A minister is now on HMRC’s board, and that’s a big win

For the first time in its history, HMRC’s board of directors will be chaired by a Treasury minister - James Murray MP, the exchequer secretary. It seems like the kind of news that the government could easily have gone without mentioning, save for discretely updating an HMRC web page, writes Andy Chamberlain, director of policy at IPSE.

The one move by the chancellor that slipped under the radar

However, the change was unveiled by no less than the chancellor of the exchequer -- as part of a package of reforms to the tax office.

To us, that’s a communications choice that our organisation can’t help but feel holds a deeper meaning.

After all, it’s not like the chancellor has got much on at the moment!

Longer reach of government is something to get behind

Reading between the lines of Mr Murray’s appointment, HMRC will stay at ‘arm’s length’ of government.

But the length of the arm appears to have now shortened, due to the government’s reach growing.

Of course, in any organisation, the chair has a distinct role. Rather than getting involved with the day-to-day business, a chair’s role is to support the leadership, relating to setting and implementing a strategy. Then it's about holding the organisation to account for its delivery.

An overdue accountability injection

At HMRC, that job now lies with an elected politician on the government’s payroll -- someone who, ultimately, answers to the electorate.

When we cast a vote in an election, part of what guides our choice is public services. If we aren’t happy with how our schools, roads and waste collections are being run, we can vote for a change of direction.

Tax collection is different.

HMRC is one of a handful of “non-ministerial departments” that operate at arm’s length of direct control by politicians. The thinking is that this enables it to focus on interpreting and enforcing tax legislation in a politically impartial way.

The loan charge put much of this into focus

But the benefits of being at ‘arm’s length’ go both ways. And ministers have been able to avoid facing the brunt of criticism directed at the tax department, particularly in situations where individuals believe they have been treated carelessly, unfairly or inconsistently.

We saw that with the loan charge, in a House of Commons debate which heard a former leader of the Conservative Party brand HMRC as “unaccountable.”

Don’t think tax and politics are one and the same? Tune in on Oct 30th

Ultimately, HMRC’s distance from politics is a necessity -- and yet, tax is political. The question of ‘who pays’ and ‘how much’ is paid, is behind every policy government announces. You’ll see that play out on October 30th at Autumn Budget 2024.  Moreover, “closing the tax gap” was a core message for each of the main parties during the 2024 election campaign.

Having been propelled to power by these pledges, is it not valid to question whether the government is supportive of how these pledges are being interpreted? And enacted on their behalf?

A heeded call

Earlier this year, our organisation used its manifesto to call for HMRC to be placed under closer ministerial oversight, believing that a better balance between supervision and interference needed to be found to ensure taxpayers -- all taxpayers -- get a fair deal.

We made the call in the wake of HMRC’s regretful treatment of high-profile freelancer Kaye Adams, who finally was unceremoniously handed a default win in her IR35 case.

Well, by now putting a minister in charge of HMRC’s board for the first time, the new Labour government may have tacitly acknowledged that it sees things the same way.

What will change with a government minister on HMRC’s board?

Officially, James Murray’s appointment changes nothing about HMRC’s leadership, structure or constitution.

It changes nothing, either, about how tax policy is developed.

Nor does it change how individual tax cases will be dealt with.

But it clearly changes something. Why else would the government break with convention by giving a minister a seat at this particular table?

Murray’s HMRC appointment officialises what’s already been

The reality is that there are many examples of ministers wading into HMRC’s business when they need to.

For example, the department’s U-turn on plans to restrict its customer phone lines came following an intervention by Jeremy Hunt MP. Ministers have similarly forced HMRC to stop and rethink its approach to Making Tax Digital numerous times, owing to political pressure.

And after hundreds of letters were sent to MPs as part of our campaigning on Managed Service Company legislation, we now know that HMRC is working on publishing updated MSC guidance for contractors to help stop more from falling into this trap.

So, it really is over to you Mr Murray…

These arbitrary, last-gasp interventions are a sign that ministers aren’t learning about problems until it’s too late.

By taking charge of the tax department’s board, we may now get a minister who is more consistently engaged with HMRC’s performance -- and one who we hope can be a voice for taxpayers in an otherwise opaque organisation.