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Who wants to listen to tax experts anyway?

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After shrugging off concerns from professional bodies about HMRC service levels and treating the Office of Tax Simplification more like a gibbon-arm’s-length body, the government is giving the impression that it doesn’t listen to tax experts. 

18th May 2023
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Ever get the feeling you’re not being listened to? That certainly seems to be the case with the government and the accountancy profession at the moment.  

Before the Spring Budget, a group of professional bodies wrote an open letter urging the Chancellor to prioritise investment in HMRC service levels. The letter described all the disruption and delays that have become regular talking points across the pages of Any Answers. 

The Budget came without any extra funding. Then this week – two months after the Budget – the professional bodies finally received a response from the financial secretary to the Treasury (FST). 

The FST acknowledged that some of HMRC’s service levels “have not been where they want them to be” but pinned the blame on a high volume of repayment claims by a small number of agents, IT issues due to system upgrades, and diverting resources to provide support for Ukraine visa processing. 

But on the bright side, the minister said customer satisfaction is around 80% and the investment in building a digital tax system between now and 2030 will reduce all sorts of errors and will help taxpayers to get their tax and payments right first time. 

The letter was short, to the point and dismissed the concerns of the tax professionals in a way that pretty much said, “What do these tax experts know about tax, anyway?” 

But is it really surprising? The Michael Gove 2016 quote “people in this country have had enough of experts from organisations with acronyms…” suddenly feels really relevant. 

This is the most recent example of a long tradition of governments not listening to the tax profession. And there is no better example of this than the abolition of the Office of Tax Simplification (OTS), where the government decided it would rather take the nuclear option than actually listen to tax professionals. 

Demise of the OTS

If anything, the demise of the OTS has made simplification anything but simple. 

The OTS quietly got on with its work for over a decade without much fanfare until the day the Chancellor no one speaks of anymore (not the big tax penalty one, the mini-Budget one) abolished it and now all anyone wants to talk about is the OTS. 

There is more heartache in the demise of the OTS, especially from the tax community, than there is in a Taylor Swift song, and it doesn’t seem like anyone is willing to just shake it off. 

Last month’s tax administration and maintenance day came with promises of simplifying the tax system, and while the government was keen to point out that simplification now sits with the Treasury and HMRC, curiously the blizzard of consultations had far more references to the work of the OTS than anyone else. 

It makes you think: if only there was a body that could fulfil that role. 

Meet the parents

HMRC is currently in a no-win situation here. It’s already stretched to its limit (see this week’s VAT registration helpline debacle for further evidence) and it’s now adding simplification to its scrolls of Merlin-sized to-do list. 

But to make matters worse, whenever HMRC is called up in front of a select committee to talk about simplification, it must feel like someone meeting their partner’s parents for the first time and being constantly reminded how wonderful the ex-boyfriend/girlfriend was. 

The tax department was given the “in-law” treatment this week when the Treasury Committee questioned HMRC’s Jonathan Athow about tax reliefs and the first question was about – you guessed it – the Office of Tax Simplification!

The office of HMRC and tax simplification

Athow described HMRC’s approach to simplification as “working through policy development with our colleagues at the Treasury” and it is at that point they start to “embed tax simplification in that process”, which he pointed out differed from the OTS who “were not involved in the process of developing policy”. 

He’s right that there needs to be some filter to make sure there isn’t a burden in complying with any new tax law and that the guidance is clear and coherent. 

He was also slick in his answers. When asked about the heaving number of tax reliefs adding to the complexity (1,180 at last count), he was quick to pull out the phrase: “Be very careful about reading the number of reliefs or the number of pages of legislation and assuming that translated to complexity. Complexity is more complex than that, I’m afraid.”

While the phrase raised a chuckle he did acknowledge that the tax system over time has become more complex. "It's the cumulative effect of tax reliefs, other changes in the tax system, the number of taxes and the entire tax system that adds to the complexity."

And there’s the rub – it’s all well and good developing policy that doesn’t add to the complexity, but the current approach is a bit like changing the tyres on a car but not fixing the duff engine. 

So if a metaphorical framed picture of the OTS is still on the in-laws’ wall, where did it all go wrong for the independent body? 

Athow said the “challenges with making the tax system simpler come up against other policy objectives”. He added that this might be because it “costs money to simplify the tax system through policy changes” or it might “create losers or winners”. 

It was another way of saying that it failed to simplify the tax system because the ministers of the day decided against adopting their suggestions. It’s a bit like blaming the fire brigade for not putting out the fire you started because you didn’t agree with their suggestion of using water.  

So while the OTS came up with suggestions like a closer alignment of national insurance with income tax, the ministers marked it like a school project and carried on with what they were doing. 

What’s the answer?

