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KEY POINTS
- Challenges to HMRC and the tax profession.
- Meeting finds a common goal.
- Sharing experiences with HMRC.
- Building on the work of Working Together.
In his guest editorial for Taxation on 22 September, Dave Hartnett described ‘a potentially momentous development in relations between tax advisers and HMRC’.
The development in question was the joint statement about service delivery issued by HMRC, the tax professional bodies and tax charities on 14 September.
I share Dave’s view that this is a potentially momentous development and in this article, I will look at what led up to it, what the statement says, and how I – and others – think the initiative will proceed.
The background
Last February I gave evidence on behalf of the Institute of Chartered Accountants in England & Wales (ICAEW) Tax Faculty to the House of Commons Treasury Select Committee as part of its enquiry into HMRC.
I, as well as others, including Chas Roy-Chowdhury of the Association of Certified Chartered Accountants (ACCA) and Robin Williamson for the Low Incomes Tax Reform Group (LITRG), painted a stark picture that day of HMRC service delivery.
The select committee report was published at the end of July 2011, showing that the members had clearly taken on board the points we had made.
Among the report’s recommendations, three stood out as challenges to both HMRC and the tax profession. They were that:
‘HMRC work closely with the professional bodies, tax charities and businesses to develop a series of performance indicators that credibly reflect customers’ end-to-end experience of dealing with HMRC and that these indicators [should be] regularly published as part of the transparency section of its five-year business plan’ [paragraph 100].
‘HMRC draw up minimum service standards for dealing with post in a timely and accurate fashion in consultation with the professional bodies, tax charities and businesses representatives. Such standards should recognise the distinction between simple and complex queries, and look at the progress of correspondence end to end rather than in relation to individual items of post. We recommend that the department publishes an indicative timetable for achieving those standards and keeps us regularly updated on progress towards meeting them’ [paragraph 119].
‘HMRC staff at all levels should spend time in tax practices, charities and businesses better to understand the people they deal with and how changes at HMRC affect them. Examples of how this could be achieved include day visits, short secondments and work shadowing’ [paragraph 142].
Shortly after the report was published, the ICAEW, the Chartered Institute of Taxation, the Institute of Chartered Accountants of Scotland, ACCA, the Association of Accounting Technicians, the Association of Taxation Technicians and LITRG agreed that we should take up the challenge and a joint letter was sent to Mike Clasper, HMRC’s chairman.
Mike responded very positively and on 7 September we met. HMRC fielded a heavyweight team, led by Mike and including Dave Hartnett, the director generals of both business tax and personal tax, as well as a number of senior people directly responsible for service delivery.
The six professional bodies, LITRG and the tax charities TaxAid and TaxHelp for Older People were all represented.
The meeting
I suspect that both HMRC and the professional bodies went into the room wanting to be constructive but with some understandable scepticism about the motivation of the ‘other side’.
That scepticism dissipated as Mike Clasper opened the meeting and the professional bodies responded. It was clear that we all had the same objective in mind: to achieve a genuine improvement in service delivery and one that taxpayers and agents would actually see.
The common view was that we needed to look forward and not back. It is for that reason I have not quoted the select committee report’s specific criticisms or what I said to the committee about HMRC’s service delivery. The transcript and the report are on the Parliament website.
The meeting looked at the most recent post handling statistics and, while acknowledging that they showed a considerable improvement, this took us to the nub of the problem: the experience of those of us from the tax professional bodies (particularly those who, like me, actually work in general practice) and tax charities simply did not reflect the picture the statistics showed. That took us on to the question of how we can change this.
There was a general feeling that HMRC would, as the report recommended, see things differently if they saw them through our eyes.
That is easy to say, but facilitating it poses a huge challenge of trust on both sides. If we are to help HMRC employees at all levels to understand where processes are not as effective as they should be and how improvements can be made, we need practitioners and representatives from the tax charities to spend time inside HMRC, looking at those processes and talking openly and candidly to HMRC’s staff.
In addition, we need people from HMRC to spend time in practitioners’ offices and with the tax charities, seeing service delivery from the receiving end. If we are to make progress we have to take this step and we have to do so in a spirit of trust and acceptance of a shared common goal.
I do not underestimate how challenging this will be to both sides conceptually, but in practice it may not be as difficult as might be feared.
Learning from experience
Having hosted an HMRC board member at my firm’s office in Taunton for a day, my view is that this is the quickest way to demonstrate what things are really like.
There is no substitute for someone actually seeing things with their own eyes or for them feeling that they can talk openly with people who are at the coal face and who have a job to do, not an axe to grind.
My colleagues at A C Mole & Sons felt some unease beforehand, but within a couple of minutes found that they could talk honestly and be listened to. An ICAEW council member who hosted another HMRC board member felt the same way about the experience.
