HMRC 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.
This memorandum has been prepared to support the Committee of Public Accounts consideration of HMRC’s approach to replacing its contract for IT services with Capgemini, known as Aspire. We set out HMRC’s approach, its business cases and the risks it has to manage. It does not seek to evaluate HMRC’s approach or progress, and therefore does not draw conclusions.
June 2016
Review of a sample of the data systems underpinning the input and impact indicators in HM Revenue & Customs’ Business Plan, Common Areas of Spend and wider management information.
Following review by a former tax judge, the NAO concludes that all five settlements were reasonable but there is concern over the settlement processes.
This short guide is one of 17 we have produced covering our work on each major government department. It summarises our work on HM Revenue & Customs during the last Parliament.
“It is important that the Inland Revenue have a clear view of the risks and scale of external fraud and the resources and approaches they are going to use to tackle them, for even a small percentage loss to fraud could amount to billions of pounds.
“The use of offshore accounts and structures to commit tax fraud is a particular concern. While acknowledging the challenges faced by the Revenue in tackling fraud, and the many useful initiatives and techniques they are developing and implementing to tackle the problem, my report identifies good practices and opportunities for reducing fraud further.”
HMRC has improved its approach to tackling error and fraud in tax credits but still lost £2.3 billion in 2010-11.
HMRC has met its targets to raise more tax revenue in the short-term; however, an estimated £16 billion is lost to tax fraud each year. HMRC needs to improve the way it uses data and analysis to understand the effect of its actions to tackle fraud.
“HM Revenue & Customs has experimented with new ways of encouraging people into the formal economy and it is managing to detect more unpaid tax. It could make better use of penalties and secure greater publicity for prosecutions to discourage people from operating in the hidden economy. With well over £1 billion in unpaid tax each year, it is important that the Department becomes more effective in tackling the problem.”
This report examines the effectiveness of HMRC’s approach, in partnership with HM Treasury, in reducing the tax gap.
