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ICAEW slams HMRC service levels | accountingweb
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ICAEW slams HMRC’s poor performance

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The ICAEW has called for a task force to remedy HMRC’s failures. But its proposals might be too little, too late.

16th Feb 2023
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Spurred on by the often trenchant and sometimes quite frankly insulting views of AccountingWEB subscribers, this column has railed against the inefficiencies of HMRC for a decade and more.

More often than not, the impetus for greater despair has been initiated by negative reports issued by either The Public Accounts Committee of the House of Commons or the National Audit Office. Since these are public bodies with no obvious axe to grind, one might have thought that their opinions would influence the behaviour of ministers and, in particular, the Chancellor of the Exchequer.

Empirical evidence since the days when George Osborne occupied the office and possibly long before, strongly suggests that those seeking change are, to coin a phrase, whistling in the wind.

It might be a little late in the day, but readers may have seen that last week the Institute of Chartered Accountants in England and Wales (ICAEW) has weighed in to the debate. To be fair, ICAEW reminds us that it has commented adversely on HMRC performance in the past, including criticisms of poorly designed IT systems and gaps in online services.

The title of the latest publication says it all: “ICAEW calls for emergency taskforce to tackle HMRC backlog.”

As chief executive Michael Izza notes “the time it takes for HMRC to respond is perceived by many chartered accountants to be the single biggest obstacle to growth and tops the list of complaints by members”.

Drag on economic growth

The accounting body wants the immediate creation of a cross-sector task force to address long-standing delays at HMRC, which it says have become a drag on the UK’s economic growth. One could unkindly suggest that the delays have been a drag for many years and little is materially different now.

This task force will include representatives from professional bodies and businesses but, strangely, neither HMRC nor the Treasury will be invited to the party.

Their hope is that this emergency task force would identify areas of support to end delays and recommend improvements to HMRC service standards. No mention is made of the chronic underfunding, which has diminished numbers and destroyed morale in the department.

Given recent government performance, the most likely outcome would be a lengthy report process, followed by dithering from the top, after which a handful of the proposals would be put to Parliament, which would then water them down before running out of time for implementation ahead of the next general election.

It would be easy to argue that a better approach might be to appoint a single outsider – Dame Margaret Hodge, Martin Lewis and Richard Murphy immediately come to mind – who could identify issues and resolutions in real time and work with those in the department to implement them, albeit shackled by that lack of financial support from the government.

Tragedy for the profession

Having seen a whole series of thick-skinned Chancellors of the Exchequer ignoring sage advice from their colleagues and appointed advisers, you can’t have much optimism that even as influential an organisation as ICAEW will make any difference. That is going to be a tragedy not only for everyone in the profession who dreads any interactions with HMRC, given the likelihood of time wasting and inaction, but also other stakeholders.

These fall into two categories. First, the poor old taxpayers who struggle to get any sensible advice and then unintentionally put themselves at risk of facing penalties for filing incomplete or incorrect returns.

More seriously, everyone in the country is paying dearly for the privilege of having a malfunctioning tax service.

As is periodically publicised, each additional inspector brings in an average of 18 times their cost in additional revenues.

That multiple could quite reasonably increase, partly because HMRC wage increases are not keeping pace with inflation but more significantly since many potential tax dodgers must now feel empowered by a probably justified belief that they are never going to get caught.

On that basis, we can only expect that fraud, evasion and questionable “avoidance” activity will increase.

Replies (9)

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By Hugo Fair
16th Feb 2023 13:27

Whilst laudable that ICAEW have (finally) gone public with the wholesale dissatisfaction of their members regarding the operational incompetence of HMRC ... their newly found tin whistle will only add to the whistling in the wind that HMRC elects not to hear.

*There is no accountability* and so no sense of any need to even admit to, let alone tackle, any of their many shortcomings.

An 'emergency taskforce' has all the right words in its title, but if it doesn't include representatives from HMRC or Treasury then it has no 'buy-in' for anything other than outsider recommendations ... and if they are allowed to provide reps then those recommendations will be so trussed up in waits for 'input from sub-committees' that nothing of value will escape the black hole of slow death.

I've seen those techniques employed in many different quasi-independent forums and it's one of the few areas in which HMRC & HMT are still possessed of extensive skills ... because, going full circle, there is no practical accountability.

