John Andrews

So when asked to write something for TaxationWeb I thought it might be a good idea to test with sympathetic friends in the tax world whether my expectations are totally realistic in the 21st Century.

The Low Incomes Tax Reform Group (LITRG) is an initiative of the Chartered Institute of Taxation to give a voice to the unrepresented. I have been involved as a volunteer since its inception getting on for 10 years ago.

We speak with low income customers of HMRC; we shadow them as they try to engage with the confusing maze of the HMRC tax administration. We mystery shop; we try to follow implicitly the instructions given to low income taxpayers/tax credit claimants by HMRC; we then try and see where it leads them. We challenge the Board and people responsible for large swathes of the activity within HMRC. We try to bring them to account.

To their credit HMRC are, with very few exceptions, responsive, polite and sympathetic. Less to their credit is that they are armed with multiple reasons why things that seem simple to me to put right are deemed to be major structural improvements and not a priority.

Even more frustrating are the many conversations that we have had over the years where we have agreement on broad principles from the top. But then the next month another bit of HMRC goes and does the opposite. There is very little feel that someone is actually in charge.

Let me try to put some of this in context. I would hope that every Board member of HMRC would endorse the broad principles that follow.

Broad Principle One. A customer should not have to understand the internal workings of HMRC in order to conduct the normal business of paying their tax or receiving their entitlements.

We are dealing with an organisation in HMRC that has had more internal reorganisations and makeovers in the last 10 years than the Home Office, yet a member of the public is expected to know that:

• It is important to understand the difference between a tax office, a general claims district, an inland revenue office and an enquiry office; 
  
• There are at least half a dozen different complaints procedures depending upon which part of the empire you want to complain about;
  
• You cannot rely upon giving HMRC information about a change of your circumstances and expect it to reach the appropriate parts that need to know. You are expected to understand the information that National Insurance, Tax Credits, Self Assessment (SA) or Child Benefit parts of HMRC etc. will individually need;
  
• If you are taken out of SA what will replace it and the procedures involved.

Broad Principle Two. A customer should not have to understand the finer details of the tax system.

Yet there are so many circumstances where the customer will lose out if, in reality, they do not understand what mistakes HMRC are making. They are expected to:

• Work out that the claw-back provisions of the married couple’s allowance, as reflected in a pensioner’s coding, are wrong;
  
• Recognise an HMRC mistake in a tax credits award;
  
• Know the different tax regime that HMRC operate for pensioners in the first year of becoming a pensioner;
  
• Be aware of the tax status of all benefits/payments made by the DWP even if the DWP has never informed them.

Broad Principle Three. A customer should expect that if HMRC says a facility exists, then it should be there when tested.

There are many examples where the HMRC website or their published literature says that the customer should do things, but which are generally impossible to do.

• Find your local tax office in the Phone Book;
  
• Obtain a particular leaflet from the Orderline;
  
• Get a hard copy of a particular leaflet;
  
• Arrange a visit by phone with your local Enquiry Centre;
  
• Ask for a home visit;
  
• Find disability information on the website;
  
• Telephone a helpline at the “cost of a local call”.

Broad Principle Four. A customer should expect to be informed of tax law that might be relevant to them in order that they may be able to comply or take advantage of reliefs.

Often “ignorance of the law is no excuse” is trotted out when the customer has failed to do something which the authorities deem they should have known. Similarly a generally dismissive approach is taken if someone has not managed to stumble over a relief which they might have expected to be directed towards.

People are supposed to know:

• By some process of osmosis that a deemed pre-owned assets tax should be disclosed as “other income”;
  
• That an SA return issued in error by HMRC still must be completed.
  
• HMRC errors on a tax credits award (which would defeat 90% of HMRC staff) are still regarded as being reasonable for an almost illiterate claimant to have spotted;
  
• That Extra Statutory Concession A19 exists and where to find it on HMRC’s website;
  
• That if their first language is not English they should be aware of the concept of foreign domicile and the accompanying tax rules;
  
• That banks and other interest payers have been delegated by HMRC to make it clear to low income customers that they might be able to prevent tax withholding.

Broad Principle Five. A customer should be helped to pay the “right” amount of tax.

HMRC will spend a great deal of effort matching data in their possession to taxpayer records to ensure that it has been appropriately taxed. However HMRC will not spend an equivalent amount of time to ensure that data in their possession:

• Can be used to repay pensioners who have been overtaxed by interest withholding due to the fact that their agents (the banks) have not adequately explained what should be done to prevent that happening;
  
• Can be used to give additional national insurance credits where employers settle liabilities on behalf of employees;
  
• Can be diligently checked against DWP-provided data to match pensioners’ records to prevent overpayments;
  
• Can be joined together to identify those many students from whose small earnings tax is regularly over-deducted and never repaid.

I could go on. But hopefully the general point comes across that the ordinary rights and expectations of a taxpayer or claimant are regularly breached.

So when we have an overarching review of Rights and Powers and the relationship between the citizen and HMRC, you might expect there to be a fair balance between the rights and powers of HMRC and the individual.

You would not have to spend an enormous amount of time reviewing the mass of consultation papers over the last two years to recognise that the rights of the taxpayer/tax credit claimant (particularly the unrepresented one) have had negligible attention.

LITRG has tried in our small way to redress the balance, but analogies of wasps and elephants come to mind. A grossly unequal struggle. Nevertheless readers of TaxationWeb are encouraged to read LITRG’s call for properly enshrined rights for the customers of HMRC .

For the last 10 years, successive Chairmen of HMRC have explained how their customers are very important to the organisation and have launched “enabling” initiatives, “customer improvement” actions and “transformational customer management”.

During this time we have seen the reduction of Customer promises such as the demise of the Taxpayer’s Charter, a dilution of the Customer Service Commitment, the dropping of published targets for customer service, the removal of Codes of Practice; and Better Guidance becoming No Guidance. The latest concern is an assault on face to face advice and the local presence through yet another reorganisation.

Time, I suggest, for HMRC to move from talking the talk to walking the walk.

Article Added Friday, 02 February 2007 | 3141 Hits

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