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MPs criticise HMRC - 09/03/2010

Her Majesty’s Revenue and Customs (HMRC) must considerably improve its performance, according to a report published today by MPs.

The report, carried out by the Treasury Committee, scrutinised the government departments headed by chancellor Alistair Darling. It highlights problems in several areas, most notably the issue of staff morale within HMRC.

The committee, chaired by John McFall (pictured), said it was "Deeply concerned about employee engagement at HMRC and its effect on performance." The report added: "We recommend that HMRC’s management re-double their efforts to re-engage with their workforce."

The report states that some staff at the Treasury faced "burn out" at the height of the recession, due to high volumes of work required to stabilise the economy, in addition to what the report acknowledged as "increased volumes of high priority ‘normal’ activity."

A dramatic fall in tax collection in 2008-09, from £457.4bn to £435.7bn, a decrease of £21.7bn (4.7%), was also highlighted by the report. HMRC chief executive Lesley Strathie claimed this was due more to an increase in debt and the lowering of VAT, rather than tax avoidance.

Additional concern was expressed at the terms of the department’s contract with Mapeley, a Guernsey-based property company that purchased HMRC’s property portfolio in 2001.

The report said: "HMRC has been slow to consider that the terms of its contract with Mapeley could put the latter under immense financial strain."

Mapeley currently own 147 freehold properties and 454 leasehold properties, which at most recent valuation was worth £526.8m. The contract between Mapeley and HMRC appeared to transfer substantive risk to Mapeley, but the committee’s report suggests that HMRC did not consider the possibility of those risks returning to them if Mapeley defaults.

The report added: "We remain to be convinced, however, that sufficient risk management, including a clear and mutually beneficial way forward, is yet in place, and will return to this in future evidence sessions."