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Tax collection at record high, but concerns over HMRC’s customer services and plans to cut fraud

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HMRC’s annual report and accounts for 2014/15 show that HMRC collected a record £517.7bn in tax for the year ended 31 March 2015 (an increase of £11.9bn on the previous year), which HMRC said was a result of ‘economic growth and the continued crackdown on tax evasion and avoidance’.

The figures also showed that HMRC:

  • achieved £210m in cost efficiencies during the year ‘through continuing to reduce estates, workforce, IT and procurement costs’;
  • handled 72.5% of 65m customer calls (down from 79% in 2013/14);
  • brought in £800m from its new powers, including accelerated payments;
  • secured and protected a record £26.6bn in additional compliance yield in crackdowns (£2.7bn more than in 2013/14, and £8bn more than in 2011/12);
  • protected £9.79bn through successful litigation; and
  • reduced error and fraud in the tax credit system to 4.4%.

Speaking at HMRC’s annual stakeholder event, HMRC chief executive Lin Homer said: ‘Our strong performance last year provides very firm foundations for the challenges of transforming HMRC into a smaller, more highly-skilled, digital and efficient organisation and for meeting the chancellor’s new target of securing £5bn a year of additional compliance yield by 2019/20. Our customer service levels slipped this year, but the work we are already doing on digitising our services, using real-time information, and creating online tax accounts for individuals and businesses, will help us improve customer service … and new powers announced by the chancellor will further help us to meet the revenue and efficiency challenges in the Summer Budget.’

Despite HMRC’s largely positive results, some concerns have been raised. The percentage of complaints about HMRC to the adjudicator that were upheld in whole or in part was 89.7% – a figure that tax barrister Jolyon Maugham QC described as ‘staggering’.

Separately, the National Audit Office (NAO) said that HMRC’s plans to cut tax credit fraud and error further by £1bn over three years by outsourcing checks to a private sector company, Synnex-Concentrix UK Ltd, have been deemed ‘not achievable’ and that ‘the benefits of the contract have been fewer than anticipated’, with HMRC estimating that the project delivered savings of £0.5m in 2014/15, compared with its original forecast of £285m. Current HMRC estimates are that the project will deliver savings of £423m, rather than the £1bn planned. Sir Amyas Morse, head of the NAO, said: ‘HMRC is one of the strongest government departments for managerial competence but it will need to rise to the significant challenges ahead. It has ambitious plans to modernize tax administration in the coming five years but these carry substantial risks – in particular, as it introduces new digital services whilst replacing its Aspire contract for IT services, and faces the challenge of making further reductions in fraud and error on tax credits alongside managing the transition to universal credit.’

The NAO also recommended that HMRC ‘takes forward last year’s PAC recommendation to be more transparent about its compliance yield estimates in its external reporting, publish more detail about how it calculates yield, and be clearer about how much it has actually collected in cash terms and explain how uncertainty affects its estimates’ noting that the additional compliance yield of £26.6bn included £768m that HMRC expected to receive from accelerated payments notices, with ‘no adjustment in year for the possibility that cash received in individual cases may have to be repaid in future years’.

To view the report and accounts, see

Issue: 1272
Categories: News