BDO responds to NAO report on the administrative costs of the tax system
BDO responds to NAO report on the administrative costs of the tax system
Commenting on today’s report from the National Audit Office on the administrative cost of the UK tax system, Dawn Register, tax dispute resolution partner at BDO said:
“The NAO’s report highlights several important areas where improvements can be made to enhance efficiency and reduce costs in the UK tax system.
“We support many of the report's recommendations, particularly the need for HMRC to take a whole-system view of the cost-effectiveness of the tax system. Establishing clear responsible owners for each tax regime and setting measurable objectives for simplifying tax administration is crucial. This should include making compliance, enquiry, and appeal processes more efficient.
“We also support the report’s call for HMRC to work more ambitiously with intermediaries to reduce system costs and improve digital services. The tax system is a three-way street, as many taxpayers need agents or software companies to help them comply. More emphasis on a positive working relationship with intermediaries is welcomed, including improving digital access so agents have the full gambit of HMRC online services.
“The report says that HMRC opened 14% fewer compliance cases in 2023/24 compared to 2019/20. It also found a lower yield per caseworker of £1.27 million in 2023/24, compared to a real-terms average of over £1.4 million in the five years before the pandemic. Improving both statistics will be necessary to tackle the tax gap. However, given the growing complexity of tax rules, the report’s expectation that experienced HMRC case workers will generate more yield may be misplaced. Tax simplification and increased enforcement of the rules are both imperatives for HMRC action.
“HMRC needs to develop a clearer understanding of the costs and benefits of 'upstream' compliance activity, for example the impact of providing HMRC guidance is hard to quantify. This will ensure that spending money on promoting compliance and preventing non-compliance is cost effective.
“Finally, we suggest that an ‘old-fashioned’ focus on a better quality of support and work by HMRC would save all parties time and cost. In our experience, easing the administration burden on individual taxpayers, businesses and tax agents will help to promote compliance with the UK tax system.”
ENDS
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