What’s wrong with HMRC?


In my seven years working with HMRC on and off, either providing services from a small company or representing software developers’ interests, it has been perfectly obvious that trivial technical tasks become time-consuming and expensive once they have been put to HMRC’s prime contractor.

I have been on conference calls, providing a parallel service to the prime contractor, where they quoted months and many thousands of pounds for changes I had already implemented for a few thousand, had tested and could have deployed in a few seconds. We ran rings around them and my old colleagues still do.

There are some tremendously dedicated, hard-working people at HMRC, but the system fails to give them the skills, tools or contractual flexibility they need to achieve simple tasks quickly at low cost. Our money is being wasted hand over fist and, under the current circumstances, the alternative is the risk of fiascos like this massive loss of unprotected, undisguised data.

And they are not well-organised these days either…

The organisation of HMRC

Perhaps in common with the FSA, HMRC as it is today is the result of over-ambitious centralisation in search of cost savings. The Inland Revenue’s core competence was taking tax from people and businesses. It was quite good at this, taking care to maintain confidentiality and it was even fairly flexible: we may now be called “customers”, but many of the practices that made the IR approachable have been swept away.

Now HMRC handles VAT and Duty, both responsibilities with new and dramatically different sets of competencies: can ordinary tax inspectors now use Customs’ rights of entry and search? Add responsibility for child benefits and you now have a department responsible for paying out large sums of money.

HMRC has shown itself not very good at that.

The lesson is, if you must have a huge department (about 100,000 people, reducing to 85,500 in the next few months) then it had better have a single function, so that it can focus and succeed.

So this reorganisation has not been a great success: too many people have too many responsibilities. Gordon Brown’s tinkering with the tax system has added major new lines of business to an already large department, which was already working hard to get online.

It is Gordon Brown who has made HMRC unmanageable.

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