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.

Tuesday, 25 October 2011

An Inspector Calls II - Clasper Speaks

On 10th October I wrote the following:

"The ICAEW reports that Mike Clasper (Charmian of HMRC) popped in to ICAEW Council last week for a wee chat.

Clasper told members that improving service standards and the "customer" experience were priorities for the department. He also stressed the importance of 2012 to HMRC as a number of changes are implemented.

This is his first visit to Council and he acknowledged the difficulties that have existed within HMRC since the merger between Customs and Excise and the Inland Revenue. He also stated that HMRC plans to become more efficient, increase tax revenue and improve the "customer" (ugh, the "C" word again!) experience

The wheels within the ICAEW sometimes grind rather slowly. However, after a wee bit of gentle pushing from me, the ICAEW has published a summary of what Clasper actually said at the meeting.

Here it is:

"hmrc service standards and tax agent strategy
HMRC’s Chairman, Mike Clasper, and Brian Redford, Deputy Director, Business Customer & Strategy, attended the October Council meeting to discuss service standards and the recently published consultation on Tax Agent Strategy.

The decline in service standards is one of the biggest concerns currently being mentioned by the ICAEW membership. Following a highly critical report by the Treasury Select Committee published in July 2011, a meeting was held in September 2011 between HMRC’s senior management and the professional bodies and various charities to discuss what should be done to help make improvements. 
It was chaired by Mike Clasper and following the meeting a joint statement was published, setting out plans for HMRC to work with the professions and charities to make improvements. Tax Agents have a critical role to play and need a strong relationship with HMRC. At the moment there is a lack of trust that needs to be addressed.

There is understandable concern that promises have been made in the past to improve service standards but they have not been realised. However, the joint statement marks a turning point and shows that HMRC has picked up the challenge issued by the Treasury Select Committee to work with the profession to make improvements.

The biggest problems highlighted are post and telephone handling. The challenge for HMRC and the profession is to jointly understand the nature of the problem, develop solutions to improve the service and find performance measures that accurately reflect the customer experience.

In the past, there have been different views as to how HMRC should recognise agents, with some feeling that the focus of attention should be on the tax payer. HMRC are now clear that strategically the role of the agent should be recognised in addition to the role played by the customer and there is a genuine intention on the part of HMRC to improve relationships with agents.

With the launch of HMRC in 2005, there was a loss of confidence in the organisation from customers as it was felt that it did not have a clear customer centric focus. The foundations for the merger were solid enough. It offered one tax authority for business which is a huge enabler for a customer-centric organisation, a system of dealing with large businesses that is globally competitive and a vast amount of knowledge about tax payers. However, the merger did not fully resolve the cultural differences between the two organisations and needed to deliver efficiency savings at the same time as facilitating a smooth transition from a local to a national organisation.

Following the merger, HMRC’s strategic objectives included:

-       Closing the tax gap
-       Focusing on the customer experience
-       Providing value for money
-       Operating with professionalism

In the 2010 spending review, along with all government departments HMRC was charged with cutting costs by a further 25%, but reinvestment back into HMRC was agreed with a primary focus on closing the tax gap and improving compliance.
In order to achieve HMRC’s strategic goals, there has to be a balance between three key and often conflicting aims:

1.    The tax has to be collected
2.    The customer experience has to be good
3.    HMRC has to be efficient

2010 – A difficult year

Mike acknowledged that 2010 was a difficult year and had said so on the record, but that it had to be seen in context. For HMRC employees, existing systems and processes were becoming outmoded and as configured were not able to provide a single view of a PAYE customer on its systems and this required expensive manual intervention. The system designed to support PAYE was based on 13 regionally defined databases meaning that some people had several records, some of which had not been linked and led to bad data quality and inconsistency. Working with this dated system, people developed ways of getting the right result without inputting the right data which led to further problems. HMRC underestimated the problems that would arise in the move to the new national PAYE system (NPS) and the resources that were needed to tackle them. These problems were only made worse by the resulting high volume of telephone calls that taxpayers and agents made to HMRC.

