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Concern for the vulnerable as HMRC hit with more cuts

Last week’s spending review saw HMRC hit with a 15 per cent real terms cut in its Budget.

That is even after the extra £900 million (over five years) to tackle avoidance and evasion (as announced by Danny Alexander at Lib Dem conference in September), and a further £100 million to improve the operation of PAYE.

To free up the money for these projects and make the savings required of the department, HMRC is being expected to make efficiency savings of 25 per cent of its resource (i.e. non-capital) spending through “enhanced use of new technology, rationalising the HMRC estate and maximising savings from IT contracts”.

You can read the HMRC section of the spending review paper by clicking here and scrolling down to pages 71-72.

Gavin Hinks, editor of Accountancy Age, has written a good analysis of what the review means for HMRC which you can read here.

The CIOT‘s Low Incomes Tax Reform Group (LITRG) has expressed concern that the cuts will bear harshly on vulnerable poorer taxpayers and tax credits recipients, by further reducing their access to help and support, such as home visits, enquiry centres and hard copies of leaflets, and by increasing the pressure on Tax Help for Older People (TOP) and Tax Aid. You can read more of their response here.

The union representing HMRC staff has said that strike action will be inevitable in the Government does not change its course.

The CIOT raised our concerns about resourcing of HMRC with the Exchequer Secretary ahead of the spending review. HMRC’s staffing levels have already been cut by more than a quarter over the last six years. One of our concerns is about how often ‘efficiency savings’ really are true efficiency savings and how often they are just the shifting of a burden. If the result of HMRC discontinuing something is that taxpayers and their agents have to do the work instead most people would consider this displacement rather than efficiency.

The CIOT’s Tax Policy Director John Whiting responded to questions from FT readers on the paper’s website on the day after the review. The questioners did not restrict themselves to tax matters, wanting to know John’s view on whether house prices are going to go up or down, and whether the Government should not just print a trillion pounds of new money to clear the national debt!

George Crozier
CIOT External Relations Manager
27 October 2010


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