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Tax yield is up but HMRC staff morale remains low

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HMRC’s civil investigations directorates have increased the tax yield from serious cases of suspected tax evasion by 49% since 2007/08 while reducing expenditure by 10%, according to a National Audit Office report released as two leading charities prepared to join a union rally outside HMRC’s headquarters.

War on Want and the Jubilee Debt Campaign will join members of the Public and Commercial Services Union later today in a rally against reductions in HMRC resources.

‘The demonstration will oppose UK government plans that would axe a further 13,000 jobs in HMRC on top of the 30,000 that have gone since 2005 and the closure of around 200 offices,’ War on Want said.

‘These jobs are being shed at a time when the British economy is losing £120 billion a year through tax dodging, in the form of uncollected tax, illegal tax evasion and abuse of tax loopholes.’

HMRC has estimated the tax gap at £42 billion.

The pressure group UK Uncut is preparing a ‘day of mass action’ in several UK towns and cities tomorrow, in a campaign aimed at making sure ‘tax dodgers pay’.

The return on enforcement work, which yielded £8.5 billion in 2009/10, has increased from 9:1 to 15:1, the NAO said. But yield alone does not capture the full impact of investigations, such as the effect on taxpayer behaviour, nor does it encourage preventative work to improve compliance.

HMRC is ‘planning a broader range of metrics to assess the impact of its enforcement activities.’

There is scope for HMRC to achieve more, and the department ‘does not have all the management information necessary on the cost-effectiveness of its different types of enforcement activity and their wider impact’.

Progress in understanding the relative costs and returns of HMRC’s different enforcement activities would inform decisions on how to deploy resources to best effect, said Amyas Morse, head of the NAO.

The NAO recommended that HMRC improves the system for referring cases for investigation; reduces the time taken to complete investigations; develops a clearer picture of penalties imposed on those found to have evaded or defrauded tax; and makes it easier to trace whether tax debts from completed investigations have been paid in full.

The latest HMRC staff survey, released yesterday, has revealed that only 15% of staff are proud to tell others that they are part of HMRC, and only 12% feel that HMRC as a whole is managed well.