No Longer Fit For Purpose

The Institute of Chartered Accountants of Scotland (ICAS) have just published a survey (conducted in August and September 2010) of ICAS members that shows a drastic deterioration in the facilities for contacting HMRC. These findings are also reflected in a new National Audit Office (NAO) report entitled 'Engaging with Tax Agents'.

"Poor communications account for 43% of HMRC's systemic errors and shortcomings reported by the survey respondents (compared with only 13% in a similar survey in March 2009), and 71% of these are considered 'more serious than a year ago'.

Derek Allen, Director of Tax at ICAS, said:

'Facilities for contacting HMRC have deteriorated drastically in the past year. Phone calls to HMRC help lines go unanswered.Letters sent to HMRC lie unopened for weeks – sometimes months. Many HMRC staff seem ill-equipped to perform their allotted roles, and technical tax questions are commonly passed from pillar to post. Urgent action is needed to simplify the tax regime and give more help to those trying to comply with their fiscal obligations.'

The administration of PAYE also attracts criticism, accounting for 15% of the matters reported (up from 11% in 2009), and 72% of these are considered more serious than a year ago.Many other concerns are raised by respondents, including difficulties with online filing and unreasonable delays in obtaining tax repayments.

Welcoming the NAO report's recommendations on how HMRC and tax agents could work together more closely to improve tax systems and services, ICAS notes the NAO's conclusion that the proportion of tax understated in returns submitted by agents was broadly one third of that where there was no agent involvement – finding it paradoxical that this has been used to suggest that returns for represented taxpayers are more likely to have under-declarations of tax than returns filed by non-represented taxpayers.

Derek Allen summed up:

'The problems raised by our member survey cover a wide range of issues and demonstrate that the over-complicated tax system we have is no longer fit for purpose. We hope our survey report can be used by HMRC to supplement the NAO report, helping identify weaknesses in HMRC's processes for administering the tax system and encouraging them to remedy these.

We also hope that, in looking to maximise value for money, HMRC will implement the NAO's recommendations on extending tax agents' involvement to provide further support to HMRC's tax compliance processes, whilst achieving cost reductions for HMRC and increased efficiencies for agents.

In considering the important role played by tax agents, we are disappointed that the NAO has drawn no distinction between members of professional bodies such as ICAS and those without qualifications. Unlike those that are unqualified, our members in practice adhere to a strict code of professional conduct, undertake continuing professional development, and are subject to stringent quality assurance reviews – all designed to maintain the highest professional standards among our membership.'"

The ICAS report can be downloaded here Systemic errors in tax administration.

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