Administration and effectiveness of HMRC – written evidence

Written evidence submitted by David Marsh

Firstly let me say that a response deadline of the 17th Nov is far too short for such an important enquiry and I think the deadline should be extended by at least a month + more publicity given to the existence of it.

I started my career in "Tax" with HMIT and left the dep’t as an FT HMIT. I have a total of 39 years experience and deal with taxpayers and business’ that are genuinely "small" - not the upper limits of the governments idea of "small"  (500 employees and a multi-million turnover).  My clients have t/o’s up to £1m and either no employees or just a handful.

To do justice across the full range of interaction with HMRC would take pages and pages of case histories and details.

The "bottom line" is that the quality of HMRC service has never been so appalling – and by service I don’t just mean service to taxpayers and accountants who are trying to get their Tax affairs sorted, I mean service to us all in terms of selection of cases for enquiry and how HMRC d/w those enquiries.

Access to HMRC staff who actually know what they are doing is impossible. Contact has to be at the call centre and the majority of those staff simply don’t have the knowledge and/or training and/or authority to know what to do and how to d/w the problem.

We do have an agent access line, but the general public will on many occasions have to wait 45 minutes to get through – totally unacceptable.

On many occasions delays measured in months not days occur when waiting for a response. When you telephone (the call centre) they have no idea why there is a delay, they often say the letter I sent is not on record as being rec’d and the best I get is " I will send them an email". I need to be able to speak to the officer actually dealing with the matter.

Even although the agent contact details are on every Return I file I have had too many cases where HMRC have (wrongly) just amended a liability (eg when they thought the state pension was more than had been declared). I then get a call from the client, who assumes that HMRC could not possibly be wrong (what a joke!!!!) and then want to know why I got their Tax Return wrong. If the officer who thought the Return was wrong had just phoned me, I could have reviewed the matter with them and we would all have been spared a lot of grief and a huge waste of time. But they don’t!!!

You are already aware of the almighty cock-up with the coding notices. I strongly urge you to read Alex Byrne’s article in Taxation magazine dated 4th November.  It is HMRC’s fault that these overpayments and underpayments have arisen but they are yet again trying to avoid their responsibility by saying that taxpayers should have been aware of the wrong Tax codes. As Mr Bryne points out, if taxpayers could actually understand their tax codes why did millions of them who were overpaid not claim their repayments!!!!!!!!!!!

Investigations. At District level (if there is such a thing these days) they are a waste of time. If what I am told is correct, the cost/yield ratio is less than 2:1. Why? The staff are not properly trained. The staff don’t have the right aptitude. The enquiries are selected by "risk assessment" done by a computer from almost non-existent details. The staff have little or no back ground information on the person.  What little they do have is often wrong or incomplete.

HMRC decided to adopt a policy of no composite negotiation. That has resulted in a huge backlog of unsettled cases. I understand that common sense has now prevailed on that point.

HMRC can’t risk doing no investigations at District level. What they need to do is use proven successful investigators – and pay them properly. The amount of background information available to the IR is vast and so each investigator should have a team of say 2 staff doing the research. If my personal experience is anything to go by, they should easily get at yield of 10:1.

I know that HMRC have set up a high net worth unit. It is supposed to be staffed by more experienced officers. The problem there is that they don’t know when to close a case. "Flogging a dead horse" is a waste of everyones time.

I don’t have any experience of the larger company cases or the tax avoidance cases. From what I read, HMRC are having more success with them. I suspect the reason for that is that they are using trained and experienced staff.

When HMRC have computer failure, staff problems, relocation and dozens of other reasons for not doing what they should have, we have to accept it with no meaningful recompense. When we have those same problems our clients are subject to fixed penalties. In general HMRC’s method of dealing with their failures is to legislate the problem away.

All of you should read the article by Simon McKie in Taxation magazine dated 14th October and Philip Fishers article , also in Taxation dated 7th October.

November 2010