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HMRC apologises after getting sums wrong

4th Jul 2014
Freelance journalist
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HMRC has apologised after it incorrectly claimed that it had collected billions of pounds in extra tax.

In a report on HMRC's accounts for 2013-2014, the National Audit Office (NAO) found that HMRC has set the baseline to measure its performance £1.9bn too low in 2010.

Amyas Morse, head of the NAO said that although the Revenue has been "broadly successful" in collecting extra tax revenue he was concerned that "an error of as much as £1.9bn in HMRC’s baseline calculation led it to report the trend in its performance in a way that inadvertently exaggerated the improvement since 2010-11."

The NAO also found that:

  • HMRC received total tax revenue of £506bn, £30bn (or 6.3%) more than in 2012-13.
  • The taxes that contributed most of this increase were income tax and national insurance which increased by £16.2bn (6.4%), VAT by £7.2bn (7.1%) and stamp taxes which increased by £3.4bn (35.8%)
  • The value of debt either written off or ‘remitted’ (not pursued by HMRC for reasons such as hardship or value for money) during the year was £5.1bn
  • HMRC reported compliance yield (the additional revenue it generates through its compliance activities) of £23.9 billion in 2013-14 - its highest yield so far

The Revenue said in a statement: "We regret an historic error made in 2011 when we wrongly calculated the baseline against which our performance was measured. 

"We have corrected this error and even against the corrected baseline we have still exceeded our targets. We will work closely with the NAO to prevent this happening again."

HMRC said that last year was its best-ever performance. "We ... secured £23.9bn in additional compliance revenues and achieved our best-ever customer service levels, while also making £235m of efficiency savings."


The NAO said HMRC had made progress in modernising PAYE through the new RTI system for employers, including support for smaller companies that have struggled to adapt.

Under RTI, employers send information about tax and national insurance they deduct from employees’ wages to HMRC when they are made - rather than at the end of the tax year as previously happened.

Morse qualified his audit opinion on HMRC’s 2013-14 resource accounts for the third consecutive year because of "material levels of error and fraud in the payments of personal tax credits". 

The UK-Swiss Tax Agreement, which came into force in January 2013, had brought in £1bn by 31 March 2014, compared with the £5bn HMRC had originally forecast it would collect by March 2016, but in line with its updated forecast of £1.7bn, the NAO said.


Replies (17)

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By TaxTeddy
05th Jul 2014 11:31

HMRC guidelines

Based on this I am aiming to be "broadly successful" in paying my tax.

Thanks (13)
By Mehmet
07th Jul 2014 12:26

Lick your finger....

So it is true what they say.

When it comes to HMRC "Calculating" the tax gap or how much revenue is lost because of the black market, undeclared tax return etc., it is straight forward.

Lick your finger, stick it in the air and think of a number................

Thanks (2)
By quanticoaccountants
07th Jul 2014 12:58

Sounds like a careless error to me!

I wonder if any performance related bonuses were paid out as a result of the understatement of the baseline number.

Thanks (2)
Replying to meadowsaw227:
By The Black Knight
07th Jul 2014 13:11

bit gen

quanticoaccountants wrote:

Sounds like a careless error to me!

to kind sir!

I'd say deliberate negligence.


Thanks (0)
By The Black Knight
07th Jul 2014 13:00

HMRC tell a lie NEVER.

Unheard of! LOL

Stick a finger in the air? they would have to pull it out of somewhere else first.

Think HMRC needs a culture change.

Thanks (1)
By The Black Knight
07th Jul 2014 13:07

what a surprise

"Morse qualified his audit opinion on HMRC’s 2013-14 resource accounts for the third consecutive year because of "material levels of error and fraud in the payments of personal tax credits". "

What a surprise,

They have no idea how much they have given away.

No Idea how much evasion they are missing.

Are in denial.

Have actively supported criminal behaviour and bankrupted this country.


and now like most scamsters seek to cover it up with creative accounting. Good work from the NAO at least someones concerned. We just need to tell them that after a report the next stage in the process is some action to fix the issues not straight to another enquiry and another report.

Thanks (0)
07th Jul 2014 14:02

I would not consider RTI as "modernising PAYE!" More a waste of mine and a lot of others time and this is not taking into account all the Revenue's mistakes causing even more time to be wasted!

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By jholmes
07th Jul 2014 14:26


"and achieved our best-ever customer service levels"

Really! This is your best ever!


Thanks (0)
By RogerCB
07th Jul 2014 14:44

Customer service

I think it could well be their best ever "customer" service, as when they last provided a half way competent service, taxpayers were not called customers. A long time ago!

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By Anthony Nicholas
07th Jul 2014 21:20

If anyone else gets their sums wrong they can expect a hefty penalty.

Fortunately we have the NAO who have more idea about what HMR&C is doing than HMR&C does.

Unfortunately without accountability nothing will change

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By AndrewV12
08th Jul 2014 08:13

Lets show some great results, and worry about the accuracy later

Another great example of someone calculating what results would look the best, publishing the figures and then worrying about the fall out later.  


I believe HMRC was lent on paint a rosy picture, regrettably that picture was blurry and hazzy and un-finished. 

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By North East Accountant
08th Jul 2014 08:34

Access Denied

Is this the same HMRC who wants to raid bank accounts direct! Lets hope it gets those figures correct.

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Replying to legerman:
By Huw Williams
11th Jul 2014 11:08

Bank raids

North East Accountant wrote:

Is this the same HMRC who wants to raid bank accounts direct! Lets hope it gets those figures correct.


Surely the odd £1.9bn error would not hurt any of its customers?

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By mydoghasfleas
08th Jul 2014 08:37

To be called in by Amyas Morse means it must be worse ..........

... when you see what Private Eye has said about Morse over the year's he would savage a Department less than Geoffrey Howe's dead sheep.  Eye has more than once reported on Morse prior to a review stating his office expected to find nothing wrong and guess what.  It didn't.

HMRC needs to get on with its job and administer tax, not produce mission statements about what the tax it brings in is spent on.  It's not a spending department and what the tax is spent on is not for its comment.

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By gilderda
08th Jul 2014 16:58


Bless them. A watchdog that now has no teeth and severely impaired vision, thanks mainly to the post-2010 coalition government cuts to its budgets and powers.

It exists, by and large, to back up whatever fanciful nonsense trots out of Whitehall departments. I suspect Morse will have already been called in for a strict talking to and reminding of who's in charge by Dave and Gideon for having the temerity to say anything negative.

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By redboam
09th Jul 2014 08:38

HMRC and Getting it Wrong

By a long shot this is not the first time HMRC have "got it wrong" which is why the wretched Liz Horner's suggestion that they should be allowed to raid people's bank accounts without their knowledge should be kicked into touch by Parliament when it comes up for discussion.

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By Vaughan Blake1
21st Jul 2014 14:35

The 'tax gap'

Pondering whether it is £Xbn or £Ybn seems to waste a lot of time and effort.  It's a bit like worrying about the infinite universe when planning a trip to Croydon! 

Amyas, just focus that it is a lot, a very lot in fact, and get on with collecting it!


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