Real-time odyssey awaits Homer after tax testimonies

AS MEMBERS of the Treasury Sub-Committee took stock of the witness testimonies on the taxman’s administration and progress, HM Reveune & Customs chief executive Lin Homer might not have been left cringing over what she heard, but it would be safe to assume she was at the very least pensive.

HMRC did not take a panning here – far from it. There was plenty of praise for Homer’s (pictured) start as chief executive and of her immediate team. There was praise, too, for the department’s performance relative to the budget it works with.

However, if the indications given unanimously by the expert panellists called before the committee are anything to go by, HMRC is a department with an unwieldy 2013 ahead of it.

It will come as little surprise that Revenue union representatives Gareth Hills, Graham Black and Peter Lockhart reported that the department was “not yet a confident organisation”.

That, married with the unenviable task of implementing real-time PAYE, was a source of concern for the committee.

Both the Treasury and HMRC would have been disconcerted by what they heard on real-time tax information (RTI) here, especially after the bravado around the progress of its pilot scheme.

RTI, which is due to come into force in April, will see employers updating their PAYE records as and when changes occur, rather than at the end of every tax year.

While that sounds like a far smoother way to operate the system, both witnesses and committee members expressed concerns over the timescale available to iron out teething problems as well as the ability for SMEs to cope with not only filing on time every month, but doing it online.

ICAEW tax faculty chairman Paul Aplin was measured, but at times bullish, on the issue, describing the requirement to make submissions “on or before” pay day as “absurd”, adding the compliance burden on small businesses was “disproportionate”.

How well equipped the taxman is to deal with such problems came under scrutiny, too, given the aforementioned lack of staff confidence and the “absolutely illogical” expectation of higher yields against a background of staff and budget costs.

The PCS Revenue & Customs Group’s Peter Lockhart was particularly strident, calling for “proper investment in HMRC”.

“There’s a logic there … the more that’s invested in HMRC, the more you get back,” he said, recognising the taxman faces a difficult task and “does a good job with what it has”.

There was some mixed news over staffing issues, with Association of Revenue & Customs president Gareth Hills remarking that “recruitment isn’t a problem” for the department, pointing to the addition of more than 200 graduates in the past year.

Retaining that talent, however, has been problematic, according to Lockhart, who revealed that some 4,000 temporary staff are currently employed by the taxman to cover for natural wastage of staff stemming from retirement and staff taking other jobs.

An equally immediate issue is that there is currently 11 staff over 50 to every one under 30 at HMRC, according to Hills. Although that is a heavily weighted figure, no way of redressing this was proposed by any witnesses or committee members.

Despite what, on paper, is a litany of significant issues, the knives were left firmly sheathed for HMRC. Indeed, rather than directly critical, the tone was more one of sympathetically highlighting issues and setbacks befalling the department.

That, in part, may be due the recent arrival of Homer and her fellow senior staff who, as former ARC president Graham Black pointed out, are “still getting their feet under the table”.

Be that as it may, they need to get settled soon, as running HMRC is known for being an uncomfortable task.