Saving the taxman from the axe

A FRIEND told me recently that supporting the taxman was a bit like giving a cheery wave and best wishes to your own executioner. After all, who in their right mind wants to pay more tax or hear from HM Revenue & Customs.

Today however union officials will attempt to convince MPs that slashing the taxman’s budget by 15%, as announced in last year’s Spending Review, is a staggeringly shortsighted policy measure.

As counter intuitive as this might sound, the policy to cut HMRC reveals little more than policy myopia.

The problem with all mantras is they leave little time for critical or imaginative thought. The endless repetition of the message that everyone has to play their part in the austerity measures runs the risk of blinding ministers to common sense in some instances.

HMRC has seen a third of its staff depart in the last four to five years. Most organisations going through such a sizeable restructuring would also expect an equally significant change to its mission. HMRC has not. In fact quite the reverse. As staff have evaporated, the pressure has mounted for taxmen to take ever larger pots of revenue.

Some of this can be achieved through targeting of staff, but it will leaves holes which produce errors. Tax advisers are seeing them all the time.

HMRC estimates that around £42bn in taxes goes uncollected (there may be a large margin of error in this figure, but it could be either way) – vital reserves for a struggling economy. VAT alone could account for £15bn. These are not small sums. How do you tackle that with an even smaller workforce?

I suspect it will be close to impossible. Oddly, for the Treasury, it is entirely possible that hacking away at HMRC will appear like self harm drowned out and obscured by the austerity chants that have turned budget cuts into dogma rather than pragmatic measures to manage the economy.

Good luck Mr Taxman.

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