New system will improve tax quality, says HMRC chairman

“QUALITY” is a word that HM Revenue & Customs chairman Mike Clasper litters throughout his conversation with Accountancy Age.

While many advisors would suggest that the taxman has shown a distinct lack of quality in recent years, Clasper is clear that changes are afoot.

While there is much work to be done, the introduction of a new system for dealing with taxpayer’s affairs will reward quality from both HMRC and the tax profession.

Currently under consultation, the plan is to introduce a registration system for advisors that will give them the power to revise and update their client’s affairs directly into HMRC, removing the need for time-consuming communication.

“What would be ideal is that everyone’s on the new system; agents happy, and we’re happy getting better, faster information,” said Clasper.

And here’s where quality comes into it. Proficient tax advisors will be able to input accurate data on clients’ behalf, badged as “self service”. Quality data coming into HMRC will lead to quality outcomes for all three parties.

Clasper comments: “Our systems are not perfect but are good when the inbound data is good. Anything that makes it easy to match data is good for customers, agents and us.”

Of course, how HMRC will gauge advisors’ quality and what actions they will take if the taxman isn’t happy with them is of great importance.

The CIoT warned yesterday that an independent body should manage removals of advisors from the register.

“While we are very much with HMRC on wanting to get the highest standards among tax professionals, HMRC cannot be permitted to be prosecutor, judge, jury and executioner when someone’s livelihood is potentially at stake,” said CIoT president Anthony Thomas.

As far as Clasper is concerned, the introduction of the new system for streamlining is welcomed by the profession; the consultation is, he believes, more about dealing with the kind of issues, protocol concerns, flagged up by the tax institute.

If, for example, a tax advisor under-recovers PAYE across all his or her clients during a year, the taxman will work with the advisor to rectify the underlying issue.

Removing firms off the list at short notice would only happen in cases of suspected criminal activity, said Clasper.

Clapser dismissed concerns that advisors would end up doing HMRC’s work for it, forcing advisors to “police” clients. “There is no change to the relationship”, as advisers will still represent clients, said Clasper.

The new system would also provide the taxman with better data about advisors and how they work, plus who they work with.

This data would be used to communicate with them in a more targeted fashion, Clasper explained.

“[We’d like] some form of dialogue on their specialisms, and personalised dialogue can emerge, develop over time,” said Clasper.

Dialogue between advisors and HMRC is a topic of great interest. Anthony Thomas said in his inaugural speech that the relationship between the two had never been lower. Throw in morale at its lowest ebb among HMRC staff, and Clasper acknowledges there is work to be done.

“The customer experience has inched up but we’ve got to do a better job,” said Clasper.

The new system is one key plank among structural improvements at the taxman. HMRC is “de-layering,” explained Clasper.

Certain parts of the organisation have 13 to 14 decision levels, “that’s too big by a distance”, he admitted.

The Taxman is heading towards seven or eight. “That’s five to six layers between the call centres and [HMRC chief executive] Leslie Strathie.”

Clasper also argued that there has been a lack of “balance” in reporting on HMRC’s recent performance.

The Taxman’s interventions strategy will see a “substantial increase” on the £11bn it brought in during 2009-10, up from £7bn in 2007-08.

On top of that, £1bn of fraud has been removed from the tax credits system, during a period of huge staffing cuts. Improving call centre performance is also planned, according to Clasper.

The next few months during which fundamental restructuring will occur, plus the self-service consultation, will put Claspers’ focus on quality to the test.