A related problem was the growing backlog for reconciling PAYE exceptions, which by 2010 had reached 23 million open cases, a problem that dated back to 1983. It was proving impossible to tackle this backlog with the existing systems.

The current situation

Mike explained that over the last few months there had been a considerable turnaround in performance and customers were starting to see the benefits of the NPS investment and other operational changes. Customer contact has improved. This year 70% of calls, on average, are answered within 40 seconds which is a massive improvement on the previous year.

Postal response times are the best they have been since the merger. The average is less than 15 days – calculated from the day the post arrives at HMRC through to when it is posted on HMRC’s system and a response sent. However, Mike accepted that this is not translating to the customer experience and this needs to be addressed. HMRC is also working with its mail partners, Fujitsu and Royal Mail, to cut delays once correspondence leaves HRMC.  But Mike acknowledged that there is more to do in improving the customer experience.

Internally, work is being done to improve professionalism and quality. Training and development is an essential part of this. HMRC is supporting professionalism through the establishment of ‘The Tax Academy’, accredited by Manchester Metropolitan University. This year, some 200 members of staff will commence their training through the academy for full technical training, although it is acknowledged that a wider section of the workforce will undertake other training and continuing professional development.  HMRC recognise some 18,000 members of staff as tax professionals.

Teams have been empowered to improve their own processes through ‘Pacesetter’ methodology and already an improvement in productivity of up to 60% has been seen in some areas.

Work is also being done to cut down on the organisation’s hierarchy. There have been up to 14 approval levels, from frontline staff up to CEO. By March next year there will be no more than eight. The top four tiers of the organisation have also been reviewed. 45% of jobs have been competed with a number filled externally to revitalise the structure and overall numbers reduced.

Up to 8,000 members of staff are also moving from processing to compliance roles in the coming years, which will help to balance the three requirements to achieving strategic goals.

On the performance challenge, HMRC staff members have received the training needed to enable them to go out and observe Tax Agents in their own firms to get a first-hand view of the problems that they are experiencing. HMRC now needs the profession to volunteer to host their staff and help improve standards. At the moment, it was proving difficult to recruit volunteer firms and Mike requested that ICAEW did all they could to promote this initiative. Since the Council meeting a significant number of  ICAEW members and others have stepped forward and the visits are will commence as planned.

Tax Agent Strategy
Allowing agents to ‘self serve’ through an online system should improve the process. By enrolling and understanding the business profiles of tax agents, it will be possible to tailor communication and support.

Through this system, HMRC will now be able to look at all interactions with agents. If there are consistent problems, they can then work with the agents to make improvements, a mutually beneficial process.
HMRC has committed to a big challenge. However, improvements can only be made with the input of the profession and it is therefore important that firms come forward to volunteer to host HMRC staff. Council members are strongly encouraged to do so, and take their opportunity to share their experiences.
For further information, please contact Frank Haskew, Head of the Tax Faculty, "
Well then, Clasper sounds quite optimistic!

I have been publishing this site for several years now, and accept that I may at times be "jaundiced" in my views as to whether there is any genuine improvement or merely scratching around at the edges of the issues facing HMRC.

Therefore I would welcome opinions from my loyal readers (HMRC staff and non HMRC staff) on the above, and as to whether it is a fair reflection of reality.

I would note one thing, not everyone is of the view that there is such a cosy relationship between HMRC and the profession.

Anthony Thomas, President of the Chartered Institute of Taxation (CIOT), recently debunked the nonsense that there is a "special relationship" between HMRC and the professional bodies, calling it a "myth" (akin to that "relationship" between the UK and US governments).
This view may ruffle a few feathers over at the ICAEW, where Michael Izza (the CEO) claims that "we (the ICAEW) now have a partnership with HMRC".

