TaxAdministrationTime for a comeback

Time for a comeback

Are job cuts at HMRC to blame for the efficiency slips? asks Michael Izza

Michael Izza, chief executive of the ICAEW

Much has happened at HM Revenue & Customs since the two CDs containing
the personal details of 25 million people were reported missing last November.

Dave Hartnett has taken over as acting chairman, the capability review
findings have been published and Kieran Poynter has issued an interim statement
on the data loss. While these moves are welcome, in my view, the question still
remains: was the loss linked to the job and cost cuts demanded by the change
programme HMRC is currently implementing?

HMRC and ministers have argued that there was no link, but it is hard to
believe that any organisation ­ public or private sector – could survive cuts of
25,000 staff from a workforce of 94,000 without problems. If HMRC is to deliver
the service standards it aspires to, it must be properly resourced. The
capability review, perhaps predictably, steered clear of suggesting that more
resource was required but made several recommendations regarding management and
control.

Hartnett responded immediately by making senior level management changes
designed to increase departmental effectiveness. He also, as Kieran Poynter
confirmed in his interim report, ensured that HMRC took extensive action in the
days following the discovery of the loss of the CDs to bolster data security.

The task facing Hartnett is huge, the CD loss coming at the end of a year
that saw unprecedented levels of dissatisfaction among the ICAEW members with
HMRC.

Will 2008 be any better? I am hopeful that it will. Processing times for VAT
registrations have been improving steadily over the last few months ­ something
that Paul Aplin and Frank Haskew, chairman and head of our Tax Faculty, lobbied
hard on last year ­ while HMRC looks set to start 2008 by hitting its target of
70% of routine applications being processed within 14 days.

I do not expect to see all of the service issues resolved in 2008 but I am
cautiously optimistic that we will see tangible results from the extensive
lobbying of 2007 and that our policy of constructive engagement with HMRC will
be vindicated.

I am encouraged by the management changes that Hartnett has made, but I
remain concerned that Hartnett’s zeal will be blunted by pressures on resources.
HMRC is starting to head in the right direction but the next few months will be
critical.
Michael Izza is chief executive of the ICAEW

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