HMRC Powers and Taxpayer Safeguards

Her Majesty’s Revenue and Customs (HMRC) have a vital purpose, to collect the tax revenue that pays for the UK’s public services and benefits system. The Government recognise that public trust is essential to a healthy and effective tax system. UK citizens must know that their tax authority is fair, careful and even-handed and that it adheres to those core values in all its work.

But citizens also need to be reassured that HMRC have the powers they require to ensure that everyone pays their fair share of taxes. In some areas, particularly where HMRC are faced with fraud, evasion and complex avoidance, those powers are necessarily far-reaching. It is therefore of great public importance that they are exercised in a way that maintains public trust, with appropriate oversight and operational checks and balances, and statutory safeguards that enable taxpayers to dispute HMRC’s decisions or complain about their treatment.

I am grateful to the House of Lords Economic Affairs Committee for its report “The Powers of HMRC: Treating Taxpayers Fairly” and for the opportunity to discuss these matters with them. I have also discussed matters of trust at HMRC in detail with officials and outside stakeholders, and I am today announcing several actions HMRC are taking to maintain and develop public trust in their operations.

The context in which HMRC operate is changing faster than ever before. New technology presents significant opportunities to make tax administration easier for both HMRC and for taxpayers. But it also presents new challenges, as a small minority of taxpayers who wish to escape paying tax seek new ways to find unfair advantages.

As HMRC adapt to these changes, it is important both that they continue to maintain public trust in their approach to new technologies, and that the powers given by Parliament are implemented carefully and remain subject to appropriate oversight and safeguards.

So HMRC will establish a new professional standards committee to advise the Commissioners of Revenue and Customs. The committee, which will take advice from a range of independent experts, will consider, among other things, issues relating to the implementation of HMRC powers. The committee will not consider individual cases or Government tax policies. HMRC will publish details of the committee’s membership and terms of reference in the autumn.

The House of Lords Economic Affairs Committee proposed a review of all powers granted to HMRC since the conclusion of the powers review in 2012.1 have considered this carefully and concluded that a full review of HMRC powers is not necessary at this time. The powers granted to HMRC since 2012 were properly scrutinised before being granted by Parliament. The Government’s view is that they remain necessary and proportionate. I have, however, asked HMRC to evaluate the implementation of powers introduced since 2012 in relation to the powers and safeguards principles, engaging with stakeholders, including taxpayers and their representatives. This will be published in early 2020.

The adjudicator’s independent role in complaints handling is a core component of ensuring public trust in HMRC, and of HMRC’s evolution as a service organisation.

HMRC will undertake a comprehensive review of the findings identified in the 2019 adjudicator’s report and will publish the results of the review by the end of this year. HMRC are working with the adjudicator to ensure that they have effective mechanisms in place to learn quickly and appropriately from complaints and, if necessary, to make changes to their operational policy and processes.

To enable better access for taxpayers to the adjudicator service, HMRC are also developing a secure digital channel for complaints.

HMRC understand that some taxpayers will always need extra help in their dealings with them and that others may need additional support at a point in time because they are dealing with a difficult life event. Some taxpayers may become anxious or distressed as a result of compliance activities, or when they get into debt. Ensuring that people who need support are treated with empathy and dignity is vital to maintaining wider public trust in HMRC.

HMRC have provided tailored assistance to taxpayers who need extra help and those in vulnerable circumstances since 2014 via their extra support service and also work closely with the voluntary and community sector. Working with their new customer experience committee, and drawing on the experience of the committee’s independent, external advisers, HMRC have recently embarked on a programme to strengthen the support they provide to taxpayers who need extra help. Importantly, this includes extending the extra support service to people who may need additional help to deal with HMRC investigations and to help resolve disputes wherever possible without litigation. HMRC will report on the effectiveness of these measures in their next annual report.

HMRC will continue to work closely with external representatives through their forums, such as the additional needs working group and individual stakeholder forum, to understand taxpayers’ needs better and to improve support for taxpayers.

HMRC have undertaken to increase transparency and enhance public trust by publishing more data and information about the exercise of their powers. HMRC will engage with stakeholders, including taxpayers and their representatives, to identify what further data and information HMRC should publish in support of these goals.

This year, as a first step towards that commitment, HMRC will expand the range of performance and management information they publish in their monthly and quarterly performance publications. Previous reporting focused on specific aspects of their telephony and post processes, for instance, call waiting and post turnaround times, as well as compliance yield figures. From August HMRC will publish further information, including but not limited to, their debt management, registrations and repayment services.

Compliance enquiries are a necessary and important feature of HMRC’s work in collecting the right amount of tax. Maintaining public trust in HMRC requires that these enquiries are carried out, but also that they are done in an appropriate way. Compliance enquiries can be worrying for taxpayers and HMRC are committed to ensuring that their procedures are accessible and impartial and that HMRC officers treat taxpayers with professionalism and respect. This includes taking into account the specific circumstances of taxpayers.

HMRC are reviewing taxpayers’ experiences during compliance enquiries. Drawing on taxpayer feedback, this work will look at how each stage of an enquiry or investigation can affect taxpayers. It will seek to identify improvements in the process and draw out appropriate common standards and expectations. This work includes a review of the content, language and tone of letters, to ensure that they are clear, courteous and tailored appropriately to the needs of the taxpayer, including those who need extra help. In this, HMRC are working closely with a range of stakeholder groups and forums to develop best practice, which should help HMRC to improve the way that they interact with taxpayers.

The Government will provide a further update to the House of Lords Economic Affairs Committee later this year on all of the areas of work outlined in this statement.

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