Reducing costs in HM Revenue & Customs
Reducing costs in HM Revenue & Customs

Author: Great Britain: National Audit Office

Publisher: The Stationery Office

Published: 2011-07-20

Total Pages: 40

ISBN-13: 9780102969900

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HM Revenue & Customs faces a significant challenge in securing a £1.6 billion reduction in running costs over the next four years, at the same time as increasing tax revenues, improving customer service and achieving reductions in welfare payments. HMRC has reported savings of some £1.4 billion since 2005. To achieve its cost reductions it plans to implement 24 change projects and other measures including savings in the provision of IT services, improvements in productivity, reduced sickness absence and headcount reductions. The size and shape of HMRC will change substantially as it reduces staff numbers by 10,000 and significantly reduces the number of offices it operates. HMRC has established a clear vision and specified operational priorities and revenue targets. It has not yet sufficiently defined the business performance and customer service it intends to achieve by 2015. It has good information on the different costs it incurs but only limited information on the cost of its end-to-end processes and on the cost of servicing different customers groups. It also has a limited understanding of the link between the cost and value of its activities. This has restricted its ability to assess fully the impact of cost reductions on business performance. HMRC has made no allowance in its cost reduction plans for under-delivery or slippage, and currently has no reserve of proposals on which to draw. HMRC has begun to implement its cost reduction plans but has not yet assessed all the dependencies between projects and the critical path for delivery.

Progress on Reducing Costs
Progress on Reducing Costs

Author: Great Britain: National Audit Office

Publisher: The Stationery Office

Published: 2013-02-07

Total Pages: 48

ISBN-13: 9780102981278

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In challenging circumstances in 2011-12, HM Revenue and Customs maintained its performance in key strategic areas at the same time as reducing its staff and spending. The challenge for HMRC will be to make more and deeper reductions over the spending review period while increasing tax revenues, improving customer service and introducing its 'real time information' project and changes to benefits and credits. HMRC made £296 million of savings in 2011-12, exceeding its target by 19 per cent. This is about a third of the total savings it is required to make over the four years of the spending review period. However, HMRC expects these projects to save £162 million less over the spending review period than when the NAO last reported on this subject, in July 2011. This is partly because its forecasts are now more refined and realistic, and partly because, as some projects took longer to start, the benefits will take longer to be realised. HMRC has strengthened how it manages its change programme in ways that address NAO and Public Accounts Committee recommendations. The Department has also started to address the recommendations that it should improve its understanding of interdependencies between projects and of the cost and value of its activities though it has more to do in these areas. At September 2012, HMRC was on track to exceed its 2012-13 cost reduction target by £29 million. However, the reduction in planned savings being delivered by change projects means that HMRC needs to find £66 million more savings than it originally planned through other initiatives

Administration and effectiveness of HM Revenue and Customs
Administration and effectiveness of HM Revenue and Customs

Author: Great Britain: Parliament: House of Commons: Treasury Committee

Publisher: The Stationery Office

Published: 2011-07-30

Total Pages: 206

ISBN-13: 9780215561039

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This report identified serious concerns in a number of areas, including: unacceptable difficulties contacting HMRC by phone during peak periods; endemic delays in responding to post; and an increasing focus on online communication that may exclude those without reliable internet access. The Committee recognises that the Department performs a crucial role and operates under significant external pressures including continuing resource reductions, deficiencies in tax legislation and the legacy of the merger. It also acknowledges the commitment of management to tackling these problems and the dedication and professionalism of HMRC staff. However, it concluded that the Department has a difficult few years ahead of it, as it attempts to improve its service. The Committee makes recommendations in the following areas: Improving the service provided by contact centres; providing robust alternative to online contact; ensuring greater awareness of the impact of process changes on individuals and businesses; ensuring reductions in resources are managed in a way that is commensurate with the enabling IT and process improvements and minimises the loss of Departmental tax expertise; reviewing the division of responsibilities between HMRC and HM Treasury in relation to making tax policy, to ensure practical considerations are taken into account at the earliest possible stage; better targeting of letters that threaten serious consequences against individuals; having the National Audit Office externally audit preparations for Real-time Information, to ensure Ministers can be held accountable for progress against the Government's ambitious timetable; and examining how the Department can achieve better accountability around the settlement of large tax cases

National Audit Office - HM revenue & Customs: Gift Aid and Reliefs on Donations - HC 733
National Audit Office - HM revenue & Customs: Gift Aid and Reliefs on Donations - HC 733

