Penelope Tuck

How hybrid managers act as “canny customers” to accelerate policy reform: A case study of regulator-regulatee relationships in the UK’s tax agency

Purpose - – The purpose of this paper is to analyse role transition for professionals moving towards hybrid managerial roles. Specifically, the authors examine reforms to the national tax agency in the UK, focusing on attempts to shift hybrid managers away from a focus on tax compliance, to a greater customer focus. This extends understanding of the relationship between New Public Management (NPM) and the public professions, by offering greater insight into the dynamic between regulators and regulatees, as professionals are co-opted into management roles that encompass greater customer orientation. Design/methodology/approach - – The authors draw on documentary data relating to reform from 2003 to 2012 and 43 semi-structured interviews with senior tax inspectors co-opted into hybrid manager roles. Findings - – The findings support established accounts of the effect of NPM reform to public professions, as these professionals are co-opted into hybrid management roles. Some hybrid managers resist, others embrace the demands of the new role. Linked to a hitherto neglected aspect of analysis (the extent to which hybrid managers embrace a greater customer orientation) the findings also show a more novel third response: some hybrid managers leave the national tax agency for opportunities in the private sector. These public-to-private professionals the authors call “canny customers”. Canny customers are ideally placed to exploit aspects of NPM reform, and thereby accelerate changes in the governance of public agencies, but in a way that might undermine the function of the tax agency and tax professions. Practical implications - – In regulatory settings, policy reform to co-opt professionals into hybrid managerial roles may have mixed effects. In settings where a focal dynamic is the regulator-regulatee relationship, effective governance will require understanding of the labour market to temper excess influence by those hybrid managers who become canny customers, otherwise, in settings where it is easy for individuals to move from regulator to regulatee, the pace and consequences of reform will be harder to govern. This runs the danger of eroding professional values. The specific case of tax professionals reflects themes in the literature examining hybridisation for accountants, and provides novel insight into the dynamics of professionalism that extend to the case of accountants. Originality/value - – The contribution is to extend the literature on role transition of professionals. The authors focus on hybrid managers in the context of a regulatory agency: the UK national tax agency. Policy reforms associated with hybridisation emphasised customer orientation. The authors highlight labour market characteristics impacting the regulator-regulatee dynamic, and an as yet unexplored, unintended consequence of reform. The public professional who leaves for the private sector becomes a “canny customer” who can exploit and accelerate reform.

Customers? The reconstruction of the ‘taxpayer’ in Inland Revenue discourse and practice

References to ‘customers’ have become commonplace in the policy discourses within UK government and other public sector bodies. It is a working assumption of UK public sector management that the concept of the ‘customer’ can be applied to any public sector service agency or department; and this paper analyses how the UK governments revenue department, formerly titled the Inland Revenue (IR), re-characterised firstly taxpayers and latterly tax claimants as ‘customers’, rather than ‘users’, of IR services. This paper identifies some problems, dilemmas and ambiguities associated with this reconceptualisation in the context of an organisation that is predominantly a regulating department. Far from being merely a reclassification of the taxpayer as customer, the emerging discourse and associated practices of the IR were in part embedded in organisational change, including the merger with HM Customs and Excise to form the present-day HMRC. Thus this case analysis illustrates the limits of consumerism as a strategic tool of a government revenue department and raises wider questions for public management.

Tax Havens: The Crisis of Transparency

In the midst of the 2016 Panama Papers scandal, Pascal Saint-Amans, Director of the Centre of Tax Policy and Administration, pointed out that transparency was one of the three main pillars of the international tax agenda. Indeed, the opaque nature of corporate vehicles, habitually associated with tax havens, has been heralded as the major contributor to the increase in tax avoidance. Anonymous legal structures are often enabled using the so-called shell companies, or “legal fictions”. By adding extra layers of complexity to the ownership structure, these companies can serve the devious purpose of obscuring transactions trails, which is handy for taxpayers wishing to minimise their tax burden. Although often associated with tax havens in the public imagination, evidence suggests that anonymous legal entities are provided on a much larger scale in some of the OECD countries. The world’s leading governments have been recently promoting transparency as the new way forward to address tax avoidance and evasion by multinational companies, with the OECD holding the leading position among transnational tax regulators. While the initiatives aiming to look through corporate vehicles are abundant, the implementation and effects thereof seemed to escape the interest of policymakers. Clearly, there is a need to step back and try to understand the effects of the existing regulations. In this chapter, we provide an outline of the transnational regulatory initiatives targeting the opaqueness of corporate vehicles, and discuss the potential effectiveness of the current transnational initiatives aiming to increase transparency of beneficial ownership and enforce better regulations on tax havens. The most active and internationally recognised transnational tax regulator is the OECD; hence, in this chapter, we concentrate on the OECD initiatives in tax matters, in particular, on the Base Erosion and Profit Shifting (BEPS) project, and its role within the transparency of beneficial ownership agenda. In the discussion section, we conclude that categorisation of the countries into tax havens might not be helpful for the overall regulatory goals of the OECD, which, in turn, undermines the neutrality of the organisation as a transnational regulator, and that the apparent lack of belief in the international initiative from the OECD member countries is not helpful in furthering the OECD objectives.