I could spend the rest of this column concocting different schemes and solutions to revive the OTS. Seeing how much governments past and present love quangos, perhaps the OTS could return in the guise of custodians of tax role – sort of like how the office for professional body anti-money laundering looms over AML supervision like the eye of Sauron, the OTS could do the same for tax. 

But realistically, what government would hand over the regulation of tax to an independent body? 

Listen to the experts

The answer to tax simplification is quite simple: actually listen to the tax experts. Don’t treat them like a think tank, but genuinely listen and heed their advice. 

But the minister’s response to the professional bodies on HMRC service standards shows that the government hasn’t learned any lessons from the past seven months. 

With the government shooing bystanders away from the burning fires of tax and saying “nothing to see here” only goes to show that the tax profession is not being listened to. Until tax experts are listened to, there is no hope for simplification. 

Replies (11)

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By Justin Bryant
18th May 2023 16:35

HMG only does things (or doesn't do things) when there's votes in it for them. There simply ain't enough votes in any of this for them to pay a blind bit of attention to anyone.

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Replying to Justin Bryant:
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By Hugo Fair
18th May 2023 23:50

Athow was given a free ride when, amongst other 'slick' (aka misleading) comments, he was allowed to point out that the OTS “were not involved in the process of developing policy” - as if that made their existence pointless.

The OTS was set up by govt as a body with a remit and, what a surprise, the Treasury was not prepared to allow that remit to stray into even commenting on Policy!
So it's a bit like pointing out that your local refuse collectors don't enforce parking restrictions - with the inference that this shows they're useless.

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By Catherine Newman
18th May 2023 21:44

Good article Richard. It might have sown a seed for more posts.

The Agent Forum is obviously presenting as a down pathway to extinction. They keep asking for UTRs to work an example and then say they aren't allowed to work examples. They can't understand that an issue might need the PAYE reference/the CT UTR/ the VAT registration number.
They see a word they like like IRV and impute that you put it in your post when it suits them but someone else put it in another post. They can't understand that things are systemic because nobody else has posted another answer. They can't understand that people have given up wasting their time.

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By Hugo Fair
18th May 2023 23:39

An enjoyable read ... but only if you like watching car crashes and have no interest in reducing their numbers or severity.

I liked your analogy that "it’s all well and good developing policy that doesn’t add to the complexity, but the current approach is a bit like changing the tyres on a car but not fixing the duff engine" ... but you must stop pulling your punches.

Any attempts to change tyres are being tried without bringing the car to a stop first - and currently the duff engine is being ignored as we're coasting downhill.
Plans are needed for bringing the vehicle to a halt *before* the bottom is reached - and putting in place the right changes (in the right order) to effect improvements *prior* to any crash.
Can you imagine F1 racing where repairs are carried out in mid race-track on a 'when needed' basis?

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By Jason Croke
19th May 2023 08:05

Nice article but I disagree that HMRC are in a no win situation.

HMRC continues to tell the PAC and the Treasury that they are on track to cutting costs and reducing staff count, they keep telling everyone that everything is fine and nothing is going wrong, they keep producing puff pieces that show statistics indicating that "only" 10% of callers can't get through or that the average turnaround time is "only" 4 weeks.

Only when HMRC come out and put their hands up and say "we're drowning here" will things improve, but Harra keeps pretending like the building isn't on fire without realising the building is already a pile of ashes.

I don't understand the desire to "cut costs" in HMRC. It is the main source of Treasury income, it is the police force of the tax system, it is responsible for collecting taxes, the more HMRC you have, the better the tax take, the less chance for fraud (example being the bounce back loans that have just been written off, £4b+) and yet spend £1b on staffing HMRC and you'd get that back plus more.

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Replying to Jason Croke:
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By OrmeGoat
19th May 2023 14:22

Harra will not raise his hand because he wants a lordship and his inflation-linked pension.

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By indomitable
19th May 2023 15:00

"But on the bright side, the minister said customer satisfaction is around 80%"

You have to laugh.

The mismanagement of our country now is just off the scale, what public services are actually working here anymore? and what do I pay my taxes for?

I am certainly thinking about leaving

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By Philysis
20th May 2023 08:28

Great article written by Richard , thanks , what a shambles Whitehall really is

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By OrmeGoat
20th May 2023 08:32

"... the government hasn’t learned any lessons from the past seven months. "

I would change this to "governments haven't learned any lessons from the past 27 years"

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By silverghost
22nd May 2023 10:01

The effect of the OTS was only ever allowed to be ambient at best, but it suited ministers to say that it existed.

Now they are not even bothering with the figleaf. Which says so much about the standard of politicians we now have. Profoundly useless.

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By [email protected]
22nd May 2023 18:06

I don't understand why authors waste their time on articles like this. HMRC have their agenda and are not interested in what tax professionals have to say. HMRC want advisers to be professionals and qualified whereas their own staff are not professionally qualified and have no intention of being unless it has a means to a promotion

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