In its latest report covering HMRC’s performance in 2015/16, the Commons Public Accounts Committee has expressed concern that HMRC may be painting ‘too rosy a picture’ of its success in reducing the tax gap, and that the department lacks a credible contingency plan for preventing another customer service collapse as digitisation of its services goes ahead. The PAC has also called for progress on requiring public country by country reporting by multinationals.
The PAC makes the following recommendations:
· The way HMRC measures the tax gap and the impact of its efforts to close it remain unclear: HMRC should report each year on the effect its work to generate compliance yield is having on its efforts to reduce the tax gap. As part of this, HMRC should assess how accurate its compliance estimates turn out to be in practice.
· Despite the PAC’s repeated recommendations, HMRC still does not make tax reliefs sufficiently visible to support parliamentary scrutiny and public debate about areas where the UK chooses not to collect tax. According to the PAC, HMRC should include an analysis of tax reliefs and their costs in its annual report to improve accountability about the areas where government has chosen not to collect tax. HMRC should make clear why it has decided to collect data only for a small minority of tax reliefs.
· HMRC is staking a great deal on the success of its plans to digitise the tax system, but once again it lacks an adequate plan if demand for its call centres does not reduce as quickly as it hopes. By March 2017, HMRC should demonstrate to the Committee that it has a credible plan to make savings without damaging customer service, and that it has agreed a contingency plan with HM Treasury should its projections prove to be inaccurate in practice.
· HMRC receives too many complaints and the vast majority of those referred to the tax adjudicator are upheld in part or in full: HMRC should review the complaints it receives, to identify what action it can take to reduce the number raised, and its complaints procedures to minimise the number referred to and upheld by the tax adjudicator.
· The poor quality of service received by tax credit claimants under the Concentrix contract resulted in unnecessary hardship and suffering. HMRC must ensure it has clear customer service standards whether a service is delivered by HMRC or one of its contractors. HMRC should identify quickly the lessons to be learned from this episode and act upon them, particularly given the concerns raised months before HMRC chose to act;
· HMRC and HM Treasury need to make the tax affairs of large multinational companies more transparent to increase the pressure on them to pay their fair share of tax. The PAC said that HMRC and HM Treasury should lead the global debate for public country by country reporting and push for international agreement on its introduction.
In its latest report covering HMRC’s performance in 2015/16, the Commons Public Accounts Committee has expressed concern that HMRC may be painting ‘too rosy a picture’ of its success in reducing the tax gap, and that the department lacks a credible contingency plan for preventing another customer service collapse as digitisation of its services goes ahead. The PAC has also called for progress on requiring public country by country reporting by multinationals.
The PAC makes the following recommendations:
· The way HMRC measures the tax gap and the impact of its efforts to close it remain unclear: HMRC should report each year on the effect its work to generate compliance yield is having on its efforts to reduce the tax gap. As part of this, HMRC should assess how accurate its compliance estimates turn out to be in practice.
· Despite the PAC’s repeated recommendations, HMRC still does not make tax reliefs sufficiently visible to support parliamentary scrutiny and public debate about areas where the UK chooses not to collect tax. According to the PAC, HMRC should include an analysis of tax reliefs and their costs in its annual report to improve accountability about the areas where government has chosen not to collect tax. HMRC should make clear why it has decided to collect data only for a small minority of tax reliefs.
· HMRC is staking a great deal on the success of its plans to digitise the tax system, but once again it lacks an adequate plan if demand for its call centres does not reduce as quickly as it hopes. By March 2017, HMRC should demonstrate to the Committee that it has a credible plan to make savings without damaging customer service, and that it has agreed a contingency plan with HM Treasury should its projections prove to be inaccurate in practice.
· HMRC receives too many complaints and the vast majority of those referred to the tax adjudicator are upheld in part or in full: HMRC should review the complaints it receives, to identify what action it can take to reduce the number raised, and its complaints procedures to minimise the number referred to and upheld by the tax adjudicator.
· The poor quality of service received by tax credit claimants under the Concentrix contract resulted in unnecessary hardship and suffering. HMRC must ensure it has clear customer service standards whether a service is delivered by HMRC or one of its contractors. HMRC should identify quickly the lessons to be learned from this episode and act upon them, particularly given the concerns raised months before HMRC chose to act;
· HMRC and HM Treasury need to make the tax affairs of large multinational companies more transparent to increase the pressure on them to pay their fair share of tax. The PAC said that HMRC and HM Treasury should lead the global debate for public country by country reporting and push for international agreement on its introduction.
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