HMRC Should be Privatised!

This thought has been in my head for the last few years. Now, I have seen an article in the accounting press on the same subject. I am not alone!

Privatisation is maybe going a bit far but removing it from the direct control of the government of the day does seem to have certain advantages.

There have been a number of Budgets where last minute, ill thought out, announcements have been made, that then require some remedial modifications.

There was the abolition of Taper Relief for Capital Gains Tax. This had been in place for a number of years and was well understood. Without warning it was announced in the budget that it was being abolished. Due to an outcry from the business community and others, Entrepreneurs Relief was quickly introduced. This effectively resurrected Retirement Relief that had been abolished a few years earlier. Just about the only thing that changed was the name. There are plenty more examples.

Then there is the blatant tax giveaways ahead of this election. After all the tax rises, arising from the freezing of allowances and rate bands, Hunt gives some back, just before a General Election. He and Sunak seem to have perfected the technique of smoke and mirrors, but enough said about that or I will be getting into trouble.

The responsibility for setting of interest rates was given to the Bank of England many years ago. They are provided with the criteria and desired goal. They are then responsible for deciding the rate of interest. Could it not be the same for HMRC. The government tells them how much tax needs to be raised and sets our any essential criteria. Then HMRC would be left to design and instigate a system to deliver the desired outcomes, free from political interference and sudden swings in policy.

I wonder if either of the two main parties would be willing to give up so much control. Just imagine, a system designed without political interference. No more blatant giveaways just before a General Election. Taxes would be imposed to achieve the objective of financing government and not to achieve politically motivated goals. We would get away from the ill thought-out tinkering by successive Chancellors.

Taxes, once put in place would be left alone. We would get to know how they work, instead of trying to keep up with all the myriad of small changes.

It probably would not turn out as good as it sounds but almost anything would be better than the current system.

What we have now is a poorly designed tax system built up from countless piecemeal changes over the years by successive governments. Surely the instigation of an Office of Tax Simplification was at least recognition of the current state of affairs. This office was abolished by the current government who have made it far more complex, We now have a progressive tax system where rates rise in a haphazard way going up and down and back up again depending on your level of income. Not only that but the rate of income tax for the highest earners is less than for people on much less income. Crazy stuff!

While we are on tax, one of my pet frustrations is that people blame companies for not paying enough tax. Yet they are merely operating according to the tax laws that Parliament enacts. If they are seemingly getting away with not paying enough tax, then blame the Parliamentarians who brought in and maintain those tax laws. Bad legislation that fails to achieve the desired affect is not the fault of the taxpayer, whoever they are. Its those that draft the legislation and bring it into law.

Of course, that assumes that most MPs who vote on these things actually understand what they are voting for. I will leave you to decide on the likelihood of that, but I have my own views on that matter. So, where does that leave us. Perhaps we should put the design of tax legislation in the hands of an independent body, free from political influence.

Pigs might fly!


Alan E Long

The Long Partnership

07770 738770



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