Back in February Labour announced that it would, if it took power, begin an “immediate and independent review into the culture and practices of HMRC with regard to tax avoidance.”
This politicisation of the question whether HMRC retained public confidence diffused the logic of the demand. But the force of the argument sufficed to overcome this handicap. A broad church of respected industry figures coalesced around a single answer. Paul Aplin, Chair of the ICAEW Tax Faculty Technical Committee, Professor Judith Freedman at Oxford University, Ray McCann and Richard Murphy all joined in the call for a review.
The politics have come and gone. But the issue has not gone away. Paul Aplin has repeated the call. Twice [£]. As has Bill Dodwell, Head of Tax Policy at Deloitte. And so, too, apparently, Grant Thornton. Let me, here, add my voice to theirs.
There is much that we agree on. We each of us identify the need for a review as stemming from a breakdown in public confidence in HMRC: of this, and the threat it poses to social cohesion, there can be no serious doubt.
We all, no doubt, understand the difficulties arising from a constrained funding environment. But even proceeding from this premise, there remains much that might be done to improve the relationship between HMRC and the public it serves.
Political accountability must be enhanced: whilst I have heard the arguments, I still do not understand the case for HMRC remaining a department without a minister.
Transparency goes arm in arm with accountability: the culture of HMRC must change so that it proceeds instead from the assumption that the public has a legitimate interest in understanding the basis on which decisions are made. Whilst plainly there will be hard cases, even under the law as it presently stands there is high level authority for the proposition that HMRC could move some way from the status quo.
Whilst there is disagreement amongst professionals as to whether the recent extensions to HMRC’s powers are justified, there is an emergent consensus that those powers are subject to inadequate internal and external control and supervision. These failings are not only to be found at HMRC – but it is there that rebalancing the culture must begin.
As I and many others have observed, the proper functioning of our tax system is materially contingent upon the public’s voluntary obeisance to it. That obeisance is under strain. Lose it and it won’t be recovered in a dozen Finance Bills.
Waiting for Godot 
Pingback: Tax Research UK » It is time for a proper review of HMRC
The points made by the writer are valid in the context that they are made.The core issue is who is supervising the appropriate implementation of the additional(draconian) powers being allocated to HMRC.The short answer is nobody.As one who comes from a jurisdiction where these powers have been in place for a decade or more(Eire),permit me to inform you of some of the outcomes.
Example:Power used is access of a taxpayer’s bank.Assuming that there are funds in the account and the tax is legitimately due,HMRC make a demand on the bank which they pay.The consequences for the taxpayer’s relationship with his bank are massive.The bank’s confidence will be hugely undermined.They will withdraw overdrafts etc thereby destabilising the business and possibly forcing a closure with consequent unemployment etc.
An independent observer’s view might reasonably be “tough he should have paid his taxes without forcing HMRC to use their powers”.This is not a hugely unreasonable reaction but it is harsh.
Consider the plight of the business owner who is the victim of an HMRC error.The same catastrophic consequences may occur.Will the Bank accept that HMRC made an error?Will the official within HMRC accept that he has made a mistake(good luck with that!!)?The PR machine within HMRC might(?)accept that errors occur but that such errors fall within their acceptable range that the legislation is on an overall basis operating within an acceptable error range.At any rate the errant official will be protected and his actions justified
The obvious solution is to ensure that HMRC do not know who you bank with but they will have records of the accounts from which the taxpayer has paid them and other accounts from revenue audits etc
Example 2.Same circumstances as above except that the collection method used by HMRC is attachment of a trade debt.The debtor is instructed to pay HMRC the amount that is due to the business.This opens up many opportunities for the debtor,all of which end with the debtor not paying and the business suffering humiliation and cash loss.
It is clear to all observers that HMRC have in the past and at present sought to secure tax compliance by intimidation and oppression rather than by meaningful commercial cooperation.We have all seen that brutality rarely brings cooperation.The latter needs to be earned and trust between the opposing forces secured.The current modus operandi of HMRC will never succeed.
The proper way forward is to simplify the tax codes, remove tax breaks so “Joe Citizen” is assured that every taxpayer is paying according to their earnings rather by access to tax avoidance.This will generate trust in the tax system and the bye product will be obeisance as wished for by Godot
“I still do not understand the case for HMRC remaining a department without a minister.”
Is this something that has been raised (eg by a professional body) with the government? Is there a reason why there is no minister with specific responsibility for HMRC?
“I still do not understand the case for HMRC remaining a department without a minister.”
I confess I am no expert in government but in what ways would things change if a minister in charge?
Are there examples of government departments whose performance has been galvanised by any minister?
If they said to Lin Homer, OK you’re not a permanent secretary you’re now a Minister, would that mean anything?