HMRC Is Shite

HMRC Is Shite
Dedicated to the taxpayers of Britain, and the employees of Her Majesty's Revenue and Customs (HMRC), who have to endure the monumental shambles that is HMRC.

Thursday, 26 August 2010

Bernard Ingham's View

Unedited, as per The Yorkshire Post:

"WHEN in doubt, set up a committee. That is the politician's answer to everything. It is often an elegant response to a knotty problem because, like Royal Commissions, committees can take minutes and spend years. Just what parties in power, if not the public interest, order.

And so, while his colleagues are culling quangos, Chancellor George Osborne has set up a new one. It's the Office of Tax Simplification, otherwise known as OOTS.

Unfortunately, we are in no position to grumble about OOTS. Osborne said he would establish it two years ago because, as was his wont, Gordon Brown had taken a complex system and complicated it. The new Chancellor has appointed a former Tory Minister, Michael Jack, and John Whiting, a former PriceWaterhouse tax partner, to sort out the mess.

So far so good. But what sort of dog's breakfast has Brown left behind? OOTS' usefulness turns on the answer.

It goes without saying that the tax system is complicated. There are a lot of vested interests behind its complications. As an eminent Scottish lawyer once told me over dinner, budgets were his bread and butter. I gathered that the more impenetrable they made the system, the fatter he became. Gordon Brown was God's gift to tax lawyers.

Since the 1999 Finance Bill, tax legislation has grown at an alarming rate. So have the penal regulations introduced since self-assessment tax returns were issued in 1997.

On top of this came the merger of the Inland Revenue with Customs and Excise in 2004. Rubbing shoulders with tough Excisemen brought up on nabbing smugglers has, it seems, done nothing for the taxman's dubious PR skills.

The result, according to accountants I know, is a deterioration in the relationship between taxman and taxpayer. HMRC are the masters now. I cannot personally testify to this since, in my lazy way, I employ an accountant to devil for me. He is not a complaining sort.

But I am clearly no more representative than is Naomi Campbell of models in taking post-prandial delivery of "blood diamonds" – or "dirty-looking stones" – on her bedroom doorstep. Last year, HMRC records it received 73,455 complaints and has even set aside £30.7m for legal costs in appeals that taxpayers are expected to win.

In the first half of last year, 20,778 taxpayers asked for an independent review – mostly for late filing of returns – and more than half either had the penalty withdrawn or cut.

These figures do not testify to respectful relations between the public and tax collector. Nor does the awesome total of 18 million unresolved cases covering both over- and under-payment Messrs Jack and Whiting clearly have their work cut out.

It may well be argued that, if – and hope springs eternal – they can simplify the system so that I can understand it, the problem will solve itself. But will it? All I hear suggests that it is not just a matter of complexity; it is also one of attitude. In other words, it is not just a matter of bad law; it is a matter of the public servant's approach to the citizen – as I fear it is in so many branches of our bureaucracy.

I speak as one who recognises that avoidance of tax is a national industry and that no Revenue officer should be born yesterday – or expect to be loved.

But the readiness to impose ever increasing penalties, some of which can have serious implications for contractors' continued operation in business, the difficulty of finding and reaching the appropriate office, the time taken to make simple repayments and the excuses offered demand more of OOTS than mere simplification.

It probably does not help that there are competing chartered institutes of accountants in this green and overtaxed land. They surely bear some responsibility for our tax system being up to its knees in the Brown stuff. Perhaps the public would have been better served if they had spent more time on insisting on good law and less on ever more complex methods of tax avoidance in pursuit of their own profit.

It is probably a good thing that OOTS is trying to simplify our hopelessly complex system of providing the wherewithal for the nation's operations. But I trust it also feels it must look at the spirit in which the Revenue conducts its essential business.

Unless it does, Osborne will not realise his ambition of showing the world that Britain really is open for business. It must clear the air as well as the Statute Book.

Tax does have to be taxing.

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