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.
This review was carried out on the 2012-15 Business Plan. Revised Business Plans were issued in June 2013.
The NAO is publishing a suite of short guides, one for each government department, to assist House of Commons Select Committees.
“The Revenue Departments collected over £220 billion tax in 1998-99. With such large sums at stake, it is important that the tax system operates effectively. I am therefore pleased to advise Parliament that my examination confirmed that the Department’s systems continued to provide an effective check on the assessment and collection of revenue”.
“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.”
” Customs’ approach to the collection of revenue has shifted to focus on those traders presenting the greatest risk of non-compliance. In 2001-2002 they were able to identify £2.5 billion net underpayments, some 5 per cent more than in the previous year. But I was concerned to find that in the same year the amount of tax owing to Customs increased markedly. Customs’ latest debt figures show some signs of improvement, but they have a long way to go.
” It will be of concern to everyone that there have been serious weaknesses in Customs’ systems for holding and disposing of seized goods. Customs are implementing a range of measures to address these weaknesses but they could have been quicker to deal with serious underlying problems.”
HMRC’s progress in stabilising the PAYE service, its performance in managing tax debt; and its progress in tackling tax credit overpayment.
” It is important that the Department are learning the lessons from their experiences of the current tax credits to minimise similar problems in the new tax credits that are to operate from April 2003.
“They should also enhance their management information so that it is capable of demonstrating much more comprehensively their achievements in debt management and tax collection”.
“Customs’ Tobacco Strategy has had a welcome effect on the levels of cigarette smuggling, and much has been done to develop positive working relations with the major UK tobacco manufacturers. However, in the last two years, the estimated level of smuggling has plateaued. I welcome the Department’s work to refresh their approach to take account of the changing nature of tobacco fraud and smuggling, in view of the growing threat posed by the smuggling of hand rolling tobacco.”
“Customs have been successful in reducing the level of outstanding debt available for collection, and have also managed to increase the amount of cash banked as a result of debt management activities in 2004-05. The failure to reconcile key systems on a regular and timely basis, and the failure to ensure that all amounts recoverable are under active management, though, represents a disappointing oversight which the Department are working to address.”
“Although there is some limited interim evidence that the level of claimant error and fraud involved in the payment of the new Tax Credits may have fallen, that level remained unacceptably high and therefore I have once again qualified my audit opinion on the Inland Revenue’s Trust Statement. The Department expects to have final results for the levels of fraud and error for 2003-04 awards in the Spring of 2006. It must use these results to target a year on year reduction in the amount of fraud and error. It must also ensure that confidence in the fairness of the schemes is not undermined by unacceptable levels of unjustified payments.
“The fact that tax credits awards are made on a provisional basis represents a significant cultural shift for many claimants. The need to repay the Department for overpaid awards has clearly caused difficulty for many families. The Department needs to understand better how claimants can be helped to cope with overpayments: some £2.2 billion in respect of 2003-04 awards.”
This impacts case study shows that HM Revenue & Customs has implemented more than 80% of our 130 recommendations since 2010, leading to significant reduction in tax avoidance and improvements in accountability and governance regarding tax disputes.
It is one example of financial or non-financial benefits realised in 2014 as a result of our involvement, all of which are set out in our interactive PDF.