It's time for HMRC to rebuild trust with advisers

A year ago, it seemed that HM Revenue & Customs was set on antagonising
tax advisers, tarring tax avoidance boutiques and high street tax advisers with
the same brush. Under the circumstances, this was quite surprising.

In 2004, the chancellor had announced the merger of the Inland Revenue and
Customs & Excise, accompanied by a net headcount reduction of 10,500 by 2008
and a cut in the administrative budget of 5%.

You might, therefore, have thought that it would have been in its best
interests to keep tax advisers onside during this potentially difficult period,
but, instead, it took a combatitive stance. The emphasis was on cash collection
and it didn’t seem too bothered who it upset in the process.

The disclosure regime was followed by the interventions pilot, introduced
last summer with very little warning and without heeding the advice of the
professional bodies.

The IHT attack on trusts, last year’s ‘rabbit out of the hat’, would have
benefited from prior consultation and the ‘working together’ groups around the
country, which had been working well since 1998, were beginning to fold due to a
combination of staff relocations and reallocation of duties.

So, towards the end of last year, tax advisers were feeling bruised and
battered.

But let’s give credit where credit is due. There does now seem to be a
realisation within HMRC that it went too far in antagonising agents and a
recognition that there’s a real need to rebuild trust.

In April, HMRC posted two podcasts on to its website. One of these, entitled
‘Fresh Start’, is an interview with Dave Hartnett, director-general of HMRC, in
which he emphasises that HMRC is working hard on its relationship with tax
agents and intermediaries.

‘Tax agents,’ he says, ‘are the front line of compliance in the UK for large
numbers of taxpayers. We want to recognise them in that role and we want to
involve them in developing tax administration.’

And it’s not just hot air, either. Earlier this year, HMRC set up a
compliance reform forum from which a number of interesting ideas have emerged.

In each of these, HMRC has agreed to work with agents in developing their
compliance work. Such collaboration is to be commended and it’s certainly a good
start. Let’s just hope that the next chancellor allows the impetus to be
maintained – because it really does take two to tango.

Rob Ellerby is president of, the Chartered Institute of Taxation