HMRC Forges Ahead With Downsizing Plans

by Robert Lee, Tax-News.com, London

15 January 2010

The UK government's plans to shut 130 HM Revenue and Customs (HMRC) offices will restrict taxpayers' ability to access tax advice and could hamper the department's tax collection efforts, union members have warned.

Confirmation by HMRC on January 13 that it intends to forge ahead with the office closures, which could lead to 1,700 staff redundancies across the country, drew an angry response from the Public and Commercial Services Union (PCS), which argues that the closure program "makes no economic sense."

"Access to tax advice in communities across the UK will be damaged by the confirmation of these closures, which will hit businesses and the public, as well as taking quality jobs out of local communities during a recession," commented Mark Serwotka, PCS general secretary.

"It is no coincidence that as HMRC staff have been cut, the amount of uncollected tax written off as doubtful has nearly doubled. There is over GBP130bn which is uncollected, evaded and avoided which could go towards closing the public deficit," he added.

The closure plans are part of a review of regional staffing levels, which ended in December 2008 and followed the merger of the former Inland Revenue and HM Customs and Excise departments, which began in 2005.

HMRC argues that the cuts are necessary not only to cut costs and increase efficiency, but also to ensure that its most qualified staff are deployed appropriately across the department.

According to the Financial Times, HMRC has seen its budget cut by 5% per year in real terms. However, given collapsing tax revenues and a huge budget deficit, the government has placed a high emphasis on tax compliance; indeed, some argue that HMRC's recently beefed-up investigative powers are excessive and are infringing taxpayers' civil liberties.

“Over the years, the government’s definition of avoidance has changed, and Alistair Darling [refers to] tax avoidance and tax evasion in the same sentence," Louise Somerset, Tax Director at RBC Wealth Management, observed following last month's pre-budget report announcement by the Chancellor of the Exchequer.

"Avoidance now seems to cover everybody who does not arrange to pay the maximum amount of tax possible," she added.

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