HMRC has announced details of a major overhaul of its operational structure as part of transformation plans to improve customer service, optimise its tax yield and become a more digitally-focussed tax authority. Accountancy Age looks at the key considerations about how HMRC should be resourced and how the taxman should be reorganised.
Should HMRC be restructured?
Since its formation from the merger of the Revenue and Customs ten years ago, HMRC has appeared to be in a constant change of reorganisation and restructure. The latest announcement – that from October 2016 HMRC will be reorganising itself into three distinct departments – is just the latest in a series of upheavals at the taxman.
Andrew Tyrie, chairman of the influential treasury committee states that there have been “over a dozen major reorganisations in HMRC since the merger in 2005” and notes the “trade-off between stability and what may work better on a management consultant’s whiteboard.” Indeed, in November last year, HMRC revealed plans to replace 170 local tax offices across the country with 13 new regional centres as part of a major restructuring project designed to slash millions of pounds from the taxman’s budget.
But despite the constant upheaval at HMRC, reaction has been positive to the proposed internal reorganisation. Criticisms over ‘poor customer service’ and the not inconsiderable task of achieving its digital tax revolution mean that many in the profession believe HMRC is well due an overhaul.
“With the cultural groundswell running against HMRC, we were pleased to hear news of a proposed internal reorganisation by the UK’s tax authority,” writes George Bull, senior tax partner, RSM.
How should HMRC be reorganised?
HMRC’s initial public statement made it clear that, from October 2016, the department will be reorganising itself into three new groups: a new Customer Strategy and Tax Design group, a Customer Service group, and a Customer Compliance group.
Jon Thompson, chief executive and permanent secretary at HMRC says HMRC is transforming into a “smaller, more highly-skilled operation, based in fewer locations and offering more modern, digital services to customers”.
“They are clearly serious in their intention to become an organisation which is truly focused on customers, even though many of those who are designated customers will continue to feel that they are taxpayers,” posits Bull.
He adds: “Aligning all of HMRC’s activities around the twin goals of efficient tax-gathering and great client service is a massive step forward. If all goes well, the new structure should enable “customers’” tax affairs to be dealt with more quickly, with less delay and fewer errors, and also better for HMRC employees. It seems that we can also expect to see a major crackdown on tax evasion and the hidden economy.”
Commenting on HMRC’s restructure, Paul Aplin, ICAEW’s vice president says HMRC is thinking more broadly in taxpayer terms rather than in the old heads of duty silos.
“At a time when Brexit has created new challenges for businesses and growth is key to economic recovery, it is vital businesses and their advisers can get simple actions done effectively and efficiently by HMRC,” he says.
Does it need additional resources to restructure?
This reorganisation has given the impression that it is being undertaken without the benefit of any additional resources. And practitioners are already deeply concerned over the level of service the taxman can provide in light of the closure of 170 local tax offices.
Yet there remains little appetite to channel more money to the taxman while the government continues to grapple with the effects of austerity and the looming reality of Brexit.
“I would need considerable convincing that the taxpayers’ monies should be diverted from spending on health, infrastructure, education, law & order and defence etc. to increase the number of HMRC’s employees,” says Stephen Herring, head of taxation, Institute of Directors.
However, it might be the case that less is more. “HMRC seems intent on bringing together teams engaged in similar work so that they can improve the speed of response and deal more flexibly and quickly with changing customer needs,” says Bull. “Having fewer groups with clearer responsibilities should make it easier for both HMRC officers and people outside the organisation to know who to talk to and to get their problems sorted out quickly.”
IR35 employment status tax rules may result in workers losing part of their income, says professional body
Committee expresses concern about costs to businesses and April 2018 implementation date
Drastically fewer offices for HMRC in the hope to reduce their running costs
An 80% increase in additional revenue for HMRC coincides with a crackdown on income tax avoidance