, our main newspapers have long been owned by an Australian, a Russian and Canadians, and our football league might soon be shipped off to the Gulf, given that that’s where most of the owners seem to live.

Even more UK businesses are currently being snapped up by overseas financiers and, with the single inexplicable exception of the Daily Telegraph, the government seems unconcerned at the loss of the metaphorical crown jewels. Given that Royal Mail is about to be sold off, perhaps they will be trucked in as part of the deal?

Highest bidder

In this light, it might make sense for HM Government to sell off HMRC to the highest bidder. This could bring in a hefty capital sum and might sensibly be connected to an earnout or perhaps by holding 25% back so that we can collectively share in the profits.

Imagine what an efficient entrepreneurial group could do with this business. There might be two different routes.

The first and simplest would effectively be to outsource the business including people, IT and buildings, but allow the Treasury to continue to hold the reins when it comes to tax setting and policy.

You have to believe that a properly incentivised private company would be able to work wonders with our tax collection system, bringing in far more revenue and making good use of the legendary multiplier, which claims that for every additional pound of expenditure and high-quality investigative staff, you can bring in at least 18 times the amount expended and, if invested shrewdly, that should be as high as 30.

This would be perfectly feasible and could be implemented relatively quickly by an incoming government.

The more exciting approach would be to sell off the whole package to an Arab prince or the Chinese government. In this scenario, the purchaser would have the right to set taxes as well as collect them, but would be obliged to meet appropriate performance standards, such as answering the phone within two minutes.

Never mind the security

Given its current lack of interest in our taxing authority, the government might well not be fussed about any threat to security or the economy, although a more cautious approach could include parameters within which taxes, thresholds and so on must be set, along with the need for Parliamentary approval should the purchasers wish to invent a few new taxes to boost their top line.

The good news for UK plc would be that, in addition to bringing in many billions of pounds from a purchaser, this approach would completely de-risk the tax system the nation.

This might all sound completely ludicrous but when you compare it to the status quo and given the parlous state of the country’s finances, perhaps Jeremy Hunt or Rachel Reeves might read this article and get tempted?

Replies (19)

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By Open all hours
06th Jun 2024 14:01

If HMRC had proper respect for and trust in agents many of their problems would be privatised by default. We are here, ready, willing and capable. Just let us have the access which clients expect us to have, restore the agentline to what it once was and who knows the circus could then be sold on for real money?

Thanks (11)
Replying to Open all hours:
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By johnjenkins
10th Jun 2024 09:25

Bring back "Agent Strategy".

Thanks (1)
Rob Swan
By Rob Swan
06th Jun 2024 14:04

"You can't be SERIOUS!"

Thought it was April 1st for a moment there. I checked - it isn't, at least not where I am.

Private Equity. Post Office. Utility companies......
Privatised HMRC: "We collected X in taxes, our costs went up to Y because [lame excuse]. And here's [X - Y] tiny_amount for gov.uk."

Just click-baity IMHO :(

Thanks (5)
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By JustAnotherUser
06th Jun 2024 15:14

just hold them to account, if HMRC was a FTSE 100 Jim would have been booted out by the board years ago.

Thanks (4)
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By philaccountant
06th Jun 2024 15:43

Just checked the date and it's not 1st of April.

Privitisation has utterly failed this country. Fund public services properly and they will flourish. Also scrap MTD.

Thanks (9)
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By lsoph25
06th Jun 2024 15:44

No. Fund it properly.

Thanks (5)
Tornado
By Tornado
06th Jun 2024 15:58

I think the problem really lies with the Government and its lack of control over the Civil Service.

It might be better to Privatise the Government ................. and the Civil Service!

Thanks (2)
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By mbee1
07th Jun 2024 08:11

Rather than privatise bring in the people who know what they're doing - us. When I joined the former Inland Revenue in the late 70's, the training was second to none at regional training centres with trainers that knew what they were talking about. Now it's few hours desk based sat in front of a computer and, hey presto, they know all about tax.

Ask agents what we want from the system. How do we want it to work because, let's face it, we know a lot more than most HMRC staff. Get rid of most of the career Civil Servants in there starting with JH and bring in the people in the know.

Thanks (10)
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By 2TunTed
07th Jun 2024 09:44

A long time ago, HMRC was told to bring in commercial expertise to help make tax collection more efficient and tax effective. The most tangible result of this attempt at culture change was taxpayers becoming 'Customers'. A more subtle consequence was the abandonment of the principle that ALL taxpayers should pay the right amount of tax, not a penny more and not a penny less for 'Pick the low hanging fruit', which is what business does best, and the UK tax system now works on a cost/benefit system. So far so bad.
This is click bait- but I have no doubt that some twerp in the treasury has suggested it, probably the same person who suggested using debt collection agencies.

