Taxing cutbacks by HM Revenue Customs

HM Revenue & Customs have lost 34,000 jobs since 2005, with another 10,000 planned by 2015. In addition, just three weeks before Christmas it was announced that a further 3,000 staff on fixed term contracts due to end in March 2014 will not have the contracts extended.
These include 1,500 staff in personal tax and compliance with a further 500 in debt management. The other 1,000 will be split between various other offices.
On the same day the inefficiencies already being experienced by both the taxpayers and their advisers were shown when:
-in one telephone call to the tax office they confirmed that documents sent to them nearly two months previously had not been received and duplicates would need to be sent in; and
-in a second telephone call less than half an hour later they confirmed that those same documents had been received in October
This is only one example of the problems already being faced. These problems will only increase with further staff cuts. HM Revenue & Customs say that these cuts are possible due to greater use by the public of on-line facilities. However, whilst the HMRC website is one of the most user friendly and is (generally) being improved, contact with a knowledgeable and experienced human is frequently required.
Will this make tax evasion easier? Certainly the tax office thinks that this will not happen. In a speech to the Professional Fee Protection Group a tax office spokesman, Edward Troup, said that there would be no decrease in their tax investigations policy despite these staff reductions. He stressed that tackling tax avoidance would continue to be a priority.
In that same speech he said that the tax office would increase “nudge” campaigns to encourage tax compliance. We recently received an example of one such letter which extended to two pages. In it we were told that one of our suppliers (who were named in the letter and with whom we had not dealt for over two years), or one of their suppliers, or a supplier to one of the supplier’s supplier, had evaded VAT and that we could be held liable if the tax office thought that we were, or should have been, aware of it. Enclosed with the letter was a four page leaflet suggesting the checks that we should undertake to avoid being held liable, and these included performing identity checks on directors. Our first thought was that the directors of Tesco would be very busy! Our second thought was that it was easy to see what the letter said but almost impossible to understand what, in real terms, the letter meant.
Perhaps HMRC should spend a small part of what they save through staff cuts on lessons from the Plain English Society!
WatkinsonBlack are pleased to advise on these as well as other matters, including providing a very cost-effective payroll bureau service. If you want to arrange a no-obligation initial meeting on any taxation or accounting matter then please contact us.
Please note that these ideas are intended to inform rather than advise and you should always obtain professional advice before taking any action.