This article was written for and therefore first published in Accountancy Age.
HMRC announced a major reorganisation last week, including the closure of 137 offices nationwide and a transition to a largely digital interface with taxpayers and the agents that act on behalf of businesses and individuals across the UK. But what are the implications of the move and will it achieve its lofty ambitions to nurture a more highly-skilled workforce, combating tax evasion and improving customer service? HMRC will close 137 offices over the next five years. So what? It closed my local office years ago because staff would work in Ipswich, but not in Central London for the salaries on offer. My only surprise is that it has taken so long to finish the job.
Where, conceptually, is, apparently, largely digital. HMRC says the new regional centres will be “equipped with the digital infrastructure and training facilities needed to build a more highly-skilled workforce to meet the challenges of bringing in more revenue from those evading tax and improving its customer service to the honest majority”. HMRC adds that this is part of their modernisation process, which includes “investment in new online services, data analytics, new compliance techniques, new skills and new ways of working”. Is this what staff want? HMRC expects 90% of its workforce to move happily to one of the new regional centres or see out their careers in a number of “transitional” sites (Reading, Ipswich, Portsmouth, Washington and, possibly, East Kilbride), which they will keep for up to ten years. In contrast, the Public and Commercial Services Union has said it expects huge numbers to take redundancy as a result of the geographical impact of the plans. It sees the loss of experienced staff whose skills can fairly readily be utilised by other employers.
What about the rest of us, those who HMRC somewhat irritatingly insists on calling its customers? How is this radical new structure going to improve HMRC’s customer service? The answer depends on how one defines customer service. Most people businesses seem to believe that customers want a local presence. HMRC has presumably already decided that was not necessary when it closed its local offices. There are two main types of HMRC customer; taxpayers and agents. The Office for National Statistics believes that by 2024, roughly 25% of those aged 16 and over will be over 65. I don’t know what proportion of that 25% will regard themselves as digitally challenged when it comes to dealing with HMRC. I suspect most of them. If that is right, gearing up to deal with everyone digitally when one in four customers don’t want to interact digitally is hardly an improved customer service. HMRC says that last year 8.75 million filed their tax return online. They also say that there are 29.8 million individuals who are taxable. Last time I looked at the figures, roughly 50% didn’t need to file tax returns because the PAYE system collected the right tax. This would mean that around 43% of tax returns weren’t filed online, suggesting that the dash for digital is not reflecting customers’ wishes. If taxpayers are clamouring for digital, why is it necessary for HMRC to force the digitally challenged to file their corporation tax returns, VAT and PAYE digitally if they want to run a business? You only force people to do things that they are not prepared to do voluntarily.
What about agents? HMRC’s agent strategy is that agents should investigate their own clients’ tax affairs, so that HMRC does not need to do this. I do not know how many, if any, agents want to embrace this strategy. Some agents want to do more digitally with HMRC and some don’t. I also know that HMRC’s digital strategy is a one-way affair. They want us to deal with them, but want to deal with us digitally only when it suits them. A classic example is e-mails. HMRC’s direct tax e-mail policy is that they believe e-mails are insecure and are not prepared to use them even if the taxpayer wants them to. Their indirect tax policy is that they are happy to communicate by e-mail in spite of any security risks if the taxpayer agrees. If an organisation, which professes to see the future as digital, does not even have an organisation-wide e-mail protocol, that questions its real digital commitment. Finally, HMRC promises that in its brave new world, its field force will remain mobile. They will still make visits; it will only become difficult to visit them. Perhaps their real objective here is not to improve customer service, but to redefine it. Will it work? Time will tell. Robert Maas is tax expert with City-based Carter Backer Winter
|Robert Maas Tax Consultant d: +44 (0)20 7309 3800 click to email|
One of the UK’s leading tax experts, Robert was awarded the 2013 Lifetime Achievement award at LexisNexis Taxation Awards (which are the gold standard of excellence in the UK tax industry).