HM Revenue & Customs needs to recruit more staff and offer its workforce more competitive pay and benefits packages if it is to properly execute its tax-collection role, a Labour Party-commissioned review has found.
University of Essex Professor Prem Sikka’s first-stage report also calls for a new “supervisory board” to be created in HMRC’s governance structure that would provide “stakeholder” oversight of the existing board and guard against lobbying for the interests of major corporations.
The review, which comes in the wake of the Google tax-avoidance controversy and the release of the Panama Papers, also proposes greater powers to protect whistleblowers keen to expose tax wrongdoing and extra powers for MPs to probe taxation matters.
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Additionally, Sikka calls for a recognition that effective tax-policing required a high degree of local knowledge of particular industries, potentially calling HMRC’s office-closure programme into question.
Launching the report, the professor of accounting said HMRC had experienced “considerable difficulties in meeting the service expectation of taxpayers and challenging organised tax avoidance” as a result of the spending cuts of recent years.
Vicky Johnson, president of the Association of Revenue and Customs, said it was clear that HMRC needed extra investment in resources and staffing to keep pace with demands on its services, while the ability to offer more competitive packages to staff would help to retain talent.
“There is a flow of senior staff from HMRC to the ‘big four’ consultancies,” she told CSW. “And our members quite often sit across the table in complex discussions with former colleagues who will have doubled their salaries by moving to the private sector.
“Since the previous chancellor got rid of time-served progression – with pay frozen for three years and then restricted to a 1% cap, so therefore falling further behind – the only raise that staff can expect to get is a cost-of-living one, which means their pay is basically never going to go up in real terms.”
Johnson was less sure of the need for a new tier of governance in the form of the review’s proposed supervisory board.
She said that HMRC's executive board chair Edward Troup observed strict standards in relation to meeting with taxpayers and said it was hard to see what a new panel could add to the current arrangements.
Launching the report, shadow chancellor John McDonnell said the public urgently wanted to see more action on tax avoidance but argued that government had made things worse by cutting staff and resources at the tax authority.
“HMRC needs more accountability and resources to deal with tax avoidance and evasion,” he said.
“Labour will be looking at the report’s recommendations in great detail while we develop our policies in this area, and also discussing how to take the review forward to the next stage.”
Mark Serwotka, general secretary of the PCS union, said years of cuts and “a lack of political will to genuinely tackle corporate abuse of the tax system” had left HMRC “far from fit” for the 21st century.
“The shadow chancellor’s plans to improve accountability and public scrutiny of HMRC are groundbreaking, and we look forward to continuing to work with him to strengthen this department that is central to the delivery of the public services we all rely on.”