Cuts to HM Revenue and Customs (HMRC) could hit small firms struggling to cope with complex tax issues, the chairman of the influential Treasury Select Committee has warned.
Conservative Andrew Tyrie warned that HMRC “in some areas is close to being a failing institution” with poor morale following a string of high-profile blunders.
With the department being reorganised and facing job losses he said there was “absolutely no point” making cuts if it led to increased costs for business.
Leading a Commons debate on HMRC he quoted written evidence to his cross-party committee from the Chartered Institute of Taxation: “Ten years ago the Inland Revenue had the reputation of being one of the best-run departments in Whitehall. Today HMRC’s reputation is in tatters as one disaster follows another.”
Mr Tyrie said similar representations had been made from other bodies and added: “HMRC in some areas is close to being a failing institution.”
He said a civil service staff survey had found HMRC had the “lowest morale of any government department”.
Mr Tyrie warned: “HMRC will become dysfunctional unless action is taken to bring to an end the string of disasters that have befallen it.”
A reorganisation to a centralised structure was taking place, Mr Tyrie said.
But he asked: “Can that reorganisation now be completed while cutting so many more staff?
“I hope it will but you have to say it could be a triumph of hope over experience if you look at other Whitehall departments and their reorganisations.”
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