Author: Great Britain: National Audit Office

Publisher: The Stationery Office

Published: 2013-11-21

Total Pages: 56

ISBN-13: 9780102987072

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Gift Aid provides an important source of income for many charities but it is important that they are properly administered. There is not enough evidence to conclude that reliefs on donations in their current form, and the way they are implemented, provide value for money. First, there is insufficient evidence that government has actively encouraged take-up of the reliefs so that those charities which are entitled to them get the intended benefits. Secondly, HMRC has not collected the data which would enable it to conclude how tax incentives since 2000 have affected donor behavior or if they have increased the value of donations. Changes introduced in April 2000 were intended to encourage more people to give more to charity. HMRC undertook evaluative work but this did not provide assurance that they had resulted in more income for charities. HMRC also faces a serious compliance challenge in respect of reliefs on donations, in particular from avoidance. While the proportion of charities set up to abuse charitable status is very small, the cumulative costs of small-scale avoidance activity are large, accounting for £110 million of tax lost in 2012-13. HMRC has also identified eight marketed avoidance schemes, which it is challenging robustly, estimating that they are putting £217 million of tax at risk. The Department has made a working estimate that £170 million was lost in 2012-13, based on its analysis of tax loss in related areas. However, it recognizes that its methodology is crude and may understate the level of loss

Reducing costs in the Department for Transport
Reducing costs in the Department for Transport

Author: Great Britain: Parliament: House of Commons: Committee of Public Accounts

Publisher: The Stationery Office

Published: 2012-03-13

Total Pages: 44

ISBN-13: 9780215042927

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As part of the 2010 Spending Review the government announced a significant reduction in the budget of the Department for Transport, with spending due to be 15% lower by 2014-15, in real terms, than the Department's £12.8 billion budget in 2010-11. The Department prepared early, identifying areas for budget reductions based on good analysis. But for road users, railway passengers and taxpayers, there are many questions which remain unanswered. The Department doesn't fully understand the impact of its cuts to road maintenance. There is concern that short-term budget cutting could prove counter-productive, costing more in the long-term as a result of increased vehicle damage and the higher cost of repairing the more severe road damage. Another area of concern is rail spending. The Department spends two-thirds of its budget through third party organisations such as Network Rail and Transport for London. While information and assurance have improved over some third party spending, there is still a lack of proper accountability and transparency for Network Rail. Rail budgets aren't being reduced as much as other areas, yet passengers still face high fares. The Department hands Network Rail over £3 billion each year, underwrites debt of over £25 billion and continues to treat it as a private sector company. The National Audit Office must be allowed full audit access as quickly as possible.. Better contingency plans for dealing with threats to its planned budget reductions also need to be developed - for example if some of its planned efficiency savings do not deliver or if inflation is higher than forecast

The expansion of online filing of tax returns
The expansion of online filing of tax returns

Author: Great Britain: National Audit Office

Publisher: The Stationery Office

Published: 2011-11-11

Total Pages: 40

ISBN-13: 9780102969979

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HMRC's programme to increase online filing of tax returns has made significant progress. HMRC was set an ambitious timetable to expand the use of online filing and now more than 11.5 million customers a year are submitting one or more tax returns online, generating significant savings. Take-up rates have increased significantly, particularly after mandatory online filing requirements have come into force. Nevertheless, take-up rates on some taxes (VAT, Corporation Tax and Self-Assessment) have been below original forecasts and HMRC has lowered its forecasts in the light of take-up achieved so far. Customers generally recognise the efficiencies and practical benefits that online filing offers although HMRC has yet to measure whether the anticipated benefits and costs to customers are being achieved in practice. Some users have concerns about the costs and usability of filing VAT and Corporation Tax returns online, and about delays in getting login details to access the Self-Assessment online service during peak periods. Levels of satisfaction with the assistance offered through various helpdesks also vary. Online filing is delivering significant savings to HMRC, an estimated £126 million so far. HMRC cannot demonstrate whether it is maximising benefits as it does not yet fully understand the relative costs of dealing with paper and online returns or the costs and benefits of seeking greater take-up.

Core skills at
Core skills at

Author: Great Britain: National Audit Office

Publisher: The Stationery Office

Published: 2011-12-02

Total Pages: 40

ISBN-13: 9780102976991

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HM Revenue and Customs will have to make sure its staff have the right skills if it is to succeed in cutting its running costs by 25 per cent by 2014-2015 and bringing in each year an extra £7 billion of tax revenue. It is estimated that HMRC spent £96 million in 2010-11 developing the skills of its staff but judges that spending is not systematically directed on top level business priorities. Staff skills will have been a factor in the improvement of HMRC's business results including the extra £1billion tax generated since 2010 by enforcement and compliance activity. But currently there is not a direct evidential link between results and training and development activities. Only 54 per cent of HMRC staff said that they were able to access the right learning and development opportunities when they needed to and only 38 per cent said that training had improved their performance. Evidence from a customer survey and external stakeholders also suggests that the Department does not have all the skills it needs, but HMRC does not have a good overview of its current skills gaps. It needs better data and information on gaps which would help it take a more strategic approach and gain an early warning of future skills gaps, such as the risk of skills depleting as experienced staff retire. This is of particular concern in HMRC as one in five staff in key business areas are over 55. HMRC also lacks governance arrangements or structures to hold the organization to account for money spent on training. Many of the points in this report were raised previously by HMRC's own reviews but the Department has not made the changes needed.

