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Performance bonuses for the taxman
by The Editor at 11:26 04/01/07 (Press)
Tax inspectors are being offered individual bonuses of up to 2,000 to track down more unpaid tax, according to a report in the Daily Mail.
The article claims that official figures show the taxman takes nearly a quarter of all pay, compared with less than 19 per cent before Labour came to power in 1997 and that HM Revenue and Customs (HMRC) is under pressure to increase the amount it collects every year, which means tax inspectors are feeling the heat.

By April 2008, it must have cut the amount of 'under-paid' direct tax and National Insurance by at least 3.5billion a year. Previously, tax inspectors received 'team bonuses' based on their department's overall performance but HMRC has confirmed that, for the first time, they are receiving individual bonuses.

The new 'appraisal system' was introduced in October 2005 as a result of the merger of Inland Revenue and Customs & Excise.

The' top performers ' are rewarded with up to three per cent of salary. If they are paid 65,000, this would mean a bonus payout of about 2,000.

Latest figures show that it had a target to launch 91,899 investigations into individuals in 2005/06, but more than 100,000 were started.

Right amount of tax
Matthew Elliott, chief executive of the Taxpayers' Alliance, told the Daily Mail: "This incentive scheme could easily lead to a growth in the sort of petty, borderline inquiries that people find so irritating and time-consuming.

"Tax inspectors could end up like the over-zealous traffic wardens that we see on streets across Britain, making life more difficult for huge numbers of families and businesses."

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Other experts also criticised the decision. Mike Warburton from the accountants Grant Thornton, said: 'It is entirely wrong to reward tax inspectors for collecting more tax than a person should pay, just because he bullied them into doing it.

"People should pay the right amount of tax - but not be forced into paying as much tax as possible."

Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants, said: "Bonuses are a bad thing if they are purely tax-driven.

"We want the tax law to be applied correctly and evenhandedly, rather than being biased towards HM Revenue and Customs' coffers."

A spokesman for HMRC insisted that the bonuses are nothing to with encouraging inspectors to collect more tax. She said: "Staff bonuses are not paid in return for a tax crackdown. The work of HMRC staff is assessed on a range of criteria. We consider important factors, such as judgment and decision making skills."

Full article: Taxman's bonus for making you pay more - Daily Mail - Jan 2007

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