This view that we had a common goal prevailed at the meeting and as a result we agreed:
- Post processing and handling should be looked at in detail to establish where problems still exist and how they can be resolved (and HMRC’s performance measures reviewed where necessary to ensure that they are credible and effective). This work will be complemented by a review of the following processes where it is believed improvements can be made: non self-assessment repayment claims, automated PAYE coding notices and practical issues relating to estates of the deceased.
- A number of agents and charity representatives will spend time with HMRC’s front-line service delivery teams to look at processes in detail from a taxpayer perspective and make recommendations as appropriate.
- HMRC will carry out structured visits to the offices of some practitioners and charities to gain an in-depth understanding of service delivery as seen from a taxpayer perspective.
The aim is to start the work at the beginning of October and to deliver an interim report back to the group at the end of November. The professional bodies have already started looking for volunteer firms and HMRC have already set up a dedicated project team.
Where there’s a will
Is there a genuine will to drive this forward? In the joint statement, Mike Clasper said:
‘Tax agents along with the charity and voluntary sector are vitally important customer and stakeholder groups for HMRC and I welcome their offer to work with us so we can better understand how to improve. We know that they and their clients are seriously impacted when we get things wrong and we are determined to deliver a better service. We need to get a better understanding of the experiences of our customers and stakeholders and of their experiences in resolving tax issues. Working with agent colleagues inside and outside HMRC will provide that knowledge and lead to better services for all of our customers.’
In four years of lobbying for an improvement in service standards I have never seen this level of commitment from all sides.
I would say that is a clear acknowledgement of the fact that things need to improve and an equally clear commitment to work with the professional bodies and tax charities in a spirit of partnership to achieve it. I asked some of the people who were at the meeting for their views.
The CIOT’s president Anthony Thomas, who has been outspoken on service issues, said:
‘I welcome HMRC’s acceptance that operationally the department is not well placed. I am hugely encouraged that by working together openly and closely with the professional bodies, there is a real opportunity for us all to get to a much better place, not overnight, but over a sensible time period. That is a commitment which I share.’
Chas Roy Chowdhury was upbeat, saying:
‘This is a ground-breaking initiative. HMRC took up our offer to meet very quickly but as the joint statement says, this isn’t a talking shop, it is about getting to grips with real issues like post, PAYE codings and repayments.’
Rosina Pullman for the charity TaxAid saw the initiative as building on existing work:
‘We have worked co-operatively with HMRC over the past year to deliver two initiatives. This has radically changed the outcomes and impact of our work for our clients. As a charity we can either seek to ameliorate the current system or work to change the environment in which things go wrong for the unrepresented taxpayer. By offering to provide HMRC with evidence of what we know to be the true experiences of our clients we can further this ultimate mission.’
She does, though, add a word of caution that is shared by all who attended the meeting (including HMRC) in that ‘in seeking to improve HMRC’s performance measures, however, we need to be certain that the measures we arrive at assist in achieving better delivery and do not simply become a (meaningless) end in themselves’.
These are all positive views, to which I would add my personal backing for this initiative. It also fits neatly with Taxation’s Right to a Reply campaign. There is clearly a commitment on all sides to drive it forward.
In four years of lobbying for an improvement in service standards I have never seen this level of commitment from all sides. I believe that we are at a turning point and that if we fail to grasp the opportunity we will face a very long wait for another.
For me and most Taxation readers this issue is not an academic one. It is about the realities of our daily working lives and about the effectiveness of tax administration as it touches taxpayers (represented or unrepresented).
I am sure some will say that nothing will happen or that we have been here before. To that I say if we do nothing then nothing will happen and, furthermore that the degree of commitment from HMRC seems to me, and to the others who attended the meeting, to be on a different level to anything we have encountered in the past.
Service delivery is the very stuff of Working Together, a point Brian Palmer, past president of the AAT, picked up:
‘Throughout my years on the National Working Together Steering Group I really cannot remember a better opportunity than this current situation presents for all of those involved with Working Together to make a difference at an operational level to the UK tax system. There is no one better positioned to help identify the sort of issues agents experience on a day-to-day basis which have led to the “deep dissatisfaction” referred to in the report than those involved in Working Together. It is, after all, what most of us have been doing for over a decade.’
The current initiative will certainly need to embrace and build on the work of Working Together and I will give the last word to another Working Together stalwart and practitioner, Susan Gompels. Her reaction to the announcement was unequivocal:
‘This really constructive engagement with HMRC is hugely to be welcomed – a return to the crucial pan-professional work on key operational issues which was started over a decade ago with the Working Together teams, drawn from all major tax bodies across the UK.’
I couldn’t put it better. Let’s rise to the challenge.
Paul Aplin OBE FCA CTA(Fellow) is a tax partner with A C Mole & Sons and chairman of the ICAEW Tax Faculty technical committee. The views expressed here are Paul’s own and not necessarily those of the ICAEW or of his employer
