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The news that the HMRC budget is to be protected from the cuts faced by other government departments is welcome, as is the promise of greater transparency for ordinary taxpayers.

Background

The Chancellor’s Autumn Statement declared that the HMRC budget will not suffer the 1% and 2% cuts being imposed on other departments. The Low Incomes Tax Reform Group (LITRG) believes that this could be good news for those who depend on HMRC as their only source of advice and help with a highly complex tax system.

HMRC’s budget and services

The fact that HMRC have been given an extra £77 million to tackle avoidance and evasion shows that if there is a will to find extra money in a worthy cause, there can also be a way. A cause equally worthy of substantial reinvestment would be the restoration of HMRC’s customer service to acceptable levels.

HMRC have made good progress since 2009 and 2010 in improving telephone response times and correspondence handling, but admit that there is some way to go before they reach industry standards. A certain amount of reinvestment has already taken place; more of the same would enable HMRC to enhance the speed, quality and accuracy of their interaction with taxpayers and tax credit claimants.

Improving customer service generally will reduce low value work, in turn freeing up HMRC resource which can be deployed to tackle deliberate avoidance and evasion. Besides, investing in customer service may help to fulfil the remit of tackling evasion and avoidance. After all, if people are better able to engage with HMRC, they may be less likely to drop below the radar.

Digital services

LITRG also welcomes the announcement of an expansion of the range of digital services provided by HMRC, including a personal tax statement for 20 million taxpayers showing how their tax is calculated and spent by government.

Having expressed approval and encouragement when HMRC consulted on the idea earlier this year, LITRG regards this as a welcome step towards greater transparency for individual taxpayers. Ideally it should pave the way for similar personal tax statements for all taxpayers, businesses and private individuals, and the service should be extended in paper form to those without access to technology, so that they are not left behind. As always, the group is keen to be involved in any HMRC consultation on the design.

Help for unrepresented taxpayers

Up till now the PAYE system has been notoriously opaque, tripping up millions of unrepresented taxpayers who are without access to specialist advice and who lack the code-breaking skills necessary to understand the average PAYE calculation. A personal tax statement could usefully improve transparency in the PAYE system as it moves into the brave new world of real-time information from next April.