Your Country Needs You to Stop Her Majesty’s Revenue & Customs
Her Majesty’s Revenue & Customs (HMRC) have published a paper on the future of income tax collection. Boring I hear you mutter but this is important. Two proposals are at the heart of the paper.
1. Real Time Information : Employers currently provide HMRC with employee tax details once a year. Thus, corrections to tax over/under payments are made annually in the meantime costing either the government or workers depending on who’s owing. Under the new proposal, employers will provide HMRC with information whenever or perhaps before employees get paid so the right tax deductions as calculated by HMRC can be made. Sounds kosher though few people HMRC have the chops to carry it off. See comments here.
2. The second proposal is called Centralised Deductions and is “radical”. It’s also hare-brained. Under this proposal, all pay would first be routed to HMRC who will deduct the correct taxes before re-routing the net earnings to employee bank accounts. Gasp! There’s a website attack from eastern Europe and no one gets paid! Meanwhile the government is earning interest on our cash. Anyway, besides the technological nightmare to make this work (the UK civil service is notorious for wasting money on ill-thought out and poorly executed IT projects), here are my other reasons for thinking Centralised Deductions is a mad and bad idea.
Firstly, the “benefit” that individuals would not have to worry about tax codes and how their taxes are calculated is dead silly and idiotic. If anything, people care deeply about their pay and how their taxes are calculated. They do not want to trust HMRC to get it right because experience shows that HMRC haven’t always and therefore won’t always get it right no matter how much technology is thrown at it. I believe that most people are like me and would rather deal with their employer’s HR and pay offices than speak to a government official.
Secondly, it will cost more money. It may be that employers will save some money (an obviously over-estimated £500m or $800m) but “savings” are chimerical spectres as they always are and will as they are wont to do go down the unforeseen expenditure manhole. Any accountant knows fully well that cost savings exist only on spreadsheets and in people’s heads. To illustrate, HMRC will have to employ thousands more staff (overheads: expensive UK overheads because there will be a thunderous outcry if this function is outsourced to India) who will be on generous state pensions and can never be fired. Who picks up the ensuing bill? The tax payer. Under the current system employers who can’t control their costs including administering pay deductions go bust. Under HMRC’s proposal the cost base for this will permanently shift to the tax payer. Or is that the real sneaky plan? Is this an underhanded clever tactic by the new conservative government and their business friends to shift costs to the taxpayer on the pretext that it would be more efficient for the government to centralise tax collection? I believe in governments but this is one area where HMRC (and by extension, the government) is bound to fuck up with painful consequences.
Thirdly, politically and from a liberty perspective, this is as Big Brother as one could be in England and hope to get away with it. I am centre-left politically and not a right-wing nutter. Really. However the mad grab by HMRC (and again by extension, the government) to take control of our money and in effect hold us to ransom stinks. There is a reason why Orwell’s 1984 and Animal Farm are considered classics and instructive. Someone should hand the HMRC muppets these two books to read though I suspect that their Oxbridge-trained managers know the books by heart. Which just makes me more cynical.
Fourthly, this would hurt HMRC reputationally. They won’t meet the high standards promised nor will they save the nation any money. Instead, they’ll end up more hated than British Rail when a million angry employees boil with incandescent fury at HMRC’s incompetence.
If you pay taxes in the UK then you ought to register your comments at firstname.lastname@example.org before 23rd September. Your Country Needs You. Now.