I found the following quote published by the Chartered Institute of Tax in response to Public Accounts Committee criticism of HMRC rather bizarre:
Chris Jones, CIOT President, said: “HMRC is a public body and poor service to the public should not be accepted. Ordinary people should have the expectation that they can have a sensible conversation with HMRC without much difficulty.
“It does not necessarily follow that poor customer service harms HMRC's ability to collect taxes — compliance is high and we understand high against appropriate international comparisons — surely the overall level of tax collected is the test of performance.
“ This is an important test of HMRC's performance and a tribute to the honesty of the vast majority of taxpayers — be those individuals, businesses and public sector bodies- and the support of their advisers and tax agents.
“It is important that HMRC takes on board the criticisms made in the report and continue its long term plan to develop methods to collect the right amount of tax and get all the information it needs to check on people, in a systemic and consistent basis, albeit it with a reduced number of staff.”
I highlight the two quite bizarre comments.
Dealing with the second first: the CIOT accept HMRC cuts. Why, is the simple question? HMRC is failing. Why accept that when the cause is reduced funding?
But the first is the more important: assuming a fixed quantity of tax collected is HMRC's goal is absurd and ethically wholly inappropriate. First that's because tax has social purpose and low yields can be appropriate in some cases. But, more importantly, this assumes that if compliant taxpayers can be increasingly burdened to pay then the fact that some avoid and evade and so free-ride the system should be a matter of social, ethical and legal indifference. Or, to put it another way, the CIOT wants a blind eye turned to tax abuse so long as some (let's call them 'the little people' for ease) keep paying.
I wish I could believe that comment was a mistake but I don't. I really think I can make the assumptions I do as to motive from this comment and I am deeply disappointed to have to do so.
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I read it entirely differently.
Para 1: poor customer service is not acceptable
Para 2: however, poor customer service does not necessarily mean HMRC is failing to collect tax. It seems to be doing quite well at collecting tax compared to its peers.
Para 3: so HMRC get good marks for results even if it’s because partly their “customers” are helpful.
Para 4: having said all that, HMRC needs to improve, especially as is going to have fewer people in future.
CIOT is accepting that there are cuts in HMRC,because that’s the declared direction of travel. That doesn’t mean they think it’s a good thing: in fact they have regularly deplored them. LITRG in particular is always good for a comment about how HMRC needs more staff.
As for the bit about “assuming a fixed quantity of tax collected is HMRC’s goal” – they’re not saying that at all. CIOT is simply saying that the primary purpose of HMRC is collect tax, and so the primary performance question is “are they collecting the tax?”. “Are they being helpful to taxpayers when they do so?” is a secondary question.
I don’t imagine that you would be entirely happy if HMRC were to divert resource from compliance teams to call handling.
I do think you and I would both be happier – as would CIOT – if HMRC had enough resource to do both well.
Overall, I read the comment as saying that HMRC could do better in many areas, but they’re not doing badly at their primary objective.
We read someting differently Andrew?
You amaze me
Me too 🙂
What confuses me, however, is how you get from the CIOT’s “surely the overall level of tax collected is the test of performance” to your “a fixed quantity of tax collected is HMRC’s goal”.
Nothing in the CIOT’s bit suggests anything about aiming at a fixed amount. A far better reading is that the more tax they collect, the better they’re doing. What in CIOT’s statement (or elsewhere) makes you think they’re saying there shoudl be a cap on tax collected?
Completely wrong
The social justice of tax collection is vital to the quality of HMRC’s work and you utterly ignore that fact
But we’re talking about what CIOT said, not about what you think.
Even if we say that social justice is the key thing, and the amount collected is a secondary concern, then how do get from what they *actually* said about collecting tax to “a fixed quantity of tax collected”?
The comment on para 2 provides the key to the problem.
It states “It seems to be doing quite well at collecting tax compared to its peers.”
And herein lies the problem. Because, much like organisational appraisement systems which suffer from the same fundamental design flaw, comparing performance using the criteria of how others are doing does not provide a useful benchmark to assess whether the performance in question, in this case collection of tax owed, is achieving the necessary requirements. The peers may all be performing badly, in which case the better performer merely looks better by comparison. This approach simply serves to lulls us into a false sense of security in thinking we are doing OK. A sort of comfort blanket for those satisfied with mediocre performance.
To have any efficacy in relation to the wider system of which it is a part the performance of, in this case HMRC, needs to be assessed on objective criteria. It’s role is to collect all taxes owed. No more no less. That is the relevant criteria.
There is sufficient evidence that HMRC is not collecting all taxes owed. That it does sweetheart deals with corporate entities, some of whom provide personnel to HMRC through the well known revolving door, with HMRC staff sometimes going in the opposite direction. There is evidence that there are insufficient HMRC staff to enable this so called publically accountable body to locate and recover large amounts of tax owed by wealthy individual and corporate tax debtors.