Customer Service Performance
Customer Service Performance

Author: Great Britain: National Audit Office

Publisher: The Stationery Office

Published: 2012-12-18

Total Pages: 44

ISBN-13: 9780102980561

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This report recognizes that HMRC has restored customer service levels from a low point in 2010, when problems with the new National Insurance and PAYE system increased the number of queries. HMRC has now dealt with long-term backlogs by employing 2,500 temporary staff, enhancing phone technology and improving productivity. In 2011-12, HMRC answered 74 per cent of phone calls, against an interim target of 58 per cent. This level of service is nevertheless low. So far in 2012-13, HMRC has improved its handling of post but its performance in handling calls has been varied. Depending on the tariff they pay their phone company, customers are charged from when their call is connected even if they are held in a queue. The NAO estimates that it cost customers £33 million in call charges while they are in the queue. Most of HMRC's numbers are still 0845 numbers which result in high call charges for some customers. It is, however, investigating alternatives. NAO analysis indicates that, by the end of 2012-13 and through 2013-14, HMRC could achieve its target of answering 90 per cent of calls. However, by 2014-15, HMRC will have reduced numbers of contact centre staff so will need to redeploy large numbers of back-office processing staff to answer telephones. There is also uncertainty about the impact on call volumes of large-scale changes, such as the introduction of Real Time Information and the transition to universal credit.

Cost reduction in central government
Cost reduction in central government

Author: Great Britain: National Audit Office

Publisher: The Stationery Office

Published: 2012-02-02

Total Pages: 44

ISBN-13: 9780102975376

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This report by the National Audit Office on progress by central government departments in reducing costs concludes that departments took effective action in 2010-11, cutting spending in real terms by 2.3 per cent or £7.9 billion, compared with 2009-10. The analysis of departments' accounts supports the Efficiency and Reform Group's estimate that Government spending moratoria and efficiency initiatives, including cuts to back-office and avoidable costs, contributed around half of the figure, some £3.75 billion. However, the report warns that departments are less well-placed to make the long-term changes needed to achieve the further 19 per cent over the four years to 2014-15, as required by the spending review. This is partly because of gaps in their understanding of costs and risks, making it more difficult to identify how to deliver activities and services at a permanently lower cost. Fundamental changes will be needed to achieve sustainable reductions on the scale required. It is unclear how far spending reductions represent year-on-year changes in efficiency, or whether front-line services are affected; and the departments' forward plans examined by the NAO are not based on a strategic view. Departments' financial data on basic spending patterns is sufficient to manage budgets in-year, but information about the consequences of changes in spending is less good. Longer term reform is a Cabinet Office priority and departments will need to look beyond short-term cost cutting measures and make major operational change. Cost reduction plans also need to build in contingency measures to cover unexpected risks.

HM Revenue & Customs
HM Revenue & Customs

Author: Great Britain: Parliament: House of Commons: Committee of Public Accounts

Publisher: The Stationery Office

Published: 2011-12-20

Total Pages: 72

ISBN-13: 9780215039910

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HM Revenue & Customs faces a huge challenge to resolve long-standing problems with the administration of PAYE and tax credits while making substantial reductions to its running costs. The Department needs to stabilise its administration of PAYE following the problems encountered after a new processing system was introduced in 2009. It also needs to recover a significant amount of outstanding tax credit debt while minimising the amount of new debt being accumulated. While £900 million extra has been allocated to tackle tax avoidance, at the same time, following the 2010 Spending Review, the Department is required to reduce its running costs by £1.6 billion over the next four years. The Department has made progress in improving PAYE administration since the Committee's last examination of this area in 2010. However, as a consequence of the Department's handling of the 2009 transition to the new PAYE Service, it has had to forgo up to £1.2 billion of income tax underpaid from 2004-05 to 2009-10. Under current plans, it will take until 2013 before all processing backlogs are cleared and the new PAYE Service is operating as intended. The Department needs to focus on improving data quality in particular to sustain progress in PAYE administration. Without a clear plan for reducing tax credit debt, the level of uncollected debt will continue to rise to an estimated £7.4 billion by 2014-15. The Department has been forced to acknowledge that much of this debt will never be recovered from tax credit claimants, and recently wrote off some £1.1 billion of debt dating back to the introduction of the scheme.