2011: Accountancy and tax go political

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Robert Lovell
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The country’s financial woes during the past year brought a new level of parliamentary scrutiny to tax and accountancy matters in 2011.

While many would welcome various parliamentary committees  doing something constructive about the issues facing HMRC and small business, there is an accompanying feeling that these efforts could have been coordinated and more focused on obtaining tangible improvements.

Hot on the heels of last year's PAYE coding fiasco, when tax became a front-page issue, the Commons Public Accounts Committee kicked off 2011 by publicly accusing HMRC of failing in its duty to process PAYE accurately and on time. The department “failed to collect tax that is properly due, caused uncertainty to taxpayers and treated them inequitably”, the MPs concluded.

Their findings guaranteed that the public would continue its interest in tax throughout the year.

In March, the House of Lords economic affairs committee called for the Office of Fair Trading to investigate concentration within the audit market. This committee was notable for being one of the few regulatory responses to the financial meltdown of late 2008, but anticipated the European-level scrutiny of the audit profession’s involvement in the crisis.

After listening to months of evidence, including an appearance by the UK senior partners of the Big Four firms, the Lords committee concluded that “further investigation was needed”.

Looking back at the committee’s hearing with the Big Four partners, Lord McGregor added at the time that it “wasn’t their finest hour”.

As the year progressed HMRC and the Big Four proved themselves to be far from the slick operators in the media spotlight that they thought they were.

By July the Treasury select committee had published a report claiming HMRC’s “unacceptable” quality of service failed due to a number of factors, including “overly ambitious expectations for IT projects, sustained cuts to resources, a management culture of ‘command and control’, increasingly complex tax legislation and the legacy of the [Revenue-Customs] merger.”

It highlighted areas of serious concern, including “Unacceptable difficulties contacting HMRC by phone during peak periods” and “Endemic delays in responding to post”.

It wasn’t long before permanent tax secretary Dave Hartnett was up before the scrutiny of MPs where he admitted “a mistake was made” in granting Goldman Sachs a reprieve on the interest it owed on bonus payments.

In October Hartnett answered questions from the Commons PAC on his role in the agreement, which resulted in the investment bank paying tax it owed but foregoing interest payments.

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