Spending cuts likely to hit HMRC’s service

The Chancellor’s Autumn Statement indicates that spending cuts approaching £30 billion¹ will be required across government departments. The Association of Taxation Technicians (ATT) is concerned that the impact of these cuts on an already under-resourced HMRC could significantly limit the department’s ability to meet the challenges it is facing. The ATT also believes that the cuts could also undermine HMRC’s objective of building a trusted modern tax administration.

Senga Prior, Chair of ATT’s Technical Steering Group, said:

“On behalf of our members who as tax practitioners work to help their personal and business clients meet their tax obligations, we are concerned that any reduction in HMRC’s resources could result in decreased operational efficiency, a failure to harness the benefits of technology and ultimately a loss in the Exchequer revenue which is so urgently needed.

“The covid pandemic placed massive demands on HMRC and their service performance has yet to recover fully. Call handling, post handling and other key aspects of HMRC’s work remain at levels which make the department’s aspiration to build a trusted modern tax administration very challenging.

“A modern tax administration depends on effective use of technology for communications between the taxpaying public and HMRC. The creation of the Personal Tax Account² (PTA) started with great promise and has already delivered benefits (such as the ability to obtain pension forecasts) but its development has stalled. As a result of that, taxpayers are obliged to resort to writing or phoning HMRC to obtain information and resolve issues. In addition, to date agents, are unable to access the PTA information resulting in increased delays and unnecessary use of HMRC resources when dealing with simple matters such as requesting amendments to PAYE codes which could be built into the system.

“The use of traditional communications means that HMRC have to resource those channels but the difficulties and delays in getting to speak to someone in HMRC or to receive a reply to a letter demonstrates that HMRC are significantly under-resourced.

“A trusted tax administration depends both on its efficiency and on the quality of the interaction between the public and the tax department. HMRC’s Charter defines the department’s aspirations and there has been a lot of good work both within HMRC and between HMRC and the various stakeholders in identifying how those aspirations can be converted into a reality. Without specific resources, the Charter risks never being much more than noble words. And without the Charter principles being embedded in everything that HMRC does, it cannot achieve the level of trust that is required in its operations.

“For these reasons, we urge the Government to ensure that HMRC are adequately resourced so that they can fulfil their task of effectively collecting the revenue that is required to fund all public expenditure. Building a trusted modern tax administration is not a luxury, it is a necessity.”