PAC raises “serious concerns” about HMRC’s digital plans

PAC raises “serious concerns” about HMRC’s digital plans

An examination by the Public Accounts Committee (PAC) has revealed serious concerns relating to HMRC’s plans

SERIOUS CONCERNS over HMRC’s digital plans have been voiced by the Public Accounts Committee (PAC).

The PAC identified areas of concern in its annual examination of HMRC, including customer service; the tax gap; tax reliefs; and multinationals’ tax affairs. The annual test of HMRC’s performance provided recommendations to safeguard taxpayers’ interest.

Digitising the Tax System (MTD)

“HMRC is staking a great deal on the success of its plans to digitise the tax system, but once again it lacks an adequate plan if demand for its call centres does not reduce as quickly as it hopes,” stated the PAC in its recommendations.

The Making Tax Digital (MTD) plan, which would see quarterly reporting to the taxman, “must” meet the challenges of cutting spending, restructuring its business, dealing with Brexit, relocating staff, and replacing a major IT contract. Also, HMRC must agree on a contingency plan with HM Treasury in case its projections are inaccurate. Meg Hillier, MP, chair of the PAC, added: “Contingency planning should not be an optional extra.”

It was recommended that, by March 2017, HMRC should have a credible plan to make savings without causing further failure in customer service.

Hillier said: “HMRC plays a vital role, it is disconcerting that again we must raise concerns about customer service and transparency in the tax system. The lack of a convincing fall-back plan to safeguard service remains a looming threat.” Her comments refer to mistakes HMRC made two years ago when the number of staff were reduced in the personal tax service, resulting in a “disastrous decline” in customer service.

Unclear Tax Gap

The way HMRC has measured the tax gap, and its impact of the efforts to close it, is “unclear”, said the PAC. The figures have fluctuated year-to-year to 6.5% in 2014/15 from 8.3% in 2005/6. HMRC’s annual report doesn’t set out what impact its compliance work has on reducing the tax gap.

The taxman should report annually on the effect its work generating compliance yield is having on reducing the tax gap, including the assessment of the accuracy of compliance estimation, said the committee.

The PAC reiterated the call for greater transparency in the tax affairs of large multinationals “to increase the pressure on them to pay their fair share of tax”, urging a debate for country-by-country reporting. HMRC will soon receive this country-by-country reporting in confidence, but will not increase transparency over the tax affairs of those companies.

Tax reliefs are still not sufficiently visible to support public debate and scrutiny, an analysis of reliefs and costs are called for in HMRC’s annual report. The examination recommends that HMRC should include an analysis of tax reliefs and their costs in its annual report to improve accountability about the areas where government has chosen not to collect tax.

The committee will be hosting a global summit on tax transparency on 9 December.

“Complete failure” of Concentrix

There has been “unnecessary hardship and suffering” due to the “complete failure” of the contract of HMRC with Concentrix. The actions of Concentrix resulted in many tax claimants being wrongly accused of fraudulent claims and lost their payments. HMRC ended its contract with Concentrix in September 2016.

Hillier added: “We look forward to meaningful action to prevent a repeat of the failings embodied by its contract with Concentrix, a venture with appalling human consequences.”

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

Professional Services Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine

Accounting Firms Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021

Making Tax Digital Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource