Another turbulent week in the media for HMRC but as always, when under “attack”, their defensive shield is their astonishing sense of hubris. So the week started off well enough, with a judge ruling that their warrants for a raid on Newcastle United (related to allegations of VAT fraud concerning payments to agents) were lawfully obtained earlier this year. That was as good as the week was to get for HMRC.
Three embarrassing stories followed;
- HMRC have allegedly doctored minutes of a meeting held back in July (which was to obtain feedback from industry heads on recent changes to IR35 in Public Sector) to remove comments critical of the changes. This appeared to be an attempt to force HMRC’s own view of IR35 changes onto ministers in an attempt to try and influence the extension of the IR35 rules into the private sector in future.
- Then there was a story about the disgruntlement of HMRC’s staff when completing their annual staff survey. It is alleged the scoring system manipulates responders to so that certain statements are agreed with that boost the morale scores. Oh dear. A year ago HMRC’s new Chief Executive told a committee that morale in HMRC was “worrying low” so this is one way to tackle that issue I suppose. How the British public loves any story about a large organisation that trips over its own shoelaces by saying one things then doing the exCT opposite. Remember this is an organisation that used to pride itself on being “fair and reasonable” in its charter. This was before it showed its true colours with an objective to “maximise revenue.”
Regular readers will recall whenever HMRC faces criticism they typically have one response – to come out fighting. Well, their response this time to the allegations of being caught out cleansing meeting minutes was top civil servant Jim Harra bombastically stating they believe IR35 abuse was still rife and that contractors were “paying less tax than they owe”. He also said claims the IR35 reforms in the public sector sparked a talent exodus were just “misinformation” being peddled by people who stood to gain from propaganda! This is despite two recruiters (who put contractors into the public sector contract roles) stating categorically that there has been substantial impact in terms of contractors leaving the sector.
Some have said in the past that HMRC are becoming punch—drunk with their power and status – and it is easy to see why some people feel so strongly about it. HMRC have of course been given (and continue to seek) unprecedented powers to collect more and more tax (such as APN’s and the forthcoming 2019 outstanding loan charge), are allowed seemingly unchallenged to publish success statistics that are little more than spin and recently were the victors in the Glasgow Rangers FC case. So you can see the old maxim about “absolute power corrupts absolutely” may well apply here too. Perhaps when you are the biggest and most hard hitting bully in the school yard, it is easy to lose a sense of reality and accountability.
- The week closed with the news that between now and Christmas, HMRC will be issuing over 400,000 “auto-populated” tax returns which HMRC (of course) claim makes life easier for millions of tax payers. Cynics will quite rightly point to HMRC’s atrociously high error rates in the past aligned to their “shoot first, ask questions later” policy, which is likely this will be yet another PR gaffe. No prizes for guessing that the response to that criticism will be…