This is not some esoteric issue. It has real life practical consequences and impacts. It means those of us, the majority, end up having to either plug the shortfall or put up with poorer services and infrastructure. It’s why, as one example among many, for years every car I’ve had (along with millions of other ordinary taxpayers) has suspension problems because there is not sufficient funding, due in part from HMRC’s failure to do its job properly by collecting all tax owed, to fix all the pot holes in our road systems. It means those on modest incomes are subsidising the wealthy, be they individuals or corporations who do not pay their share of owed tax.
To put forward a position that HMRC are “doing well” in their vote task of collecting all tax owed is both bizzarre and perverse. There is just no way a credible shine can be put on that particular turd.
Agreed
Don’t think CIOT will though
“The comment on para 2 provides the key to the problem.”
Well yes, you are quite right: benchmarking with peers is not the be all and end all of performance management. It is however a useful yardstick.
You are also quite right that collecting all tax due should be the aim (unachievable though it may be), and HMRC aren;t good enough at it yet. If you look at the last paragraph of the CIOT comment, they go on to say so: “It is important that HMRC takes on board the criticisms made in the report and continue its long term plan to develop methods to collect the right amount of tax”.
So I’m not sure whether you’re agreeing with CIOT or disagreeing. Your words suggest agreement, but the tone disagreement.
Contracting for a fixed yield was how the Roman tax farm worked. You then got to keep any surplus you could wring out of the subject taxpayers.
Historical note only – for now?
Hi Richard,
I can assure you CIOT definitely doesn’t turn a blind eye — or encourage HMRC to turn a blind eye — to uncollected revenue or tax abuse.
The point we were making is HMRC doesn’t do too badly overall at bringing in the revenue — measuring the tax take as a proportion of the tax take HMRC think they should be bringing in.
Perhaps the language was a little simplified but, for the avoidance of any doubt, we don’t think it would ever be acceptable for HMRC to overcharge some taxpayers to make up for underpayments (of whatever kind) by others. Their job is to collect the correct amount of tax from each taxpayer.
And we agree with you, of course, both that tax has a social purpose and that there are circumstances where low yields might be appropriate (say, where the purpose of a tax is to deter a particular activity).
On your other point it’s not that we accept cuts in HMRC staffing. We have been critical of them at times (though we’ve also pointed out that it’s not simply a numbers game — it’s reasonable that better, more automated IT systems mean fewer jobs are needed in manual processing). It’s that we accept they are a fact of life and have to be lived with. That’s what we were acknowledging.
Hope this explanation is reassuring.
Best regards
George Crozier
CIOT Head of External Relations
Reassuring
But it was a shame the original was so wide of the mark then
Richard
” (though we’ve also pointed out that it’s not simply a numbers game — it’s reasonable that better, more automated IT systems mean fewer jobs are needed in manual processing) ”
That’s were it all falls down, despite eye watering amounts spent on IT systems there has been no improvement to counteract the 50000 or so job cuts. I can write to them & expect a response in a couple of months or ring them & wait for up to an hour.
A decade ago I would get a response within a month for a letter or waited a maximum of 20 mins for them to answer my call, and if urgent I could simply call in at my local office.
Agreed. HMRC service levels are poor and they need extra resources to improve customer service as well as to tackle compliance issues.
The press release on the PAC report from CIOT’s Low Incomes Tax Reform Group (our initiative which campaigns to get the tax system working better for taxpayers on low incomes) makes this point in more detail –
“Much of this could be avoided if we had a simple and straightforward tax system and clear and accurate communications from Government departments, including HMRC. But until that day comes, HMRC must not be starved of resources to cope with the inexorably increasing demands upon their helplines. If HMRC receive additional funds to tackle avoidance and evasion, they should be similarly funded to improve customer service for their compliant customers.”
http://www.politics.co.uk/opinion-formers/chartered-institute-of-taxation-ciot/article/hmrc-s-poor-customer-service-tackle-the-causes-not-just-the (we’re having a few website problems at the moment hence the link to our politics.co.uk microsite)
Who are these peers? For example, in 2014 SARS (South Africa) had a cost to revenue ratio of 0.97%. It also publishes an extensive and well-written 130 page report, which a layman like me can sort of make sense of when it comes to performance criteria.
It certainly scared the hell of of some very wealthy friends of mine in the early 2000’s when colleagues were wafted off to jail for, mainly, false declaration. Whereas, under the apartheid government tax evasion success was a popular discussion topic around dinner tables in Constantia and Houghton.
CIOT must be on a different planet to me, is all I can say. I think your comments were mild RM, HMRC is an organization not fit for purpose. Just listened to some of their senior people at the ICAEW last week- Glorified PR bods, not senior Executives, in my opinion
We agree, for once
Just like to point out that I agree with a lot of what you say! I just don’t tend to make comments when I agree, just pointing out when I don’t. And some of my comments when I don’t, are tongue in cheek.
Noted!