‘The primary tasks of the
Inland Revenue are to assess and collect tax in accordance with the laws of Parliament.’ So spoke John Savage, my former boss, on my first day with that department in April 1982. The fact that in the last 33 years HMRC seems at times to have lost sight of that core function is the reason why I believe a root and branch review of the department is now essential.
I empathise with HMRC, as it’s often stuck between a rock and a hard place. There are many good people working really hard to do an almost impossible job. They don’t write the legislation they try to enforce; they get kicked by the public when the adoption of a commercial approach to litigation and enforcement appears too ‘soft’ (even though it nearly always isn’t); and they are often criticised by Parliamentary Committees, notably the Public Accounts Committee – although the change in chair will, I hope, lead to a more supportive and encouraging narrative towards the department.
In many respects, the merger of Inland Revenue and Customs and Excise, exemplifies the core of the problem HMRC face. Time after time governments have added to the remit of the department, whether with a full blown departmental merger like that above, or adding responsibility for student loans, tax credits for families, child benefit, even the adherence of business to applying the minimum wage.
Add to this the fact it is still a huge department – around 60,000 people are directly employed by the department, and that ignores the large number who will be engaged as subcontractors usually on IT projects, such as the departments digital strategy. Is it any wonder that morale in HMRC is one of the lowest in Whitehall departments?
A root and branch review provides the opportunity to ensure we have an HMRC that is best placed and resourced in its core role of collecting the revenues the country wants in order to provide for the services and facilities the country needs and deserves – a department that plays its part in creating a vibrant economy.
A review should look at the core of HMRC, the way it is led and managed, its interaction with Parliament and notably the Treasury, its impact on law making, training and skills for all areas but especially those that protect the public purse – and that those who attempt to understand the meaning of legislation drafted and passed in Parliament are adequately rewarded.
And vitally, the unthinkable should be considered. Whether aspects of its current functions could be delivered by private sector or not for profit contractors, or at the very least that its leadership should reflect the view and experience of organisations and individuals who have practical experience of how tax impacts upon the economy. By this, I mean individuals with real and relevant commercial skills, honed at the coalface of business.
A review must also consider how the tax regime is simplified and what taxes should be abolished, or merged. And to see an end to Victorian principles of schedules and colonial practices.
Others have called for a root and branch review. The new government was elected with a manifesto commitment to take tax simplification forward with teeth. Now is the time to go a few steps further, and ensure that by going back to basics, we have an HMRC that is fit for purpose and focused for the economy it so vitally supports.
