Citizen Engagement United Kingdom United States

Tax and Accountability

Two interesting stories have been doing the rounds on either side of the Atlantic over the last few days.

Both relate to tax. Both relate to the policies adopted by the tax collection authorities.

The UK story is that HMRC (the UK’s revenue and customs service) has been rapped over the knuckles by the Public Accounts Committee for poor levels of customer care. In particular, the Committee takes a dim view of HMRC’s apparent inability to handle calls from tax-payers:

“HMRC is still failing to provide an acceptable service to customers and could not tell us when it would be able to do so. In March 2013, the previous Committee concluded that HMRC had “an abysmal record on customer service”, having only answered 74% of telephone calls received by its contact centres during 2011-12. In 2014-15, HMRC responded to just 72.5% of calls and over the first half of 2015 this had fallen to 50%. The previous Committee considered that HMRC’s target of answering 80% of telephone calls within five minutes was “woefully inadequate and unambitious” and recommended that HMRC should set a more challenging short-term target for call-waiting times and a long-term target that is much closer to industry standards. HMRC has consistently refused to set more demanding targets,however, and in 2014-15 it answered only 39% of calls within five minutes. HMRC did not provide us with any indication of when or by how much its customer service would improve, beyond a vague aim to improve year on year. It acknowledged that people are more likely to pay the right tax when they find HMRC easy to deal with, but, in the words of its own Chief Executive and Permanent Secretary, “we are still struggling”. We are concerned that customer service levels are so bad that they are having an adverse impact on the collection of tax revenues.”

The States-side story is different but related. Apparently a record number of Americans are giving up their citizenship. The main reason for this relates to aggressive tax collection policies adopted by the IRS and aimed at US citizens that live abroad.  Such citizens are getting so fed-up with being hounded for tax – when they derive no services from Uncle Sam – and they are renouncing citizenship as a result.

One of the issues we discuss in our soon-to-be-published paper is that the nature of the ‘contract’ between citizens and government is changing. Part of the reason for this is that there is an expectation on the part of citizens that government needs to know its place in society. It’s no longer more important that any of the other actors in citizens’ lives. Therefore it needs to behave accordingly – adopting a more humble attitude, perhaps.

But there’s clearly a transition period. Government will inevitably shrink as governments continue to grapple with huge debt burdens. But the means of dealing with annoyed citizens who are being squeezed for tax is neither to provide appalling service nor hound people for tax when there’s no reason for them to pay.

Register here to ensure you get our latest paper when it’s published

Citizen Engagement Digital Government Government and Cloud United Kingdom

Xero, Tax and HMRC: EnterConf

EnterConf opened today in Belfast, Northern Ireland in a former Harland & Wolff warehouse building (now home to a skateboarding park). The venue is grungy but the presentations – from the great and the good in enterprise software – help paint a picture of enterprise software in a state of flux.

The flux is, to some extent at least, being caused by cloud technology. Enterprises (and governments) are all over this technology and want to be seen to be using it. Sometimes they have no choice – such is the tendency for developers, in particular, to start using the new cool thing – the C-suite is then forced to pay the bill for an enterprise license. There’s talk, at EnterConf, about the ‘shadow cloud’ – non-approved software entering the enterprise and staying there.

But most SMEs see little down-side to the cloud. And a new breed of software vendor has entered the domain traditionally occupied by Google to offer very handy functionality for very little cost. One such company is cloud based accounts vendor, Xero.

Xero, along with competitors Sage, KashFlow and others, offers its software for a minimal monthly fee. Functionality grows with need as the business grows.

Such cloud based packages have transformed the lives of small business owners and accounting firms. They have also caused government tax authorities to reappraise the nature of the relationships between themselves and small business owners. In the case of the UK tax authority – HMRC – it seems inevitable that its head-count will reduce as its need to provide face-to-face engagement reduces with the advent of all-electronic filing and returns.

I had the opportunity to ask Andy Lark, CMO of Xero, about his observations about how government tax authorities should rearrange themselves – in preparation for a cloud future.