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New CIOT chief blasts HMRC

25th May 2011
Editor in Chief AccountingWEB
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New Chartered Institute of Taxation (CIOT) president Anthony Thomas started his term of office last week with a hard-hitting speech that took HMRC to task for failing to maintain standards - and trust - in its dealings with tax professionals.

“A fair tax system requires respect on both sides. HMRC are at risk of damaging the trust that has been built up over centuries between tax payers and tax collectors,” he said.

HMRC has undermined respect and trust among taxpayers and advisers in recent years with an array of unsatisfactory behaviours:

  • Issuing press releases, technical briefs and toolkits that often add to the complexity of tax practice rather than clarifying it. “It is extremely difficult to have trust in the tax authorities when they feel they have the power to introduce de facto secondary legislation with no Parliamentary scrutiny,” Thomas said. “We need to get back to taxing in accordance with the rule of law.”
  • As part of its modernisation programme the department has been seeking new powers without demonstrating why existing powers are inadequate - an argument characterised last year by Lord Chief Justice Judge as “the argument of tyrants”. Powers to levy penalties and gain access to taxpayers’ data have been extended, sometimes without proper safeguards, Thomas warned.
  • Constant modernising since the Inland Revenue-Customs merger resulting in “disastrous” upheaval and a sequence of operational failures such as last year’s PAYE coding fiasco. “Top management at HMRC now appear to be concerned almost exclusively with processes coupled with an obsession with tax avoidance and tax evasion,” he added.
  • Taxpayers increasingly receive computer generated documents sent under new initiatives where no attempt appears to be made to verify their validity. Many are issued incorrectly, but the onus is on the taxpayer to appeal against them. “The overall impression is that HMRC is attempting to have automated processes make up for its declining numbers of staff, who in any case often lack proper training and the skill to make appropriate judgements.” Thomas said. “There is a complete failure to recognise that tax is complex and, until simplified, cannot easily be converted into automated processes.”
  • Privatisation of debt collection, where poor communication and lack of attention to safeguards can have serious implications for those on the receiving end.
  • Unrealistic consultations that leave no time for responses to be considered, and too much reliance on “soft landings” and “light touches” when new legislation is introduced without due consideration.
  • Referring to taxpayers as customers when it does not treat them as such. No customer would continue to put up with unanswered telephone calls and letters, loss of confidential data, and technical errors by inadequately trained staff, he said.

It’s a damning charge sheet that reflects the reputational damage HMRC has suffered in recent years. “A department once regarded with circumspection but trusted and respected is becoming disliked, mistrusted and feared,” Thomas said. “It will take years to rebuild that trust between taxpayers and HMRC.”

Relations with tax advisers have suffered similar damage. The CIOT president added that HMRC managers are happy to work closely with the profession and rely on their expert advice when it suits them, yet ignore sensible suggestions.

The supposed “special relationship” that exists between HMRC and tax advisers is like the one between the US and UK governments, he added: “It always favours one side, and that side is not ours.”

Instead, Thomas called for a return to the “healthy tension” that used to exist 10-20 years ago, when tax officials applied the law in an even-handed manner and did not subject business and professions to policiticised lectures. “No special relationships; no cosy conferences; no favours, deals and understandings; no inside tracks and private access. Instead there was straightforward dealing; openness and frankness with honest broking and above all a genuine willingness to work together with total transparency and integrity,” he said.

For his year in office, Thomas said his mission would be to try to turn the tide and get relations back on an even keel. He would fight any attempt by HMRC to impinge on the relationship between client and tax agent and urged the department to get its own house in order before attempting to roll out a registration and disciplinary mechanism for tax advisers.

Striking a constructive note, Thomas said the CIOT would take the opportunity to try and re-establish trust around the agent relationship consultation process that is due to start up again shortly.

“My hope is that by this time next year we will have been successful in starting to remove some of the danger… inherent in an aggressive tax authority with overbearing powers,” he said.


Replies (6)

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Tony Margaritelli, ICPA Chairman
By Tony Margaritelli
28th May 2011 19:29

HMRC and Agents

At long last we have a leader of one of the major Institutes actually standing up and being counted on the situation we as agents find ourselves in when dealing with HMRC.

