Opinion Former Article

HMRC risk stigmatising SMEs without better Tax Gap scrutiny

Responding to the Public Accounts Committee’s Report on HMRC’s performance in 2016-17, John Cullinane, CIOT Tax Policy Director, said:

“HMRC have clearly believed for some time that the impact of small and medium-sized enterprises (SMEs) on the Tax Gap is especially significant. The nature of this issue merits a more detailed explanation from HMRC than the tax authority shares at present. Without more granularity on the nature of the impact on the Tax Gap, HMRC risk stigmatising SMEs, which could be unfair and does not seem calculated to improving whatever underlying behaviour is the cause of the problem. It is also unhelpful to the public’s understanding of tax. If more focussed information on SMEs and the Tax Gap is simply not available to HMRC, then more needs to be obtained, so targeted initiatives can begin, which we would be keen to support.

“For example, we are still awaiting publication of the final report following the Business Records Checks initiative, which would both indicate the extent to which inadequate record keeping contributes to the Tax Gap and provide more information on the nature of the errors.

“HMRC’s statistics on customer service and call handling which show a clear improvement warrant further investigation to see if this is because, in part, some services have been switched off. For example, early in 2017 HMRC stopped providing pay and tax details over the phone to agents, because HMRC were being flooded with calls, but they did this before a suitable alternative arrangement was made available. This risks HMRC being seen to say that customer service has improved, when in fact in some areas they are simply providing less of a service.”

Notes to editors

1.       The Public Accounts Committee website can be found here.

2.       The Chartered Institute of Taxation (CIOT)

The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.

The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.

The CIOT’s 18,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.

Contact: Hamant Verma, External Relations Officer, 0207 340 2702 HVerma@ciot.org.uk  (Out of hours contact: George Crozier, 07740 477 374)

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