HMRC has re-structured about every year since it was created in 2005. Will this one improve the service for taxpayers?
Accountants reckon that HMRC latest re-organisation may finally improve the service to taxpayers and reduce bureaucracy. But will any gains be undermined by a shortage of staff at HMRC after tens of thousands of job cuts?
In October, HMRC’s four directorates will be reduced to three: Customer strategy and tax design, customer service and customer compliance:
- The customer strategy and tax design group will be led by director general for business tax, Jim Harra. He will manage customer strategy, tax policy, process design and tax assurance teams. This group will manage customer service staff as well as specialist personal tax teams and “product and process” staff
- A customer service group, run by current director general for customer services, Ruth Owen, will manage HMRC’s operational teams
- A customer compliance group, led by director general for enforcement and compliance, Jennie Granger, will be responsible for compliance and enforcement work across HMRC, including the large business operation
Mike Down, head of tax investigations at RSM, told AccountingWEB that HMRC’s re-organisation would probably improve the service for taxpayers, although it may be about two years before the benefits start.
“[HMRC] is trying to really focus on customers,” he said. “I think it’s a simplification of the structure and they are trying to bring together teams that are engaged in similar work and hopefully by doing that they can improve the speed of response.”
Down said that the new customer compliance group, was part of an effort to strengthen HMRC’s tax compliance teams, which check that taxpayers are paying the correct tax.
HMRC has pooled resources in compliance and created specialist teams, focusing on sectors of the economy or types of taxpayer − such as tax avoidance by rich people (the ‘high net worth unit’).
HMRC’s new structure could help it get the full benefit of new powers, such as against offshore evasion. Meanwhile, the move to a digital tax system by 2020 may reduce some of the administrative strain (and backlog of tax cases), it’s hoped, allowing HMRC more time to improve its service.
Jonathan Riley, head of tax, at Grant Thornton UK, said: “Whilst we await detail, it is encouraging that HMRC seems to be focusing on strategy and design, suggesting HMRC may have greater connectivity with policy formulation than has been the case in recent years. This move combined with the Office of Tax Simplification being placed on a statutory basis suggests we may be moving into an era where we consider designing a tax regime that that works with and for business, allowing them to unlock growth and help create a vibrant economy.”
But other experts doubted whether the re-organisation would do much good.
A spokesman for the Public and Commercial Services (PCS) union, which represents HMRC workers, said that although it supported attempts to improve tax compliance and customer service, it wouldn’t solve what it said was one of HMRC’s main problems – too few staff.
HMRC has cut its workforce by about 45% since 2005, from 105,000 employees to 57,000, according to the PCS.
More job cuts are planned. By 2021, HMRC has estimated that it will employ 16% fewer people then now, most of whom will work in 13 regional centres.
“[HMRC] can re-organise all they like but if they don’t have enough staff they won’t be able to do a proper job,” the PCS spokesman said.
Customer service levels collapsed between 2014 and 2015 because HMRC underestimated demand for its telephone service and reduced customer service capacity by cutting 5,600 jobs, the Public Accounts Committee said in July.
Average call waiting times tripled compared with previous levels, transferring an unreasonable cost to taxpayers, MPs on the parliamentary committee said, although it said that the service has improved since then.
Ken Frost, a chartered accountant and acerbic critic of HMRC, said that he didn’t think HMRC’s re-organisation would work because it was trying to do too many things at once – including digitising the tax system, cutting costs and staff and extending its telephone service.
Frost said that that a cabinet minister should be made solely responsible for HMRC.
Some MPs want clarification about HMRC’s re-organisation.
Earlier in September, Andrew Tyrie, chairman of the treasury committee, wrote to Jon Thompson, HMRC's chief executive and permanent secretary, to query the justification for another re-organisation of the government department.
"On Tuesday, I pointed out that HMRC had been reorganised to some degree nearly once a year on average,” Tyrie said. “The last one was in November 2015. On Wednesday, they announced another one.”
During the Treasury Committee hearing on the UK's tax policy and tax base (on 6 September) Bill Dodwell, head of policy at Deloitte, said that HMRC had re-organised about a dozen times since the Inland Revenue merged with Customs & Excise in 2005.
“That sounds like quite a lot. Have there been too many reorganisations, how is this affecting you as a recipient of their product, and are they getting their objectives and priorities right?"