Tax does have to be taxing.

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  1. What an absolute crock of s...e!

  2. The usual spin bollocks from Clasper, watch the whole thing blow up in his face in the next 12 months, bet he isnt even working for HMRC then.

  3. Heaven's forbid, it is seen as a HMRC 'initiative'... from the Treasury Committee Report

    119. We recommend that HMRC draw up minimum service standards for dealing with post in a timely and accurate fashion in consultation with the professional bodies, tax charities and businesses representatives. Such standards should recognise the distinction between simple and complex queries, and look at the progress of correspondence end-to-end rather than in relation to individual items of post. We recommend that the Department publishes an indicative timetable for achieving those standards and keeps us regularly updated on progress towards meeting them.

    Only because HMRC are being told what to do!


    "Teams have been empowered to improve their own processes through ‘Pacesetter’ methodology and already an improvement in productivity of up to 60% has been seen in some areas."

    60% improvement in productivity... WHAT THE FCKU were they doing before? Taxpayer paying the wages of teams who were only performing at 40%...

    ... it just get better when you look behind the bullshit.


    Somebody wants locking up!

    Rhymes with 'anchors', and has a 'W' at the beginning.

  4. @15.40

    The 60% improvement IS bullshit! These teams were probably operating more efficiently before the introduction of PaceSetter. Any so-called improvement is a product of skewed stats provided by self-serving managers at all levels because PaceSetter cannot be seen to have failed.

  5. The 60% is bollocks. HMRC worked better before pacesetter, gave the taxpayer a service and were better trained - whatever happened to training tax inspectors?. All of this 'tax professional' nonsense is a way of not having to pay for decent training or pay a decent wage at the end of said training. The only training is 'customer' (sorry Ken) based for example - how to handle telephone calls! for f***s sake! As for the 8000 staff moving to compliance is the figure not 1200 over four years? That may not be accurate but it is a bit more accurate than 8000. They have introduced new software but computers used by staff are old and outdated with hardly any memory so they keep freezing. One of the new systems allows the user to open up to four or five screens at once but the old PC's don't allow for that. HMRC is failing badly.

  6. having watched him on "hmrc the movie" the awards ceremony filmed with all the emotion of a staged love in with balloons supplied from your local irec, this spin clearly is the reason he is employed for a few days a week on the pittance that a few hundred thousands is.
    i hope he believes this as clearly his staff and "stakeholders" arent falling for it.

  7. We all know it is bullshit... how he manages to sleep at night show what a two-faced lying bastard he really is. I feel sorry for any children he may have fathered. And what a crock of shit the other two-faced lying bastards called Government really are. And that two-faced bastard Gordon Brown must be really proud of himself.
    'Statistics, statistics and damn lies' ... forget the 'statistics'. Upset, upset... we just pays the bills and their wages!

    Treasury Report – "If a view of dealing with HMRC as being a frustrating, costly and time-consuming business were to become entrenched then there is a significant risk of public respect for the institution, and the tax system more generally, being lost."

    ENTRENCHED, ENTRENCHED, what planet are you on? Clearly have no idea and this has been going on for years.... at our expense and not just fnancial.

    RESPECT, now you are taking the proverbial – that was lost a very long time ago.

    Wakey, Wakey!
    Planet Zog.

  8. It's difficult to descramble the spin in this speech.

    It appears to be to try and appease agents concerns. The introduction of tax professionals seems to be a step in the right direction, in other words there will be other staff other than inspectors who have some knowledge of how best to interpret tax legislation and HMRC's own manuals and whatnot.

    From my experience in working in HMRC in a PAYE/SA environment. There are several types of tax agents:
    1. Professionals - those who understand how tax and the department works, they generally work for a recognised firm of accountants (either one of the big firms, or from a larger pool of firms who have set up subsidiaries). Their partners or directors have achieved several accounting qualifications. It is recognised that not everyone in such firms have a wide knowledge of tax e.g. those who are employed to do repetitive/administrative tasks - much the same as such tasks that are expected to be carried out by HMRC admin grades. These will often have clients that are large business or high-profile individuals.

