HMRC have been HM Revenue & Customs for several years now and yet we see “Inspectors of Taxes” working Enquiries and settling Income Tax liabilities as they always have and then handing over to the “VAT Officer” who makes his VAT calculations and asks for another chunk of tax, interest and penalties. This is not in accordance with successive government initiatives to ensure Departments dealt with everything in one go as far as possible to reduce administration and businesses costs.
Clearly the profession will continue to make representations about all these issues and continue to resist extension of powers or policies which are patently unfair, unnecessarily intrusive or that just leave the ordinary every day taxpayer completely at the mercy of the tax authorities. This can be done during the consultation process for new measures proposed by HMRC……when there is one although of course there are many instances where HMRC do not listen. At least we have the Taxpayers Charter which the profession fought hard to obtain but who is to rule for example on whether or not HMRC has dealt with a case “even handedly”?
Where the profession fails to change HMRC’s mind, at present the taxpayer has 3 places to go to seek redress – the HMRC Complaints Team for the area dealing with his affairs, the Adjudicator and the Ombudsman. Our experience is that the Ombudsman will not be much interested if the Adjudicator has seen the case so in practice the later 2 avenues are really only either/or and are just one avenue. In addition there is always Judicial Review but as a barrister will almost certainly be needed, legal costs prohibit this being an option for all small to medium tax liabilities.
Complaining to HMRC can feel like complaining to a shop assistant and then asking for the manager at which point the shop assistant says he or she is the manager! HMRC appear to have organised itself into more specialist sections eg concerning the operation of PAYE or residence, so after a challenge to the ordinary local office, the case is referred to one or more specialist officers, and then a senior officer before can be referred to the Complaints team. This is all very long winded. And can take 6 or so months before a final response to the Complaint is received and the case can be taken further. HMRC insist that they be given a proper chance to answer the Complaint before it is referred which is eminently reasonable, but only if this happens quickly.
So what about the Adjudicator? Who is the Adjudicator and how has this Office performed in dealing with complaints?
In brief the Adjudicator is an appointed, respected figure often with considerable experience in public office. The current Adjudicator is Judy Clements OBE who previously worked at the Independent Police Complaints Commission. Working to the Adjudicator have always been seconded HM Revenue & Customs staff. The Adjudicator can only make recommendations although their recommendations are nearly if not always accepted by HMRC.
Tax credit complaints account for some 70% of the cases in 2010. Substantially upheld complaints were 17% of the total, partially upheld 29% of the total. However only 20% of non Tax Credit Complaints were substantially or even partially upheld. That is a matter of concern. Even ruling out a proportion of taxpayers who complain without any substantive justification, I find it very hard to believe that some 80% of complaints were unjustified.
The Adjudicator Office does not seem to be handling that many non tax credit complaints for the size of the taxpaying population. Even taking into account that there are appeal processes which effectively absorb disputes with HMRC into the appeals system so they never reach the Adjudicator, the organisation which taxpayers will see as their main champion does not seem to get called to battle that often and the results are not at all encouraging.
So the professions strategy must be two fold. Firstly to continue to fight for any unmerited extension of powers and for a fair tax system. But secondly, push and push hard, for a complaints body with more of its most senior staff not on secondment from HMRC and with proper teeth.
Just the existence of a strong, powerful and independent Adjudicator will encourage the Revenue to think twice about their actions. If we don’t all push for an independent complaints body, then we deserve the tax regime that we get.
Photograph courtesy of Rafael Mèdeiros