A major HMRC programme to improve the way it tackles evasion delivered £4.32 billion of additional tax yield, reduced staff numbers and improved compliance work. However the Department is not yet exploiting the full potential of its new systems.
HMRC’s renewed strategy for dealing with alcohol duty fraud is a significant improvement on the previous strategy. However, the Department needs a reliable estimate of the tax gaps for beer and wine; and to tackle successfully the illicit diversion of duty-unpaid alcohol back into the UK market.
HM Revenue and Customs will have to make sure its staff have the right skills if the Department 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.
The programme to increase online filing of tax returns has made significant progress, but HMRC needs a better understanding of the benefits and costs to customers and how its online filing costs compare to those for paper returns.
This Departmental Overview is one of 17 we have produced covering our work on each major government department. It summarises our work on HM Revenue & Customs during 2010-2011.
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.
PaceSetter has led to productivity improvements and may have contributed to greater staff engagement. However, the extent to which overall efficiency has improved is not clear; and some key principles of process improvement are not yet being applied strategically across the entire organisation.
The NAO has published its report on the 2010-11 accounts of HM Revenue and Customs.
HMRC’s civil investigations directorates, which examine serious cases of suspected tax evasion, have generated increasing returns from their work, while reducing resources. However, there is scope for them to achieve more.
HMRC might be able to increase tax revenues by providing more support to professional tax agents, third parties paid by taxpayers to act on their behalf in their dealings with the Department.
