HM Revenue and Customs has committed to a series of actions it has said are needed to build public trust in the way it deals with people’s tax cases, following an 18-month review.
An evaluation of HMRC’s powers, obligations and safeguards introduced since 2012, published last week, comes a year and a half after Treasury financial secretary Jesse Norman made a statement to parliament saying the tax authority was launching “several actions “to maintain and develop public trust” in its operations.
He said those measures would include the establishment of a professional standards committee to consider issues relating to the implementation of HMRC powers; a review of the findings of a 2019 report by the adjudicator that handles complaints about HMRC’s work; an increase in the amount of information HMRC publishes about its work to increase transparency; and the powers and safeguards evaluation last week.
Announcing the evaluation’s publication in parliament last week, Norman said HMRC had made “substantial progress” in some areas, but that the evaluation had highlighted “further opportunities for improvements that will build and maintain public trust in the tax system”.
Norman ordered the evaluation after the House of Lords Economic Affairs Committee proposed a review of all powers granted to HMRC since the conclusion of the Powers Review in 2012.
Back in 2019, Norman said after considering the peers’ proposal, he concluded a full review of HMRC powers was not needed, and that those powers remained “necessary and proportionate”. However, he said he had instructed the department to evaluate its implementation of certain powers introduced since 2012, relating to powers and safeguards and engaging with stakeholders.
He said the resulting report – which was published last week – would be published in early 2020.
Referring to the July 2019 statement, the report said Norman had noted that HMRC’s powers, especially those designed to tackle fraud, evasion or tax avoidance, could be “far-reaching”.
“It is important that the powers granted to HMRC are exercised in a way that maintains and enhances public trust. This means taking care that powers are used consistently and proportionately, taking into account an individual’s circumstances,” the report said.
The evaluation found HMRC’s approach to implementing its post-2012 powers was “broadly consistent” with the principles underpinning them.
“Internal processes are designed to ensure that substantial care is taken when making decisions, so that outcomes align with the principles,” the report said.
It said data on reviews, complaints and litigation showed taxpayers have formally challenged HMRC’s decisions in a small minority of cases.
But it also said the powers evaluation forum HMRC set up to engage with stakeholders on the evaluation had identified a “number of examples of individual cases where no formal challenge or complaint had been made, but where they felt that HMRC could and should have approached cases differently”.
“These examples highlight the need for HMRC to ensure a consistent approach and level playing field for all taxpayers, while taking account of the individual circumstances that a taxpayer may face,” the report said.
The evaluation set out 21 commitments HMRC has made to improve the way it works.
Several of the commitments relate to HMRC’s comms strategy. The department said it would continue to consider “new and innovative communication approaches” to ensure people understand their tax obligations; and that it would continue to use data to target communications at “the right audiences at the right time” to encourage people to comply with tax rules, including promoting the Making Tax Digital programme.
It also said it would continue ongoing work to “evaluate and improve compliance communications” and strengthen processes to ensure comms “consistently meet the high standards that the public expect”.
The tax agency also pledged to deepen its partnerships with voluntary and community organisations to help raise awareness of tax obligations and build trust among harder to reach groups – including the “digitally excluded” people.
Other commitments included improving users’ experience of HMRC guidance through new formats; review how to best clarify the scope of multinational enterprises’ obligations for publishing their tax strategies; and better processes to better identify people who need extra support from the agency.
Summing up the commitments, the report said HMRC would “always strive to improve the way the tax that is due is collected”, including working with taxpayers to “make their experience as clear and fair as possible”.
“HMRC make millions of decisions every year that affect taxpayers. Inevitably, HMRC do not always get everything right,” the report said.
But it said the commitments marked a “significant further step forward in building trust in HMRC’s administration of the tax system”.
“They will help to ensure that, where compliance activity is necessary, taxpayers are consistently treated fairly, professionally and with respect, taking into account their individual circumstances and needs. This will help taxpayers to understand how and why decisions are made, as well as their rights and obligations.”
HMRC will continue working with its forum to “ensure that the implementation of any future powers reflects the learning and conclusions from this evaluation and our commitments”, the department said.