HMRC: What the annual reports tell us

Annual reports
istock_damircudic
Share this content
Tags

Wendy Bradley has sifted through over 400 pages of HMRC’s reports and accounts to find out whether it is meeting its objectives and what it aims to do in the future.

To understand what HMRC has been up to in the year to 31 March 2017, a good place to start is the Single Departmental Plan for 2015 to 2020 as it provides the best short summary.

This states the HMRC objectives as:

  • maximise revenues due and bear down on avoidance and evasion
  • transform tax and payments for our customers
  • design and deliver a professional, efficient and engaged organisation

Maximise revenues

This objective makes me feel my age: the organisation I used to work for once strove to collect the right amount of tax, not the maximum amount of tax and I, therefore, take much of the rest of their statements with a large pinch of salt.

HMRC claims £28.9bn of compliance yield in a year, and its calculations of this figure are supported by the NAO report on HMRC’s annual accounts for 2016/17. But there is a difference between actual money brought in by compliance action, and the calculation of the supposed "deterrent" and "revenue protection" effects of these actions.

I suggest HMRC should apply the same deterrent and revenue protection calculations to the figures of tax remitted because it wasn't considered "value for money" to collect it. For example, £28m was written off for small VAT and SA penalties more than two years old, and £58m of unpaid PAYE was written off.

Writing off penalties

The report says: "There was a bulk remission for Self Assessment (SA) penalties of £23m relating to 25,431 cases, where it had been identified that customers had not filed returns for at least three consecutive years. These customers were therefore removed from the SA regime and are no longer liable for SA."

Does this mean: If you don't fill in your tax return for three years and they won't bother you again?

There is both a compliance and a customer service point here. Instead of thinking of small scale liabilities as "not cost effective to pursue on a value for money basis", surely the penalties ought to be thought of as, first of all, an equity issue. No-one should get away with not paying their taxes because they only get away with a few quid.

Secondly the customer service issue – many small and low value cases may be due to departmental error or poor communication and understanding, not to delinquency on behalf of the taxpayer.

Transform tax and payments for our customers

I would feel a lot better about this objective if the words "for the better" were added at the end. The NAO picks up on this, commenting that it would like to see "better communication of what HMRC will look like after transformation for customers and staff" (see page R28). However, we can glean some clues from HMRC’s annual report.

Digital

HMRC will be largely digital: it will still receive funding for MTD even with the deferral and dilution of much of the project. The department's IT will be brought in-house (or at least into a wholly owned company) as current contracts end. HMRC now operates the government gateway and is migrating its tax credits work to DWP as tax credits are replaced by Universal Credit.

Physical

There is a plan to consolidate the HMRC estate into a small number of locations, closing down the local office network entirely. This does not seem to have been examined as an objective but simply accepted as a process.

Customer service

There is a disconnect between the significant improvement in customer service according to HMRC's statistics, and the actual experience of customers. The NAO observes wryly that perhaps HMRC ought to strive to develop a set of performance measures which "better reflect customer experience".

An example is the large number of telephone calls which are disconnected before the caller speaks to a human. HMRC counts these calls as successful transactions because the caller has been helped/guided by the recorded messages they hear. Anyone who has ever called HMRC might have a different view.

An engaged organisation

The third objective to “design and deliver a professional, efficient and engaged organisation” worries me. The staff recruitment statistics are interesting: 192 graduates recruited onto the tax specialist programme but also "more than 1,200 apprentices" (see page 40). A clearer picture of who tax agents and taxpayers will be dealing with if they need to contact the HMRC in the future would be helpful.

The future

HMRC includes responsibility for customs and excise charges: what will Brexit mean for the people who have financial oversight of our borders?

There is a new border planning group, with a new director general, Karen Wheeler. The report notes that HMRC will be working with HM Treasury to bring forward legislation "to establish a new framework for the UK customs service and other areas as required," but "our future projected budget does not reflect the additional costs that may be incurred as a consequence of Brexit" (see page 42).  

About Wendy Bradley

Wendy Bradley is a retired tax inspector, now working as a freelance journalist.

Replies

Please login or register to join the discussion.

02nd Aug 2017 15:31

I honestly can't make my mind up whether HMRC are on the road to nowhere, or the highway to hell, but it's definitely one or the other.

Thanks (5)
avatar
03rd Aug 2017 06:38

In my view their whole strategy is mind-numbingly idiotic.

Thanks (3)
avatar
03rd Aug 2017 10:15

'strategy'...if only!

Thanks (2)
04th Aug 2017 13:19

Quote
''An example is the large number of telephone calls which are disconnected before the caller speaks to a human. HMRC counts these calls as successful transactions because the caller has been helped/guided by the recorded messages they hear. Anyone who has ever called HMRC might have a different view.''
WHY ARE THEY ALLOWED TO GET AWAY WITH THIS!

Thanks (2)
07th Aug 2017 11:17

Perhaps a rewrite of the objectives should be done before HMRC race headlong into complete meltdown

This states the HMRC objectives as:

"maximise revenues due and bear down on avoidance and evasion" SHOULD BE "ensure the revenues properly due are collected promptly and improve legislation to ensure that compliance is clear and unambiguous"

"transform tax and payments for our customers" SHOULD BE " ensure tax payers have a simple route to understanding and remitting taxes due and receiving refunds.

and finally

"design and deliver a professional, efficient and engaged organisation" ..............I'll accept that as an aspiration but remain doubtful as to any hope of achievement under the current team, including interference from HMT and their political masters of all colours who can't resist poking a stick into a pustulous sore which needs treatment not aggravation..

Thanks (1)
avatar
07th Aug 2017 12:49

For "transform tax and payments for our customers" read plunder customer bank accounts by direct collection of tax debt whether real or or made up by HMRC.

Also meets objective 1 of "maximise revenues due"

Thanks (0)