Search results

“HMRC has made it easier to import goods into the UK. The lack of information on compliance levels and the declining number of trader audits does however risk diluting the control the Department has over imports. It needs to develop ‘minimum’ levels for checks and trader audits, so that importers pay the right amount of tax and duty, and fully comply with the laws on prohibited and restricted goods.”

“This is an ambitious programme of change with the potential to provide significant benefits in terms of tax yield and improvements for the Department’s customers. To succeed the Department must determine what it expects the programme to achieve with the resources available. It should also establish that the planned benefits are realistic and confirm each year that those achieved are robust.”

“Levels of tax credits error and fraud are significant when compared with the expenditure on the scheme. I have therefore qualified my opinion on the regularity of these payments. HMRC now has a target and has developed a strategy for reducing error and fraud. It will need to monitor how the measures it adopts are contributing to the achievement of the target and to respond effectively.”

“The Department must strike a balance between stopping criminals entering the VAT system and ensuring legitimate traders receive their VAT registrations without delay. Its performance in processing VAT registrations is now operating in line with targets. ”

Notes for Editors

“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.”

“Large businesses are a significant contributor to the UK economy. The recommendations in my report will help the Department manage the risks to Corporation Tax revenues more effectively and work more collaboratively with large businesses. The Department should embed cultural and behavioural changes in the everyday practice of its staff to achieve these aims.”

On tax credits

“Once again, the levels of claimant error and fraud in the tax credit schemes are unacceptably high. This has led me to qualify my audit opinion on regularity of these payments. It is important that the Department now targets reductions in levels of error and fraud and considers how its compliance teams can engage more widely with tax credit claimants.”

On income tax (PAYE)

“HMRC’s computer systems are no longer well suited to the efficient administration of income tax especially where people have more than one job or change jobs frequently. This has led to employees paying too much or too little tax. HMRC has put in place a number of measures to improve the quality and timeliness of PAYE processing, in advance of its implementation of a new computer solution in 2008. The Department should quantify the success of its measures in reducing levels of error within PAYE.”

On income tax (self-assessment)

“The Department has made good progress in engaging with taxpayers through the internet. However, a million taxpayers still failed to submit their returns by the 31 January deadline. The Department must continue its work to target groups who are more prone to non-compliance, for example those new to self-employment and subcontractors in the construction industry.”

On VAT missing trader fraud

“The Department has strengthened the operational measures it uses to tackle missing trader fraud, and this is to be welcomed. The Council of the EU has approved legislation to allow the Department to apply a reverse charge, which it can apply to criminals trading in goods associated with the fraud, namely mobile phones and computer chips. There is still a significant risk however, that fraudsters will simply switch their trade to other goods not covered by the reverse charge. Missing trader fraud is a major challenge right across the EU. It will need concerted action by all Member States to find a long term solution to this problem.”

“HMRC has improved its processing of income tax returns but there are still substantial numbers of taxpayers who are affected by processing errors. Vulnerable groups such as pensioners are likely to be disproportionately affected. The recommendations in my report will help the Department build on the work already underway to improve the processing of tax returns.”

“Tax can be a complicated matter so it is important to make it as easy as possible for taxpayers to understand and comply with their tax obligations. My report shows how forms and guidance can be made more accessible and the importance of grasping opportunities to simplify the complex rules and procedures.”