HMRC has defended the work of its tax compliance officers after a House of Lords committee raised concerns that staff had adopted “a more aggressive approach" than needed when tackling tax evasion and avoidance.
In a report published yesterday, the House of Lords Economic Affairs Committee's members said they “fully support HMRC’s efforts to recover tax owed and deter” tax avoidance and evasion but added that there need to be better systems in place to identify and address any problem behaviours as a matter of urgency. According to the committee, there was evidence that “in compliance and enquiry cases the behaviour of some HMRC staff falls well below the standard set in [HMRC’s own] charter".
The report said the government does not appear to discriminate effectively between the full range of behaviours and circumstances it describes as tax avoidance, despite what it called “a clear difference in culpability between deliberate and contrived tax avoidance by sophisticated, high-income individuals, and uninformed or naive decisions by unrepresented taxpayers”.
As a result, “cultural drivers” to increase tax yield “may have pressured staff to take a more aggressive approach to tax collection, and in doing so impaired the ability to be fair to taxpayers and act in accordance with charter values”, according to peers.
HMRC’s charter requires it to respect taxpayers and treat them as honest; provide a helpful, efficient and effective service; be professional and act with integrity; and deal with complaints quickly and fairly. |Accelerated payment notices (where HMRC believes the recipient has been involved in a tax avoidance scheme and must pay the amount of wrongfully avoided tax stated within 90 days) and follower notices (issued to taxpayers who have used a scheme similar to one that has been found in another case to be unlawful, in order to resolve litigation) were highlighted as examples of disproportionate powers, in particular the lack of a right of appeal to the tax tribunal.
However, in a response to the allegations, an HMRC spokesperson told CSW that the department sets “very high professional standards for our compliance officers, and we take meeting those professional standards very seriously”.
"This means that as well as taxpayer rights as set out in legislation, HMRC also has extensive internal checks to ensure we get things right."
“If we fall short of our high standards, we have a rigorous complaints process in place,” the spokesperson added. “If people aren’t satisfied with our response to their complaint, they can refer it to the Independent Adjudicator’s office.”
The HMRC statement added that over the past three years the number of complaints the tax agency has received has fallen from 1,222 to 997, while the percentage of cases upheld by the adjudicator has fallen from 73% to 39%.