Thanks (1)
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By jon watkin
07th Jun 2024 10:03

It's June, April 1st has long since gone. Or has this been suggested by the same SPAD who thought outsourcing PIPs and JSA assessments, or Probation would be a good idea? How did that go? Although it may well be like the curate's egg, at least HMRC is accountable still, of sorts. Is there any HMRC estate left that hasn't already been sold on sale and leaseback.?

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By JD
07th Jun 2024 10:08

Interesting idea - When it is privatised, would that mean that the next labour government (most likely outcome, whichever side of the fence one sits) will introduce VAT on any charges that HMRC will be charging taxpayers for using its services.

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By Retrocanary
07th Jun 2024 12:52

Good heavens, no. It's bad enough they call us all "customers" already. And how would there be commercial competition here exactly?

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Replying to Retrocanary:
Rob Swan
By Rob Swan
07th Jun 2024 14:35

The Treasury's magic number: 3!! We'd have a choce of three, or.... NOT!!! Either wall, all terrible ;)

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By Tom+Cross
07th Jun 2024 16:06

Privatisation is not the answer. Never will be, and must never be considered.
Simple thoughts, flirt through the mind, as an argument against such considerations, national security being one of the initial concerns. Imagine the reaction, from the Russian and Chinese influencers.
HMRC, akin to the other Government agencies, run by the civil service, who unfailingly believe that they have carte blanche, to run Whitehall, exactly as they see fit. Possibly the best sickness policy in the UK, with a gold plated pension - which the taxpayer has largely funded - at the end of the trip. I'm guessing 30 years maximum, with the opportunity to return to the workplace, on a part time basis.
Can you imagine turkeys voting for Christmas? The very idea that the civil service would permit privatisation of any of their working arenas, is simply laughable.

Thanks (4)
Replying to Tom+Cross:
Rob Swan
By Rob Swan
08th Jun 2024 07:34

I agree with Tom+Cross but would add....
As politicians have done, some civil servants will be eyeing up lucrative private sector jobs as the Civil Service is becoming less pleasant as a workplace and as more government roles are dished out to the private sector. A senior civil servant with good connections is worth far more in the private sector than to the Civil Service. Money talks. The 'good old days' are long gone and not about to return.

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VAT
By Jason Croke
09th Jun 2024 11:32

HMRC are not accountable, they are independent and in reality only the PAC (Public Accounts Committee) can hold a candle to HMRC's feet, but with no ability to sanction or sack staff, the PAC is just a circus side show, and Harra knows this.

HMRC doesn't need privatising, it needs funding and above all else, trained staff who respect the tax laws and respect the taxpayer (both currently lacking).

As others have posted, the smarter move would be to let the tax agents deal with all the low level stuff like basic compliance and HMRC can focus on the big fraudulent type stuff, but HMRC clearly do not like agents, despise agents and would rather agents did not exist (evidenced by the lack of facilities for agents, not being able to do half the stuff we used to do before government gateways changes and this continued idea that agents must be qualified whilst HMRC struggle to spell HMRC.

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By CMPACDGDB
10th Jun 2024 11:00

This was tried in France and the amount recived by the state was 46% of tax collected....

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By leekris
10th Jun 2024 11:42

This is similar to the medieval practice where monarchs would ‘farm’ out taxes and excise. A wealthy individual would agree to pay a fixed fee, usually up front, at which point the monarch/state had no further concern, other than to spend the money. The farmer then endeavoured to make a profit by employing agents to collect it by whatever means, with minimal supervision.

Sometimes this was done as a gift to a favourite which had the side-effect of making them beholden to the monarch. Essex’s reckless rebellion against Elizabeth I was in part because after he had become an overmighty subject, the Queen refused to renew his entitlement to the tariff on the import of sweet wines. He could no longer maintain his level of desired expenditure, which even with the tariff had resulted in substantial debts.

Shakespeare, developing his source material, contends that much of Richard II’s political problems arose from his ‘liberal largesse’ which inforced him to farm out his realm. I doubt that a modern entity would employ any more delicacy than a situation where ‘The Earl of Wiltshire has the realm in farm’ (Richard II 2.1.256)

One can think of modern parallels if today’s state privatised or franchised tax collection.

Having distracted you with all this, can I ask what HMRC phone number I can use to have a 50% chance of being answered in just 23 minutes ?

Thanks (1)
Replying to leekris:
Rob Swan
By Rob Swan
10th Jun 2024 14:56

I believe the number you require is available online at www.lucky-dip.gov.uk

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