HMRC fail to report – is it because they don’t want to talk about the tax gap?

Posted on

From the Observer this morning:

Ministers have been accused of reneging on commitments to open government after it emerged that HM Revenue and Customs had cancelled publication of its full annual report.

The decision was described as shocking by tax experts, who said crucial information about the Revenue's performance would be hidden from public view.

HMRC said the annual report due this month – which sets out its goals in broad terms – would be replaced by a dry financial report and accounts, which appeared last month, to save money.

Figures showing the number of prosecutions against taxpayers and the success rate of court actions pursued by HMRC were omitted from the report and accounts, which focuses on the department's internal finances.

This is quite shocking. Here we have a government department deciding it is unaccountable. That puts the average tax haven to shame. The official explanation is wholly unacceptable:

An HMRC spokesman said the decision to scrap the annual report was taken by the Cabinet Office in May.

Cabinet Office minister Francis Maude made the decision after the coalition government took office as part of a wider effort to introduce structural reform plans for each Whitehall department.

An official said many of the targets in annual reports related to initiatives dating back to the previous government, which were no longer relevant. It is also believed the move was a cost-cutting measure that follows a clampdown on spending across Whitehall to reduce annual budgets by up to 40% by 2015.

I venture to suggest a much more pertinent reason. As has been noted here over recent weeks, the tax gap has attracted considerable attention in parliament of late, largely (and I’m not blowing my own trumpet here, the facts suggest it’s true) because of my work on the issue. I have no doubt HMRC would not wish to have more attention drawn to their inability to collect over £120 billion of tax a year at the same time as they are sacking staff without proper consideration of consultation. Why should they? The evidence suggests a shocking inability to manage the tax system on the part of HMRC’s senior staff. And I’m pleased to see on this one I am in agreement with my usual sparring partners of John Whiting and Mike Warburton.

Well, they may want to duck the issue but I have a strong suspicion that parliament will not let them. The accounts alone provide plenty of ammunition for questioning, and questions there will be I suspect. I will be starting the ball rolling by highlighting some issues civil servants might like to start preparing answers on this coming week.