Toothless HMRC charter slammed as one-sided
As HMRC rewrites its charter, CIOT technical director John Cullinane suggests that the tax department should be subject to financial penalties for failures, just like taxpayers are.
The CIOT has also been remarkably frank in its criticism of the proposed new version of the HMRC charter, pointing out that it will reduce HMRC’s obligations, while maintaining taxpayers’ responsibilities. Rebecca Cave (RC) talks to CIOT tax policy director John Cullinane (JC) about how the proposed revised HMRC charter will be a step backwards for taxpayers.
RC: Why is the HMRC Charter being revised at this time?
JC: A number of Parliamentary reports called for the HMRC charter to be reviewed and amended. For example, the Independent Loan Charge Review suggested that HMRC’s charter be reviewed “to set higher expectations of performance during interactions with members of the public and ensure that staff are offered training on how to deliver it”.
The House of Lords Economic Affairs Committee report: The Powers of HMRC: Treating Taxpayers Fairly, recommended that “the charter is amended to clarify HMRC’s responsibilities towards unrepresented taxpayers including that issues are clearly set out, legislation is explained and rights to review and appeals are made accessible”.
RC: Have the revisions achieved the goals that those two reports set for the HMRC charter?
JC: No, the performance expectations for HMRC have not been raised by this new draft of the HMRC charter. In fact, the proposed wording appears to lower the bar in terms of HMRC’s obligations and how it will be measured against performance targets.
RC: What are the consequences for HMRC if it does not abide by the standards it has set itself in the charter?
JC: There appear to be few, if any, negative consequences for HMRC if they fail to meet its charter obligations, and its performance targets. It is hard to see how these aspirations can be effective without sanctions.
HMRC should be required to compensate taxpayers and their agents financially where delays, inconvenience or additional costs result from HMRC’s action or inaction.
RC: What consequences are there for taxpayers if they do not meet their obligations as referred to in the HMRC charter?
JC: There can be significant negative consequences, including interest and penalty charges, if taxpayers fail to meet their general obligations to file tax returns and pay tax on time.
RC: How can the proposed draft of HMRC charter be improved?
JC: The current charter adopts a two-way approach to the wording that separately sets out both HMRC’s obligations and those of its customers. The CIOT believes this is clear and effective. It is also the approach adopted by Revenue Scotland in its similar document: Charter of Standards and Values
The revised charter instead sets a combined set of values which are supposed to apply to both HMRC and its customers. However, these value statements lack clarity and are woolly and aspirational in tone. For example, in several places the original definite statement of “We will…” has been replaced by the aspiration of “We aim to…”
It would also be helpful if each area of rights and obligations was reinstated as in the current version of the charter.
RC: How should HMRC’s obligations set out in the charter be monitored.
JC: HMRC’s performance measures should focus on delivery of their Charter obligations, which could be measured through a variety of means such as Webchat feedback, gov.uk customer feedback ratings, ‘cold’ reviews of a sample of interactions between HMRC and its customers. Also the NAO could monitor and report on HMRC’s performance against its charter as part of its audit of HMRC’s annual report and accounts.
RC: How do taxpayers find out about their rights and obligations as set out in the charter?
JC: There is generally low awareness of the charter among individual taxpayers and small businesses, even some HMRC officers do not appear to be aware of it. This need to be addressed.
Awareness of the Charter and its implementation could be gauged within HMRC’s Civil Service People Survey and their annual Individuals, Small Business and Agents Customer Surveys.
RC: What should happen now to the revised HMRC charter?
JC: There’s a gulf in responsibilities, powers and resources between HMRC and taxpayers so I’m not sure that it can be a full “partnership”. But if it is HMRC’s ambition to move things in this direction then the charter must fairly balance the rights and financial obligations for both sides.
HMRC should take on board all of the comments made as part of the consultation into this document and produce a more balanced charter with clearly stated rights and obligations.