Day after day we take calls from members concerning the treatment being "meated out" to them and their clients by HMRC. The constant outpourings about fines, penalties, Interest charges, task forces, new regimes at al have brought relations to the lowest level possibly for decades. Investigations are reaching all time peaks, and yes I make no bones about calling an HMRC investigation that which it is, an investigation not an enquiry, and at the same token HMRC is passing our tax debts to the like of "Wheel Clampers". Now clients are being investigated before they have actually filed a Return under the guise of the new bookeeping initiative or as I prefer to call it the fine gathering initiative. At no time has there been any acknowledgement on the part of HMRC of the inadequacies on their part, never have we heard about automatic fines for late payments of refunds and there appears to be no possibility of any form of surcharge either. I'm just waiting to see what the supposed "Soft Landing" approach will be to late filings due to IXBRL problems. IXBRL another issue that is one sided and we all know which side.

Agents are being told to use the services of an Agent Account Manager as if this were the "holy grail" but how many Agent Accounts managers are there compared to the number of Agents. No this frankly is just not good enough. All the talk about the quality of Agents is never matched by any agnst on the part of HMRC about the quality of their staff.

Daily our members are sent letters dated weeks in advance of them actually being sent and are then taken to task for not responding speedily, we are telephoned at varying intevals throughout the day, having to answer more lengthy security questions only to find the caller is ringing about why our client has not paid a tax bill! yet JUST TRY TO CHASE A REFUND FOR A CLIENT AND SEE HOW FAR YOU GET.

Mr Thomas is correct in everything he says, he has stated the case far better than I could and with a lot more restraint, he deserves to be heard by those at HMRC who can actually start reversing this process, and he deserves the support of all Agents not just those affiliated to the CIOT. 

I firmly believe that the relationship between HMRC, the taxpayer and his advisor is the biggest single issue facing the profession today and one that requires more men like Mr Thomas to stand up and be counted.

Tony Margaritelli - Chair ICPA









Thanks (0)
By The Black Knight
01st Jun 2011 14:28

hear hear !

Well said,

Added to which they are failing to collect tax from errant taxpayers who are seen to escape the law.

The whole situation should be a comedy sketch, bring back monty python !

Standard HMRC response to failure is to blame someone else, (e.g. Paye)

They are not helped in the process by the budget cuts, I ask you when you need to collect more tax where would you spend your resources. Its not rocket science is it ?

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By Nick Graves
01st Jun 2011 20:51

I'll vote for that President!

And I'm not even a member of the CIOT.

Finally, after years of mealy-mouthed appeasement from so many organisations, someone's finally had the guts to stand up and tell it exactly like it is.

Thank you very much indeed, Mr. Thomas.

And to the chair of the ICPA for his support.

I really hope the situation can be rescued before it gets ugly -If they won't listen politely, my idea for a "taxpayers' strike" is still up for grabs!




Thanks (0)
By Alf
06th Jun 2011 10:07

Hear Hear

I would like to applaud Anthony Thomas' speech.

Although not a CIOT member, I too was delighted that a major institure has at last stood up for the profession.

Thanks (0)
By wingco44
06th Jun 2011 14:15

ICPA Chair's support

Dear Tony

I think you put it equally robustly as the CIOT President, if not more graphically.  I have had letters giving me 28 days to reply 'from the date of the letter' only to receive it with 7 days left to their impossible deadline.  Post marks show that the letter was not posted for 2 weeks and then sent 2nd class mail - why?  Not very helpful is it.


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By mpurcell
07th Jun 2011 12:20

Long overdue

Thank you so much Mr Thomas. You have articulated my thoughts very well.

HMRC no longer listen to agents' views nor cares about our difficulties in dealing with their monopoly.

I am sad to say the healthy respect I had for HMRC built up over 35 years is now replaced by contempt.

As an ICAEW member this is the sort of stance I wish my own institute would adopt. The old order has been swept away and it is about time we took stock as a profession and accepted reality.

What does it take for us to recognise HMRC have no intention of improving voluntarily? Surely the arrogance of Hartley & Co confirms that to us all? HMRC does what it wants. There is no account taken of the adverse impact their decisions have on taxpayers or agents. Just review your experience over the last 5/6 + years. How many examples do you need to convince yourselves?

Their use of the words 'customer', and 'service' is an insult to the language and our intelligence.

I am afraid I do not have any answers other than - complain, complain, complain - but I hope this may be the first step on a long road towards making HMRC accountable again. Let us remember and remind them as taxpayers they are our agents not the other way around.

Thanks (0)