APPG: Inquiry into public confidence in HMRC's capability to collect tax fairly and effectively - CIOT comments
The CIOT responded to the All-Party Parliamentary Group on Responsible Tax’s Inquiry into public confidence in HMRC’s capability to collect tax fairly and effectively.
We recognised that one of the challenges for HMRC to improve public confidence is to overcome the perception that big businesses (including multi-nationals) get a better ‘deal’ than smaller businesses and other taxpayers. Whilst HMRC clearly need to have a focus on big businesses, given the amount of revenue that may be involved, there is also a public service angle of helping small taxpayers comply, and our members perceive HMRC are not sufficiently resourced for that task. HMRC’s communications (perhaps restricted by taxpayer confidentiality), have not recently convinced the public that laws are applied to all taxpayers equally, and more could be done by HMRC and indeed politicians to educate the public about tax, dispelling some of the misleading impressions given through media reports (the Apple / Google type ‘avoidance’) when this is beyond HMRC’s powers to prevent.
Domestic tax avoidance is not as prevalent as it was ten or more years ago, and in recent years has reduced significantly. This is due to a combination of factors; one of which being HMRC’s targeting of resources. However, tax evasion does not seem on the whole to be reducing, and tax lost due to illegal behaviour is seven times that due to legal tax avoidance. Illegal activity is a difficult area for HMRC to challenge. Recent and forthcoming measures might reduce these levels, such as the data which HMRC will shortly receive by virtue of the Common Reporting Standard, and HMRC is making increasing use of its ‘Connect’ system, but this requires a greater quantity of resource than other HMRC activities.
The level of customer service provided by HMRC has hit the headlines, particularly with regard to telephone waiting times. HMRC’s approach to customer interaction is ‘digital by default’, with customers self-serving rather than having human interaction with HMRC staff. We have cautioned against reducing staff numbers within HMRC until the benefits of digitisation have been realised.