There have been reports of HMRC providing a disservice to many over the past couple of years, with overseas tax scandal after overseas tax scandal circulating the media, which we’re sure you are all only too aware of. The apparent incompetence of HMRC has seemed to have gotten so bad that some are now even saying the department is ‘not fit for purpose’ any longer. With staff cuts allowing HMRC to plunge further and further into disarray, Labour have recognised the importance of doing something about it and have announced their big plans to totally ‘overhaul’ HMRC – DIY SOS style. They believe that with further investment, they can turn HMRC into something that provides a fair taxation system for everyone in the UK (emphasis on the everyone). We say this because at the moment, some of the main issues that are stemming from HMRC are based around the inequality that represents HMRC, which allows for tax cheats. Labour also want to make sure there is significant protection available for people that expose whistleblowers or tax dodgers to HMRC themselves.
The produced report recommends a supervisory board for HMRC which will have stakeholders that will be appointed by the Chancellor. This will be in an attempt to stop the corruption that seems to be occurring within the department which at the moment, remains unchanged. At the moment, it seems that the board is dominated by members that are known to have been previously connected with large accountancy firms and corporations which have been known for marketing ways in which to avoid tax payments. Not only is this unjust in itself, there is also little to no representation of small businesses, those receiving benefits and quite frankly, just normal taxpayers. Officials are hoping that the new board will provide a reliable and trustworthy point of contact for those that are looking to expose whistleblowers, as these are the people that are working in favour of the taxpayer. It is important that they get further protection under the law. In a bid to encourage whistleblowers further, there is also a suggestion that they should receive part of the taxes that are uncovered as a direct result of their information.
Lack of Resources
Amongst claims that HMRC are no longer fit for purpose, it has also been suggested that they have been thwarted by a lack of resources, which basically means it has been easier than ever for people to dodge taxes. In a bid to clamp down on this, there have been calls for tribunals for tax avoidance to happen much quicker than they previously have been (at the moment, tax avoidance cases can take up to a decade to resolve, with HMRC dealing with a backlog of around 30, 000 cases or more) which would mean the appointment of more judges that specialise in tax issues. It has also been suggested that all large businesses must make their tax returns publicly available. These documents will then be available to access through the Companies House Database online. Any companies that have taken advice in the way of avoidance schemes, will have to include this information in their documents.
There have been recent, famous, tax avoidance cases that have been widely circulated by the media but have also shown the failings of HMRC as they have notoriously failed to act, leaving many tax avoiders unpunished. The HSBC Swiss Private Bank, which was outed earlier this year, was found to be negotiating private deals with multinationals from Luxembourg has remained on the down low. With 3, 600 suspected of tax avoidance, a mere one wealthy taxpayer exposed by HSBC has been dealt with accordingly. It has since been announced that HMRC has abandoned the case, and it is thought that they only investigate around 35 wealthy UK taxpayers a year. The scandals do not stop there, and shortly after the huge controversy known as the ‘Panama Papers’ entered the media. With 300, 000 offshore companies involved, this was definitely going to be a big job. It is feared that HMRC will again fail to deal with it appropriately due to their lack of staff that are working on the case – around 70 in this instance. It does seem that HMRC is demonstrating
It does seem that HMRC is demonstrating incompetency which may derive from a lack of staff and resources. Since 2005, HMRC has lost 1/3 of its total staff and as a result there is not enough staff to work on specific cases, and it is important that each case is dealt with individually, in detail. At the moment, 10-30 staff are being used per case which is taking around 22 months for a verdict, during this time they are leaving little to no resources for anything eslse. Lack of staffing means the issues of small businesses and taxpayers are being overlooked completely, which concludes that HMRC is not at the moment, in a position to provide an adequate service to the country.