A federal inquiry is examining whether the Australian Taxation Office suffers from too much scrutiny.

A host of submissions to the inquiry have argued that the tax office, like the big banks, is 'too big to fail', and thereby should not be subject to less scrutiny.

But one of the agencies that Tax Commissioner Chris Jordan has said he wants to face less oversight from is Mr Noroozi's office.

The ATO, which handles tax revenue of about $340 billion each year, in its submission to the inquiry says "duplication and overlap is evident across and within scrutineer work programs" and suggests the ATO may in future be treated with an "earned autonomy/differential approach".

No duplication

But Mr Noroozi has rejected there's duplication.

Mr Noroozi on Tuesday addressed the inquiry being held by the House Tax and Revenue Committee, laying out several reasons why less scrutiny of the tax office was not warranted.

He labelled the ATO's testimony at earlier hearings about cases of duplication over oversight as "a series of soundbites" that were "not supported by facts and evidence".

The IGT, which recently took over the function of handling individual taxpayer complaints against the ATO, had handled 2000 taxpayer complaints over the past 11 months, Mr Noroozi said, many of which came from small business taxpayers.

He said small business people had told him that if his office – which was set up to specifically keep a watch on the conduct of the ATO – "can be bullied in this way", then they feared they would have little hope in having their compliants resolved.

Taxpayers had lost confidence in the tax system. "Whatever you decide, you need to restore some of the confidence in the system," he said. 

Why bite the hand that feeds you?

Mr Noroozi also warned that while multinationals must pay their fair share of tax, tough talk against big companies needed to be balanced against the fact that Australia was a "net importer of capital".

"You don't want to bite the hand that feeds you," he  said. "If you start degrading that, it may have a flow-on effect."

Mr Noroozi's supplementary submission to the inquiry urges the "need to exercise extreme care in relation to any change to external scrutineering arrangements".

It says the government's recent policy decision to transfer the Commonwealth Ombudsman's tax complaint handling function to the IGT had "already created significant efficiencies and minimised duplication".

More than 35 per cent of complaints were being resolved without needing ATO intervention and, when the ATO's input is required, the majority of the remaining matters had been resolved with 15 business days, it said.

Mr Noroozi said Mr Jordan had reassured the public that ATO job cuts would not impact its services. In such an environment, "robust oversight and scrutineering are even more critical", Mr Noroozi said.

The ATO was also in the midst of a "cultural reinvention" plan being overseen by Mr Jordan, and Mr Noroozi noted "there are examples of large–scale system failures during periods of significant change within the ATO".

At an earlier hearing in March, Liberal MP Bronwyn Bishop said it was not up to the ATO how much scrutiny it faced from Parliament.