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Taxation's stance on planned redundancies at HMRC has been reinforced by comments from tax expert Neil Warren, who believes the Revenue should be investing more in staffing.
Mr Warren, an independent VAT consultant, was responding to the latest report from the Commons' Committee of Public Accounts, which estimates that the Revenue fails to collect an annual amount of around £1.5 billion due to missing VAT and corporation tax returns.
The paper claims that only 50% of all VAT receipts are received by the due date, and the committee's chairperson, Edward Leigh, has called for HMRC to 'make greater use of non-financial incentives to businesses to comply with filing deadlines'.
The committee criticised the 'gaps in the [Revenue's] information on the potential tax outstanding from all missing returns, the businesses that fail to file both types of return, and the link between late filing and other forms of non-compliance'.
Neil Warren believes that the root of this problem lies in a lack of resources and employees at HMRC — against which Taxation is currently campaigning with its Stop the Staff Cuts drive, as the Government prepares to force more redundancies.
'Missing traders have always been a problem,' said Neil, who is also a tax lecturer and author. 'When a business starts up, someone from HMRC needs visit it quickly; not in six months but one month.
'However, staff shortages often mean that by the time an official can get out, the trader has gone.
'A new business should get its first VAT inspection within no more than its first 18 months — and then every three years. But the usual case is that there is no initial visit, and then unless a trader is regarded as high-risk, it's never inspected.'
Neil, a former Customs inspector, believes that the move away from local Revenue offices to larger regional ones is also partially to blame.
'There's often not the same geographical proximity to a business to allow HMRC to see what is going on,' he remarked, citing frequent cost-cutting measures as the reason for the larger, less localised offices.
'What we have,' added Neil, 'is an emphasis on saving money rather than giving value. The system needs to be slicker, and there needs to be more local involvement and more investment in staffing'.
