Does calling a taxpayer a customer enhance or undermine voluntary compliance?

The term “customers” implies choice, John Humphrys told HMRC’s Ruth Owen on the BBC’s Today programme in July. “I like to think of customers because that’s the kind of service I want HMRC to offer,” Owen replied.

When HMRC calls taxpayers customers it may be misrepresenting the relationship and trust might be dented, Kimberley Scharf, professor of economics at Warwick University, suggested last week. Tax payments are not voluntary payments, and HMRC is “not there to make you happy,” she told a meeting of the All-Party Parliamentary Group (APPG) on Responsible Tax, as I reported for Tax Analysts (paywall).

“If trust in the tax agency is undermined, voluntary and involuntary compliance are also undermined,” she said.

Scharf’s submission to the APPG’s consultation on trust in HMRC suggests that rather than being harmless, calling a taxpayer a customer may undermine the idea that paying taxes is a basic duty:

“A customer is someone who freely chooses what to spend their own money on. But when it comes to paying taxes, taxpayers have no choice about it – nor should they; taxes are coercive levies on taxpayers made for the purpose of providing public goods and services that public institutions have an institutional and political mandate to provide.

“So the place to start for asking questions about ‘customer service’ in the context of tax compliance and administration is to ask whether calling a taxpayer a customer is a harmless thing to do from a revenue perspective, or does it harmfully misrepresent the fundamental nature of the relationship between taxpayers and tax authorities, and, by doing so, does it then promote the idea that paying taxes is not a basic duty and responsibility linked to the benefits that all taxpayers receive by belonging to a community.”

“I am not a customer” was the title of a campaign launched by Taxation in 2012. As I reported for the magazine’s sister title Tax Journal, HMRC told me that the term “plays an important part in helping us to take forward our strategy of putting people at the heart of everything we do”.

Does calling a taxpayer a customer enhance or undermine voluntary compliance? It’s an important question for anyone addressing the need to restore trust in HMRC.