HMRC is in line for a tough year as they face more cost cuts whilst continuing to find and chase tax evaders. This could have a knock on effect on those who work through umbrella companies.
The PCS union claim that because the government is attempting to reduce the UK’s £167bn public spending deficit heavy job cuts are planned. Since 2006 twenty thousand jobs have already been lost nationwide, and the cuts will only get deeper after the publication of the taxman’s new business plan. This document confirmed the HMRC’s plans to cut 25,000 more jobs and close 200 offices by 2011.
However, despite this the document itself states that the department is more committed than ever in catching tax cheats.
The current chief executive of HMRC, Leslie Strathie, admitted that the next year will be a tough one but said that they had to respond to new ways of collecting tax, whilst also calculating the tax payments that people are due to make.
One controversial method for succeeding in this challenge is the amazing attempt to offshore IT work to India. There is hope that by shifting taxation work overseas, £110m will be saved by 2012. Despite HMRC being the third biggest government IT spender, these plans have caused considerable debate and will be the first time that government work has been offshored. Government officials have responded to criticism by stating that no personal tax details will leave the country.
Other IT cuts are hoped to create £11bn in savings in total and will come about through the renegotiation of existing IT agreements and creating a newer, more robust IT infrastructure.
This improvement in IT will be needed if the department is to meet their pledge in the new business plan to raise an extra £5bn in taxes, made up of £4bn in general tax receipts and £1bn in tax credit losses. However, how easy this will do in an age of staff cuts will remain to be seen, and the bad reputation for service that the HMRC already has amongst contractors and the umbrella companies they work through could only get worse.
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