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KEY POINTS
- New draft in existence but not published.
- ‘Pursue relentlessly’ has been removed.
- Structure based on Australian charter.
- Still no change to the statutory provision: ‘aspire to’.
On 23 June, in the Finance Bill Committee, the Conservative Treasury spokesman David Gauke said:
‘I thank ministers for producing a draft charter last week, as it is helpful for the committee to have it in front of us.’
It would be helpful for me to have a copy in front of me too, but I haven’t. I’m not allowed to see the latest draft, and nor are you. David Gauke continued:
‘Such is the timing, however, that I do not think that the professional bodies that scrutinise such documents closely and provide support for members of the committee have had an opportunity to review the contents. I suspect that, although they welcome some aspects of it, they still have further questions.’
The last sentence summarises my views as well, based on what the committee proceedings showed had changed in the charter.
The first sentence may have been true in respect of the precise wording of the charter in front of the committee, but the representative bodies have been in almost constant discussion with HMRC since the February 2009 consultation paper came out, which I have written about previously (see Wrong turn).
Unfortunately, the process has been behind closed doors, and although I asked HMRC if I could see a copy of the current version of the charter before writing this article, I was told that it was still under wraps.
What makes this even more absurd is that the committee report sets out several of the provisions in the revised charter. So although I can’t tell you everything that is in it I can certainly tell you about some of the changes.
Mission statement
The February 2009 version started with a paragraph that was widely criticised as being a mission statement for HMRC which had no place in a charter:
‘HM Revenue & Customs makes sure that money is available to fund the UK’s public services. We also help families and individuals with targeted financial support. We aim to make the tax and benefits system feel simple to use.’
According to the Finance Bill Committee report, the new charter starts with this paragraph:
‘We collect taxes and duties so that there is money to fund the UK’s public services. We help families and individuals with targeted financial support. We also help international trade run smoothly and protect the UK economy.’
The change to the first sentence does at least start with a more straightforward statement of what HMRC does – collect taxes. However, the change to the third sentence is inexplicable.
The main complaint about the original third sentence was that it was in the opening paragraph rather than being in the main charter.
It is not clear from the committee report whether there is any specific commitment to simplicity in the revised charter, but why on earth did the reference to international trade get in there?
True, the charter is supposed to be for all HMRC’s ‘customers’, but the reality is that it is going to be relied on mostly by individuals and small businesses. HMRC’s role in international trade is unlikely to be uppermost in their minds.
‘Protect the UK economy’ seems to have even less meaning, although I have to say that David Gauke’s theory about the whole sentence makes a lot of sense:
'My personal theory is that there was a first draft that stated, “We must protect the UK economy”, which I suspect was about protecting UK tax revenues. Then, someone looked at that draft and said, “That looks somewhat protectionist”, and therefore some wording about helping “international trade” was inserted, to prevent there being any protectionist element.’
While that has the ring of truth about it, the official answer which came back in the debate was that HMRC had a responsibility at an EU level for obligations relating to trade duties.
Pursue relentlessly
One of the ‘rights’ in the February draft of the charter was that HMRC would ‘pursue relentlessly those that break or bend the rules’. It was hard to see what place that statement had in a section of the charter which was meant to give taxpayers some safeguards against the new powers which HMRC have been given in recent years.
The sentence has now apparently been changed to ‘tackle people who try to cheat the system’. That is certainly a less objectionable way of phrasing it, but it still sits very peculiarly in a list of taxpayers’ rights.
There is a danger that some of the provisions in the revised charter will be seen as acceptable simply because they are better than the originals. Improving something from atrocious to merely bad does not make it acceptable.
Australian rules
One very welcome change is that HMRC seem to have moved away from a single short document to something more akin to the Australian model.
This has a list of short statements in the charter, but more detailed information to back them up. It appears, for example, that our revised charter will now have a simple statement that ‘you can expect us to… respect you’, but then will also have detailed guidance such as the expectation that you will be listened to, treated with courtesy and consideration, and so on.
The initial response to the charter in February highlighted the Australian model as a good one to use, as did the commentary in this magazine. It is good to see that this has now been taken up, but surprising that it took so long.
The Australian model was mentioned approvingly in an earlier consultation document, and many people expected it to be the format of the draft charter, at least when consultations started.
Still missing
The debate also makes it clear that some proposed additions to the charter are still not there. There is no reference to freedom of information rights. There is apparently a very brief reference to rights of appeal.
Although the specific appeal provisions are obviously the preserve of legislation, it would have been interesting to see a general commitment to a right of appeal from decisions taken by HMRC, since one of the criticisms of the new powers is that not all the appeal rights appear to be sufficient.
There is also no commitment to compensation from HMRC for taxpayers when mistakes occur due to failures on the part of HMRC which might be considered negligent.
Mark McLaughlin argued for this recently in his article Turning the tables, and David Gauke’s comments in the Finance Bill Committee suggest that he also thinks that there should have been some reference to compensation in the charter.
There was a difference of opinion about the commitment in the charter to HMRC providing a professional service. According to David Gauke:
‘The charter refers to various commitments – we will do what we can to keep the costs down, we will help to support you to get the payments and claims right… but there is nothing particularly explicit.’
In replying for the Government, however, the new Exchequer Secretary to the Treasury, Sarah McCarthy-Fry pointed to the clause which says:
‘Whenever you deal with us we will take responsibility for our actions and behave in a professional way. We will act with integrity.’
While that is a reassuring promise, it is hard to square with the proposal to withdraw equitable liability and collect amounts of tax which HMRC admit to being ‘unconscionable’.
Aspirational
It was rightly said during the debate that the charter itself is not set in stone, and that the debate was likely to feed back into it and change it.
Because you and I haven’t had the chance to see it, we won’t be part of that process, but since the charter can be changed at any time, what is said about the final charter can still lead to revisions at a later date.
What I still feel was a missed battle was the wording of the clause which gives the charter statutory authority. It was not amended at all, and therefore only commits HMRC to ‘aspire to’ the obligations in the charter.
It is good that the obligations themselves appear to have been improved, but we are unlikely now to ever get a real chance of giving them more statutory authority.
