Speaking in 2003, John Healy, the Treasury Minister for Customs, stated "Customs is also an ancient service, with legal roots stretching back to the 11th Century". To the cynical, tracing the history of HMRC back to the dark ages might confirm their suspicions about the role and function of the organisation. Indeed, when you look at the very narrow definition of it's objectives you might be forgiven for assuming they've never been altered. They simply state: "We are here to ensure that the correct tax is paid at the right time". The powers HMRC use and apply are based on this one simple objective.

Defined in this way, this Government Department, is able to detach itself from both circumstance and consequence. Rules can be blindly applied as they are not limited by any economic context. This may also go some way in explaining why there does not exist a Taxpayers charter. There is no downward pressure from the organisations goals to have one. Although it's been discussed at the Consultative Committee Meetings it seems to have been reduced to a carry forward meeting minute. It needs further thought.

Suppose we added one more aim to their objectives, and this was "To not inhibit or impede economic growth."  This goal might accomplish a number of things, including a need by HMRC to understand the wider economic impact of applying it's powers.

Let's look at an example. In it's current form it is perfectly permissible for a company to have to wait over four months to be VAT registered. If the registration process were governed by an objective to not impede economic growth this timeframe would be unacceptable. I can almost hear Donald Trump exclaim,  "It's a disaster".  The organisational structure and practices would have to change so that the process be completed in an acceptable period, a period to which the organisation is accountable.

At the moment there is none. Guidance booklets from HMRC suggest the registration process to be three weeks, however, owing to their single objective,  and the lack of a tax payers charter, they can legitimately take as long as they like. There will be some reason or power they can apply which supersedes any prior commitment.  At the moment, this reason is Missing Trader Intra-Community (MTIC) VAT fraud estimated to cost the Exchequer 0.6% of total Government revenue, almost the same still being lost through tobacco smuggling, or estimated to be lost in identity fraud. The spin put on MTIC fraud is that it diverts vital funding intended for public services, like hospitals and schools, on which we all rely.

I say "spin" as we should not forget these losses are less than the £3.3billion in unpaid taxes avoided by over half a million illegal workers, and less than the amount the Government has spend on the Iraq war. It's a spin, should it be used to lower standards of public service? Long, undue delays in VAT registration are explained away as part of Customs strategy  to combat MTIC fraud.  This, for some reason, seems to make it okay.

Lets look at another example. HMRC have redeployed an additional six hundred staff to help with validating the VAT repayment returns of companies trading in industries tainted with MTIC fraud. When we look at the numbers it just doesn't seem to stack up. The Department processes approximately 170,000 repayment returns per annum. Of these, only a small minority relate to returns submitted by companies trading in tainted markets. If this small minority were 5% then there would be some 8,500 returns per year to apply increased validation to.

With these numbers, each repayment return would have one Customs Officer working full time on it for four weeks. You would be forgiven for concluding , with this level of resource, returns would be validated quickly. This is not the case. In a letter leaked to me, from a reader, a senior Customs Officer writes, "HMRC is under no statutory obligation to complete these verifications within any fixed timeframe" and further "the case officer will normally provide at least monthly updates", which would suggest the process is going to be a siege.

Cashflows of legitimate businesses are squeezed as Customs retain their VAT repayments as part of their strategy to combat MTIC fraud. This makes it okay. Where the single objective of the organisation is "to ensure the correct tax is paid at the right time", it becomes acceptable to implement a strategy to "disrupt.... all points in the supply chains". The collateral damage is not considered.

Are these the "legal roots stretching back to the 11th Century"?

Well the only comfort that you have is that you are not alone. I read in yesterdays FT (www.Ft.com) that the London Olympic Bid "forgot" to include Vat in its projections when pitching for the Games.

 I don't think they forgot but rather they were waiting for a response from HMRC when they heard nothing an exectutive decision was made, perhaps "we have been waiting for months for a response therefore we can assume there is no liability, lets move on".

That commercial view, which you would agree is reasonable, will now cost £1bn extra, all because the HMRC "has its roots in the 11th Century", pity about the liability being in todays terms.