Press Release - Audit of HM Customs & Excise systems and
accounts 2003-04
16 December 2004
Sir John Bourn, head of the National Audit Office, today
reported the results of his examination of HM Customs and Excises
systems for the assessment, collection and allocation of tax
revenue during the year ending 31 March 2004. In 2003-04 Customs
collected £162 billion (gross) in taxes and duties.
Sir John’s report focuses on Customs’ work to manage the risk of
oils fraud and improve compliance in small and medium-sized
enterprises. His examination also covered Customs’ financial
accounts. The key findings are:
The UK Oils Strategy
Customs have developed an innovative approach in their fight
against oils fraud. A scheme has been established that requires
dealers in rebated oils to be registered. This scheme has provided
Customs with access to much greater information to strengthen its
intelligence and drive assurance and detection work. The Strategy
has led to the development of effective cross-departmental working
and information sharing with other organisations.
The Strategy has presented Customs with significant operational
challenges in ensuring that proper support, particularly in the IT
area, is provided to officers. Customs also need to work with the
trade to encourage a greater take up of e-lodgement for monthly
returns amongst the trader population using the Registered Dealers
Scheme.
Many promising developments have been introduced under the
Strategy which has resulted in an integrated approach across the
department to tackle oils fraud. However, Customs are still working
to devise a robust performance measurement system to allow the
effectiveness of resources deployed to be assessed on a timely
basis.
Improving compliance in small and medium-sized
enterprises
Customs have implemented a new VAT Compliance Strategy. Within
Regional Business Services, the risk analysis system has been
restructured by introducing risk centres to all regions. This has
led to a move towards a more flexible and varied risk assessment
which is co-ordinated by a national risk management structure.
Performance measurement systems to evaluate the impact of these
changes are still evolving. It remains too early to report formally
on the effectiveness of the Strategy because of the difficulties in
separating out the increase in revenues as a result of assurance
and compliance activities, and those caused by other fiscal and
economic factors. There are a number of promising and innovative
developments which have strongly enhanced the approach to risk
taken within Regional Business Services.
Commenting today on his audit, Sir John Bourn
said:
"Customs’ UK Oils Strategy is an innovative and
promising approach to tackling the illegal use of diesel and other
fuels. The high degree of interdepartmental co-operation and
improved intelligence gathering already achieved should provide
substantial benefits, but Customs will need to ensure that issues
such as IT support are further addressed.
"A significant decline in the VAT gap in 2003-04
indicates that Customs are on the right track with the VAT
Compliance Strategy. Work is ongoing within the department to
assess the effectiveness of individual elements of the Strategy to
improve the targeting of resources and identify the best ways of
further reducing the VAT gap."
Notes for Editors:
- The Comptroller and Auditor General’s Report were both
published with the HM Customs and Excise Annual Report, their
Resource Account recording administrative expenditure and Trust
Statement that provides details of revenues received.
- Section 2 of the Exchequer and Audit Departments Act 1921, as
amended by the Government Resources and Accounts Act 2000, requires
the Comptroller and Auditor General to examine the systems for the
assessment, collection and allocation of tax revenue, and to report
the results of his work to the House of Commons. In 2003-04 HM
Customs and Excise collected some £161 billion (gross) in taxes and
duties, some £116 billion (net) after repayments.
- The Committee of Public Accounts considered the issues of
misuse and smuggling of Hydrocarbons Oils and made a number of
recommendations in its report (HC 649 2001-02).
- Customs VAT Compliance Strategy was developed within the 2002
and 2003 Customs & Excise pre-budget reports;
a. Protecting Indirect Tax Revenues – November 2002
b. Measuring Indirect Tax Losses – November 2002
c. Measuring and Tackling Indirect Tax Losses December
2003
- Regional Business Services is responsible for the collection of
taxes and duties from more than 1.7 million small and medium
enterprises.
- Press notices and reports are available from the date of
publication on the NAO website at www.nao.org.uk.
Hard copies can be obtained from The Stationery Office on 0845 702
3474.
- The Comptroller and Auditor General, Sir John Bourn, is the
head of the National Audit Office which employs some 800 staff. He
and the NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 76/04
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