    2. One or two man bands - who, in order to raise their profile, may set up shop under a franchise, they often have qualifications in accountancy, but not necessarily in tax, they may or may not have staff who work for them. They will often have clients that are individuals with small businesses who would prefer someone else dealt with their self assessment/CT affairs or simple PAYE payroll functions.

    3. Umbrella agents. Those who have identified that there are still benefits to being a corporation rather than an individual when it comes to tax and employment law (sometimes have a cross-over with 2 & 4).

    4. Payroll agents - These are those who have bought some kind of software solution and charge their customers for the privilege of having someone trained to use it.

    5. Repayment agents – these are people who have identified a target audience e.g. those who are subcontractors in the construction industry, those who have yet to claim deductions such as professional subscriptions or laundry expenses or those that simply approach them to see if there is a tax refund.

  9. Unfortunately, HMRC has to be seen to deal with all such groups of agents in the same way, regardless of their professional qualifications in tax or otherwise. I can only assume that this because under some kind of common law, if someone assigns someone else as a representative then a government department cannot discriminate against that representative.

    So in the ICAEW speech Mike Clasper is delivering reassurances to the first group (with some in the second group). This is fine, but he forgets that HMRC staff who deal with groups 2-5 will remain sceptical. This is why:

    Groups, 2, 4 & 5 have their own understanding of how tax/PAYE should operate. They will often remain in day-to-day communication (often at odds) with HMRC staff members because they will have often made administrative mistakes and tried to put the focus on HMRC/computer payroll systems that HMRC have not developed).

    Groups 4 & 5 can limit their legal responsibility (as much as HMRC can) due to the fact that although they represent the taxpayer in some manner, they are not dealing with that persons affairs overall. Group 4 only acts for the employer and their functions are limited to those of making correct deductions on behalf of an employee either through information the employee provides them, through direct deductions of tax (agreed by dispensation) or from the PAYE code sent to them (and operated within PAYE guidance) and Group 5 can simply say “well, the agreement between me and the taxpayer only extends to taking a percentage of their repayment but I will not be held liable for any underpayments”) and HMRC can limit their responsibility by stating that they were only acting on the instructions of the appointed representative in lieu of the person whose legal responsibility to provide such information did not provide such information (as the agent/person contract is a private contract – not something a government department is also bound by).

    So, now that’s been dealt with, there is the reputation of the businesses concerned.....

  10. Groups 4 and 5 (and to a limited extent 2) generally do not have their reputations hurt if they get their calculations wrong, for the reasons above. They can just blame HMRC and rely on the ignorance of those who are ‘employed’ by them to blame HMRC, whereas HMRC staff are limited by what they can say with regards to errors caused by an individual/their representative or employer/their representative because if HMRC hurts the reputation of an agent it (or rather the staff member) can be sued. Groups 4 & 5 tend to hide behind that.

    Groups 1 & 3 have a lot to lose here, if they haven’t interpreted legislation correctly and courts/parliament issue something that affect their businesses they may lose their entire business.

    Groups 2, 4 and 5 may have some initial hurt to their reputation but can simply open up again under a different name due to their size.

  11. So, how to overcome this? The easiest answer would be to increase the liability of agents/employers/individuals/HMRC when they make avoidable mistakes. However this will result on more court cases being heard around matters of tax and no one wants that.
    Another suggestion would be for HMRC to admit when it has made a mistake and accept the responsibility, however as a countermeasure, this would mean HMRC being able to disclose when it hasn’t made a mistake and a rogue agent has used legal privileges around confidentiality to displace blame.

    In any case it requires a huge culture shift, but this would involve closing down several business who exist to make a fast buck from others ignorance and they will probably lobby heavily.