HMRC 2011-12 accounts qualified for 12th time

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For the 12th year in a row, the comptroller and auditor general qualified HMRC’s accounts for 2011-12 for the lack of verifiable evidence concerning tax credits errors and fraud.

Ever since it first started pumping out billions in tax credit overpayments (estimated at £2.2bn a year in 2003-4), the Revenue has failed to produce accurate figures for erroneous payments and related fraud. The 2010-11 figures were only published this month and showed it had failed to reduce the figure to a targeted maximum of 5% for the year. The latest available estimate was 8.1%, equating to £2.3bn.

The NAO’s assessment for 2011-12 was that HMRC “has inadequate management information” on the recoverability of tax credits debt. The NAO assessment of the tax credit debt balance at 31 March 2012 indicated that the level of irrecoverable debt could be substantially higher than HMRC was estimating and led to a £638m increase in the provision for irrecoverable debts to £2.3bn by the time the final versions of the accounts were published.

Aside from that continuing multi-billion pound niggle, and £5.2bn of debt write-offs swelled by £81m for small PAYE underpayments that will not be collected following the botched National Insurance and PAYE Service (NPS) implementation, the department is showing signs of emerging from the torments of recent years.

New chief executive Lin Homer struck a breezy tone in her introduction, accentuating the positive achievements and neglecting to mention the negatives. Among their achievements, she and chairman Mike Clasper highlighted:

  • £474.2bn of tax raised in 2011-12, £4.5bn up on the previous year.
  • Compliance activities yielded £16.7bn, a 20% increase on 2010-11. Homer said HMRC’s progress in this area “puts us well on course to bring in an extra £20bn per year by 2015”.
  • Around 12m open PAYE cases cleared (there are discrepancies in the numbers quoted), with the department “on track to clear all remaining legacy cases by the end of 2012”.
  • Written off tax held to £5.2bn - a mild improvement on the figure of £5.5m last year.
  • 74% of calls to contact centres answered compared to 48% in 2010-11; also improved processing times for post (63.7% handled within 15 working days, up from 36.8% last year, but still short of 80% target) and tax credit/child benefit claims.

HMRC’s annual accounts statement is a big document - 200 pages (2.1MB PDF) detailing the department’s resource accounts, accounting policies, internal functions, risk management strategy and including the auditor general’s report. It is possible to put many different interpretations on the information provided, and many accountants might see a rueful irony in positive accounting figures that don't appear to reflect their personal experiences of the entity. This overview looks at some of the areas that have attracted the most attention and controversy on AccountingWEB during the past year.

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About John Stokdyk

John Stokdyk is the global editor of AccountingWEB UK and


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02nd Jul 2012 13:17

Aren't any HMRC apologists...

... going to speak up for the useless management?

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02nd Jul 2012 15:52

HMRC Accounts

Taxpayers ought to be assured that the vast sums of money they pay into the Public Exchequer are dealt with and disbursed efficiently.. I do not agree with tax evasion and much of tax avoidance, but I can understand why some people do it, in the light of this report.

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By chatman
02nd Jul 2012 16:13

"corporate communications"

Does "corporate communications" mean PR (i.e. propaganda)?

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By AlMiles
04th Jul 2012 09:50

More horrors to come?

No doubt things will improve when they get rid of the next 10,000 personnel in the planned staff reductions.  (Yes, I'm being sarcastic.)  Will we see the tax take go up as well?

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04th Jul 2012 14:24

HMRC Accouts Audit report

HMRC are paying Aspire (Capgemini) on average £70m to £75m per month forIT support of various description and they still cant get their systems sorted out and working, what on earth is going on? 

The Audit report makes 37 recommendations and obsevations and the most startling is number 37 which states " the Department does not have an organisational-wide operational strategy" With the levels of expenditure being incurred on on the introduction of RTI I would have thought that HMRC would be clear as to how their core functions could be changed but here again it appears from the Auditors comments that there is uncertainty on how RTI and Universal Credit will fit into HMRC future operational model. I for one am staggered that we now have evidence supplied by C&AG that there is a lack of clarity at top level as to where all these changes will lead.

Finally one last quote from the report (point 15 if you are interested enough to read it) which states:- "The Department has yet to decide how far it will use RTI to improve the PAYE service and will use the pilot to inform this work" Sounds to me like making  up policy as you go along. Just what are these eye watering amounts of public money being spent on?

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