Do you pay all the tax you should? Chances are, this depends on your values, your familiarity with tax rules, opportunities for evasion, and your attitudes. These may be affected by how much help you get from HM Revenue and Customs (HMRC) – and could potentially be influenced by how happy you are with HMRC’s […]
Posted on June 29, 2017 by Andy Morrison
Do you pay all the tax you should? Chances are, this depends on your values, your familiarity with tax rules, opportunities for evasion, and your attitudes. These may be affected by how much help you get from HM Revenue and Customs (HMRC) – and could potentially be influenced by how happy you are with HMRC’s service. In our recent report on The quality of service for personal taxpayers, we said we would work with HMRC to explore whether service quality affects tax revenues. The way we have done this is a great example of how the NAO can help to drive public service improvement.
The role of the NAO: adding value
“The role of the NAO: adding value” is the title of the very first section of the NAO’s Strategy. What does it mean? As independent auditors, how can we achieve our aim of “driving public service improvement”?
One key way is through the hundreds of recommendations that we and the Committee of Public Accounts (PAC) make each year, principally to government departments. The vast majority of these are accepted and taken forward by the relevant organisations. But our support doesn’t have to end there.
We can support organisations by sharing generic good practice and the approach we take to our reviews. The ways we do this range from publishing good practice guides to informal discussions with organisations about the basis for our assessments. Where possible we publish and/or discuss in person the approach we would take to reviewing the value for money of particular issues – our Self-assessment resources web-page contains some examples.
We’re also very happy to review our back catalogue of work on a specific issue to help government plan. And, where helpful, we can bring in expertise from the NAO’s technical teams in areas such as accounting, financial reporting, economics, statistics, data analytics, digital, transformation and a range of other specialisms.
Another key way we can share our experience and expertise is by working with organisations to explore options in workshop settings. This was the approach we used recently to work with HMRC to understand the extent to which customer services might affect tax revenue.
Collaborative exploration into tax-paying behaviour
In our 2016 report, The quality of service to personal taxpayers, we identified that the quality of service may have an impact on whether people comply with their tax obligations. The PAC recommended that HMRC should carry out further work to understand and measure the relationship between customer service and tax revenue. In accepting the recommendation, HMRC committed to working collaboratively with the NAO.
We held an initial workshop with HMRC to discuss our research and consider how HMRC might take forward PAC’s recommendation. HMRC picked up the baton and ran a series of workshops to consider the scope of the work, develop a long-list of ideas for research, and then focus in and explore the best candidates.
This approach has been a highly collaborative and open. It has used the best of our combined expertise, drawing on experts in customer research, tax compliance and the NAO statistical methods experts. It has also used the best of our combined experience – bringing together people from across HMRC and the NAO and using the study team’s experience of looking across HMRC’s operations.
I believe it’s true to say that both we and HMRC have been very impressed with each other’s contributions. It’s been a very useful and positive series of workshops and we’ve seen the passion, talent and skill of HMRC’s people in action. HMRC has run the sessions with an open-mind and a can-do attitude. Ultimately this has helped us support them to scope the work and identify the different methods they could use.
The result of the workshops was a consensus on proposed pieces of research to explore the issue. HMRC will be taking forward a range of small case studies exploring how compliance behaviour is influenced by some specific aspects of customer service:
- quality of service on HMRC telephone helplines;
- pre-population of customer accounts; and
- laboratory experiment on impact of variable service quality.
HMRC is now getting the work underway with the aim to report to the PAC on its findings in autumn 2017.
Although HMRC has made – as, of course, it must – the ultimate decision about the research approach, the department has explored a large number of ideas with the NAO and discussed the pros and cons of each. These workshops have enabled more ideas to be explored efficiently and the discussions have helped to shape the design of each proposal.
Lending a helping hand
It is always the government, and not the NAO’s, role to determine what action to take. But within the boundaries of our independent role, the NAO is, as our latest Strategy says, putting increased focus on ‘adding value’ to the public sector. And this is not only for the departments and large organisations on which our value for money studies are focused. Wherever possible we seek to share good practice and lessons that are relevant to all public sector and related organisations. Our Directors and Audit Managers are also very happy to discuss our views on good practice and how we would approach an audit.
As always, we welcome your comments and invite you to contact us to discuss any of the issues raised in this blog-post.
About the author: Andy Morrison is an Audit Manager and chartered accountant with over 10 years’ experience in leading NAO value-for-money studies. He has led several programmes of work in welfare, tax and customer service issues, including the ‘The quality of service for personal taxpayers’ report.
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