Enter Your E-mail

Revenue & Customs and the taxpayer is getting worse thinks Anthony Thomas, president of the Chartered Institute of Taxation.

“Trust between taxpayers and HMRC is in severe jeopardy. A department once regarded with circumspection but trusted is becoming disliked, mistrusted and feared”. These were words I used in my CIOT presidential inaugural address in May. I have no reason to believe they have any less foundation now than when I made them. In fact, I suspect the situation is probably getting worse and not better.

There is no doubt that the objectives of the tax adviser and HMRC are entirely aligned. The correct amount of tax must be paid in accordance with the law. This has nothing to do with “fairness” or anything else. The constant references by HMRC about the supposed tax gap and fairness is a distraction. Such comments are unhelpful and at times place HMRC in a poor light as evidenced by recent senior officials’ appearance before the Public Accounts Committee.

The move to “real time” checking for Business Records (BRC) may be intended to tackle those who deliberately keep poor or no records but I worry that without care and insight from highly skilled and sensitive personnel it will be viewed as a burden upon the already compliant. To expect the smallest businesses to have perfect records is not strictly necessary under the law and it is unrealistic, inappropriate and wholly out of kilter with the Government’s aim of reducing burdens on business. It is difficult to reconcile recent comments on SME business burdens by Nick Clegg, when he said “…get these people off the backs of smaller business” with HMRC seemingly doing exactly the opposite! This ignores the delicate relationship aspects existing between citizen and State, HMRC and tax agent that could be fatally damaged by change without proper consideration, debate and planning.

It is entirely reasonable for HMRC to have a range of powers and these are necessary. They must be used in clearly defined circumstances and the law should be clear without ambiguity, be applied in a balanced and proportionate manner, be easily understood and certainly not skewed excessively in favour of HMRC. Taxpayer rights are important too and that includes tax agents. New powers must be introduced only where existing law is deficient or too complex. I am in favour of tackling dishonest tax agents but far from convinced that the proposed “dishonest conduct” legislation is really necessary. It seems that HMRC want an easy way to tackle bad agents instead of using their criminal powers which are already in place - with the relevant checks and safeguards which come with them. A lack of manpower or will should never be used to justify what could become oppressive legislation. There must always be in place significant safeguards to protect citizens against an overbearing State.

There is no doubt that the reputation of HMRC for efficiency has been severely damaged and the department’s governance is widely perceived as deficient. The efficiency aspects have been acknowledged and there is positive action in this area. Until HMRC recognise that their main Board and Executive Board lack sufficient practical operational tax experience it will be difficult for improvements to be made. It is essential for the Government to address these issues urgently if public trust is to be restored. A failure to recognise these soon and do something positive to change is likely to damage HMRC for years ahead!

Anthony Thomas is the president of the Chartered Institute of Taxation. The views expressed are entirely his own and should not be attributed to CIOT policy.