Jeff Salway: Tax cuts could leave us all worse off

HMRC closures have a downside, writes Jeff Salway

Modernisation of HMRC may save money, but the costs and benefits of reorganisation to taxpayers remain great unknowns. Picture: PA

Taxpayers in Scotland have been told to expect further frustration in dealing with HM Revenue & Customs as it prepares for an overhaul in which tax offices north of the Border will be shut down.

The move is part of a modernisation programme that one leading tax expert warns could make dealing with HMRC even harder for ordinary taxpayers.

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It comes just months before proposed cuts to tax credits that are likely to trigger a surge in calls to HMRC helplines from low-income workers anxious about the changes and impact on their finances.

More than 8,000 people work at HMRC’s 18 offices across Scotland, but 2,000 or more of those jobs will be cut by 2021 as the network is consolidated into new regional centres in Edinburgh and Glasgow.

The 17 centres being closed north of the Border include offices in Aberdeen, Dundee, Cumbernauld, Bathgate, East Kilbride, Inverness and Livingston, as well as several in Edinburgh and Glasgow. No HMRC centres are open to people wanting to discuss tax issues in person, with the last HMRC inquiry centre closing in 2014.

The announcement came just a week after HMRC came under fire from MPs for customer service levels that were already “abysmal” and were “now even worse”. The Commons Public Accounts Committee pointed to figures showing that HMRC only manages to answer half of its calls from taxpayers, and just 39 per cent within five minutes.

Almost a third of people surveyed in the summer by consumer group Which? said they had been kept on hold by HMRC for more than an hour, with another three in ten respondents waiting between 46 and 60 minutes and a quarter for up to 45 minutes.

HMRC’s modernisation programme could ultimately improve the service, experts say – provided it’s designed to do just that, rather than cut costs even further. Jim Meakin, UK head of tax at RSM, said: “If it is the former then it is to be welcomed. If it is the latter then there is a risk service standards will slip which will not be good news for anyone who has to contact HMRC when it comes to agreeing tax codes or liabilities.”

Those hit hardest are people without accountants or other advisers that can reach HMRC through more direct channels.

“Taxpayers who are not represented by professional advisers are left hanging for 30 minutes when calling helplines and when they do get through HMRC’s technical staff are often unreachable,” said Frank Nash, tax partner at Blick Rothenberg. “HMRC needs to invest in more properly trained staff, not less, and the proof of that is in the ever complex legislation which HMRC and taxpayers have to deal with.”

The revenue’s modernisation programme features increased investment in online services to make it easier for people to pay their tax. But that doesn’t help those with queries about complex tax issues, or with concerns over potentially expensive problems such as incorrect tax codes.

Anthony Thomas, chairman of the Low Incomes Tax Reform Group (LITRG), said that for many people the only real option for dealing with the taxman remains the phone service.

“With the increasing complexity of the tax system and opacity of HMRC communications, more and more people are being driven to call the helplines to make claims, ask for explanations, query apparent mistakes, enquire after delayed post, or seek help in completing forms,” said Thomas.

“We wait anxiously to see how HMRC will cope with the inevitable flood of calls from tax credit claimants should the proposed tax credit changes go ahead and they realise the extent of the reductions in their awards from April 2016.”

The LITRG expressed concern over the Needs Enhanced Service, aimed at people who need extra help in dealing with their tax affairs (including those with speech, hearing, language or learning difficulties).

“Significant investment should be made in HMRC’s Needs Enhanced Support service which offers a good service to unrepresented taxpayers who experience particular difficulties in dealing with their tax and tax credit affairs,” the LITRG said.