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VAT
By Jason Croke
16th Feb 2023 15:17

HMRC flat out ignore the Public Accounts Committee (PAC), which is HMRC's only real threat/accountability, if HMRC are giving two fingers to the PAC, then HMRC need not worry about anything as trivial as a local MP or the ICAEW.

https://committees.parliament.uk/publications/33390/documents/182713/def... Page 13, HMRC expects not to be able to deliver new efficiencies until 2024-25.

ICAEW has limited impact on HMRC's customer service, but ICAEW has been left wanting in terms of how HMRC treats agents and the constant erosion of trust between HMRC and agents. ICAEW has let a lot of things slip to the detriment of their members, it's a little late in the day and besides, HMRC are untouchable, so why does HMRC need to change or listen?

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Replying to Jason Croke:
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By Hugo Fair
16th Feb 2023 15:31

Quite.

Meg Hillier is probably more effective (quietly) than Margaret Hodge (who knew how to garner headlines), but neither pose any kind of threat to a body that chooses to treat the PAC with the same disdain that we all encounter on a too regular basis!

Whereas ICAEW is really just a member's club - and who ever heard of a club driving change unless it's to the direct advantage of their members specifically?

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By AndyC555
17th Feb 2023 10:49

Anyone who thinks Richard Murphy is the answer is asking a particularly bizarre question.

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Replying to AndyC555:
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By Hugo Fair
17th Feb 2023 11:18

... or, indeed, Martin Lewis!

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By indomitable
17th Feb 2023 12:31

"It would be easy to argue that a better approach might be to appoint a single outsider – Dame Margaret Hodge, Martin Lewis and Richard Murphy immediately come to mind"

What?? What the hell do any of these people know about tax or dealing with HMRC.

How you solve it, A task force? Oh please! Another talking shop!

I'll tell you how you solve it

1) Make sure that politicians have the ability to sack civil servants that don't perform
2) Give the civil service clear deliverables and the resources to sort it
3) If the deliverables are not achieved sack the senior management in charge
4) Stop all unnecessary 'vanity' projects like MTD until the 'basic' service has been restored
5) Get rid of ALL woke jobs that are not front line and solving any problem
6) Stop all HMRC staff working from home

Being an ICAEW member myself, even though I welcome the criticism, it is not enough. I have long commented that the ICAEW needs to be more critical of government and the HMRC. These problems are solvable but not with another committee or enquiry. We all know what's wrong. Just sort it!

When the government want to sort things they can. Look at lock down, look at the building of emergency temporary covid hospitals.

The fact is its just not that important

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By Mr J Andrews
17th Feb 2023 15:17

The rot may well have set in before Osborne but the whistling in the wind has become more of a stench in the air since.
It's all very well identifying areas where support is needed - which in my book leaves just about every area - and making recommendations. But what will come of it ? The starting point must be accountability.
The ICAEW rightly recognise the current shambolic HMRC under its current ''leadership'' is holding back the UK's economic growth. Dubious statistics may show a Tax Inspector yielding 18 times his worth but Philip's final paragraph says it all. The UK's black economy and evasion remain rife - probably at it's highest ever level.
Can I please put my hand up to join the Task Force ?

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Morph
By kevinringer
20th Feb 2023 13:43

The performance problems at HMRC can easily be resolved: just cancel MTD ITSA. Every time I speak to an experienced HMRC officer (something increasingly rare these days), they all complain that MTD ITSA has consumed all resources. Cancelling the MTD ITSA vanity project will suddenly free £millions which can then be used to tackle the numerous performance problems.

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By timkingcott
20th Feb 2023 16:43

I find that generally HMRC has pretty good standards and seems to be trying to address some of its problems after Covid. With the loss of so many staff I am sympathetic.

One frustration for me during the last couple of years is the HMRC slowness of dealing with various requests. Nine months or so is not unusual.

But the worst is where refunds are passed on to the technical team for further investigation. I understand that this is needed to avoid fraud etc but is it fair to hold on to client refunds for well over a year without even saying why. By all means investigate but not without any resources to finish the job.

So much of our time is spent writing letters for the second or third time and multiple telephone calls. It just make our life less efficient and it feels like we are letting down our clients. In fact, we are working harder for them.

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