Wed, 1 Jun 2011

Banks should run HMRC, MP claims

HM Revenue & Customs should outsource tax collection and back-office administration to private companies to avoid errors, an MP has claimed.

Ian Liddell-Grainer, chair of the All Party Parliamentary Group on Taxation, said banks are better at managing people’s money.

He claimed the Revenue had too much responsibility and problems were becoming endemic. ‘It carries out policy, collects taxes, administers systems, runs online filing, the front and back of house – everything. And, quite honestly, it can’t cope with it,’ he said. ‘Why can’t those be dealt with by external organisations?’

The Tory MP suggested banks could handle tax administration. ‘The banking system in this country can run cash machines and everything very effectively,’ he said. ‘[Banks] probably deal with more money per day than HMRC does in three or four months, and they don’t make mistakes. [Banks] could collect tax, administer it and HMRC could oversee the policy, enforcement, organisation and responsibility.’

David Hanson MP, shadow exchequer secretary, said the suggestions would be unpopular. ‘While we’re keen to see innovation and better services from HMRC, people would naturally be worried if banks were to be given confidential details of their tax affairs. Banks have not always acted responsibly,’ he said.

The MP’s comments came after HMRC was revealed to have incorrectly advised people they could not appeal against demands for unpaid tax.