Costs of dealing with HMRC set to come under spotlight

6 Mar 2024

The Chartered Institute of Taxation (CIOT) has welcomed the announcement in today’s Budget that a suite of tax simplification metrics will include HMRC’s estimate of the net change in cost to businesses of meeting tax obligations from tax measures.

The government will evaluate progress in simplifying the tax system based on:

  • HMRC’s annual customer survey, tracking the views of small businesses and individuals on the ease of dealing with tax issues, and the ease of finding information.
  • How easy taxpayers found it to deal with HMRC, from a survey offered after using HMRC’s telephony or digital services.
  • HMRC’s estimate of the net change in cost to businesses of meeting tax obligations from fiscal event measures.

Welcoming the announcement, Richard Wild, CIOT Head of Technical, said

“The UK’s tax system is incredibly complicated, and we welcome steps which seek to simplify it, and evaluate taxpayers’ ability to comply, as well as more openly considering costs to taxpayers.

“However, it is vital that these measurements are credible and stand up to scrutiny. For example, HMRC’s estimates of business costs often seem significantly under-estimated, and far from reality. Greater transparency is needed, particularly around HMRC’s application of the Standard Cost Model, which is opaque to say the least.”

There is also little in the way of reassurance that today’s Budget will improve service levels at HMRC. While the government is investing £140m in HMRC’s debt management, there is no additional funding to improve day to day service.

Richard Wild continued

“We are disappointed by the lack of further investment in HMRC to improve customer service, especially while HMRC’s digital channels are further developed and more widely adopted.

“HMRC’s service levels remain the single greatest concern of our members, yet again the Budget adds to HMRC’s workload. The announcement, for example, that the High-Income Child Benefit Charge will be administered on a household rather than an individual basis by April 2026 highlights the tension between fairness and simplicity in tax policy. Policies like this continue to add pressure to HMRC’s resources, through the challenges of design, implementation and further down the line, ensuring compliance.”