MPs today piled pressure on HM Revenue & Customs with the launch of an inquiry into its effectiveness – weeks after it was widely criticised for mistakes that led to millions of incorrect bills, and days after the department was warned to prepare for a new wave of job cuts.
The Treasury sub-committee inquiry will focus on "how HMRC is doing its job, whether it can do it better, and what the future holds" following last month's comprehensive spending review. Lesley Strathie, the Revenue's chief executive, is among those likely to be called to give evidence in person.
The MPs' investigation will build on the findings of a previous inquiry, published this year, which suggested morale inside Revenue & Customs was so low that government plans to tackle aggressive tax avoidance were in jeopardy.
MPs on that committee said HMRC staff were the most unhappy of all Whitehall workers.
Then, early last month, it emerged that almost 6 million people had been caught up in what was dubbed a major tax blunder. It became clear that about 4.3 million people had paid too much tax through the Pay As You Earn (PAYE) system, and were due a refund, while a further 1.4 million had not paid enough, and owed an average of £1,380.
Those affected by the blunder include people who have changed jobs or taken on a new extra source of income, received a new employee benefit such as a company car, or are retired. The Guardian subsequently disclosed that the Revenue had about 18m open cases on its books, dating back six years.
Last week, staff were told that 13,000 posts at HMRC would disappear as a result of a 25% spending cut over the four years covered by the spending review. The organisation had 69,000 full-time equivalent staff in April this year, and this is expected to fall to 56,000 by April 2015.
These job losses were on top of 25,000 staff lost since the formation of the department in 2005, said the Public and Commercial Services Union, which added: "HMRC is not coping currently, so it is difficult to see how further reductions are going to help."
The Treasury sub-committee inquiry will focus on the department's performance and "whether it is delivering its key aims"; the implications of HMRC's spending review settlement; whether it is "able to deliver" the government's aims on combating tax avoidance and evasion – a priority for which £900m has been set aside over four years; whether reforms to the PAYE system are necessary; and what the organisation's priorities should be for the future.
"The operation of HMRC has come under close scrutiny in the last few months ... [and] the department is subject to a significant efficiency programme, and must make further savings as a result of the comprehensive spending review," said the sub-committee.
Labour MP George Mudie, its chairman, said: "HMRC was criticised heavily over the end-of-year [PAYE] reconciliations. Like most government departments, it will have to make sizable cuts in administration.
"We will examine how HMRC is doing its job, whether it can do it better and what the future holds following the spending review settlement."
