The Labour Party today is publishing the initial report of its review of Her Majesty’s Revenue & Customs (HMRC). This first stage of the independent review has been carried out by a team led by Professor Prem Sikka (University of Essex) with the aim of enhancing HMRC’s efficiency, effectiveness and public accountability.
The report recommends:
- The formation of a Supervisory Board, consisting of stakeholders, to watch over HMRC’s Board to give it direction and enhance its public accountability. The board shall act as a bulwark against corporate capture and inertia and be accountable to parliamentary committees.
- The Supervisory Board should support and protect tax whistleblowers.
- Additional investment in HMRC resources and staffing.
- That HMRC needs local knowledge and must respond to citizens’ concerns. This is best achieved through a network of local offices and staff with local knowledge.
- That HMRC should have a well-resourced internal investigation and prosecution unit. This would strengthen its in-house institutional knowledge base.
- That HMRC should offer competitive financial rewards to its staff.
- Tax returns, related computations and documents of all large companies must be made publicly available. The public availability of corporate tax information will improve the quality of information available to parliamentary committees to scrutinise the effectiveness of HMRC in meeting its objectives.
- Parliamentary committees should be empowered to examine any tax information, no matter how sensitive. It would be up to the relevant parliamentary committee to decide whether scrutiny of any documents and practices should be conducted in private or closed meetings
- The backlog of tax cases creates uncertainty and anxieties. This is also unfair to taxpayers. The judicial capacity to hear cases should be expanded.
- Various reports published by HMRC should contain information that enhances transparency and accountability.
- Public pressure is a vital ingredient in transforming HMRC. It should not be diluted by the introduction of fees to challenge tax assessments.
- HMRC needs effective tools to combat sham. We recommend a rewrite of the General Anti Abuse Rule (GAAR). HMRC should be guided by the Department of Justice and/or a panel of retired judges, rather than by people from the corporate sector.
John McDonnell MP, Labour’s Shadow Chancellor, said:
“I welcome this very important contribution to the debate about tax in this country, and I would like to thank Professor Prem Sikka and his panel of experts for their enormous contribution.
“The public want to urgently see more action on tax avoidance but the Government have made things words by cutting staff and resources at HMRC. This report lends further support to something we have been arguing for years: that HMRC needs more accountability and resources to deal with tax avoidance and evasion.
“Labour will be looking at the report’s recommendations in great detail while we develop our policies in this area, and also discussing how to take the review forward to the next stage.
“It’s only under a Labour Government under Jeremy Corbyn that the UK can get a serious grip on the problems of tax avoidance and evasion.”
Professor Prem Sikka said:
“HMRC performs a vital task in collecting taxes, enforcing lax laws and delivering services to taxpayers. Against a background of reductions in resources, it has experienced considerable difficulties in meeting the service expectation of taxpayers and challenging organised tax avoidance. We have investigated the difficulties and made recommendations to strengthen HMRC and its public accountability.”