HMRC’s budget cuts raise fears on service

As tax advisers settle down to absorb and deal with the impact of the Budget, their counterparts at HM Revenue & Customs have an altogether different problem – how to manage the chancellor’s decision that it would be experiencing a 5% real terms cut in its budget.

The cuts are likely to provoke familiar concerns from the profession. Will the change mean that the quality of service provided drops?

There are already worries about the impact of Sir Peter Gershon’s review, and the HMRC merger has also seen some offices close. There have been no cuts in staff with the merger moves, and the closures have only meant two offices in one town merging, but in the atmosphere of concern about the service provided, the changes have at least played on people’s fears.

How will HMRC deal with the latest round of cuts? It is thought that there are two plans in mind.

One is e-filing, which ought to provide a cheaper and more efficient way for the taxman to process tax returns. The growth in e-filing has been notable. Two million people filed self assessment returns this year, compared with 1.6 million last year. The other is its ongoing reforms of its frontline service. This is likely to raise more fears amongst the profession.

HMRC recently announced that it was reforming its office structures to introduce a new ‘floorwalker’ asking those queuing up what their query was. Those who did not need to see anyone could be directed elsewhere. The move begged the question: if you didn’t need to see anyone, would you go to a tax office in the first place?

Any moves in a similar direction will raise hackles about a declining quality of service. The profession’s relationship with HMRC on its efficiency in dealing with issues is already fraught.

There may even be job cuts. Apparently, no decision has been made – but given the importance of employment costs in public sector budgets, it would seem unlikely that there would be none.

Advisers may complain that Gordon Brown has landed a new set of stealth taxes, acted deviously or even created new burdens. Whatever problems they have, they might spare a thought for those at HMRC too.