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HM Revenue & Customs 2005-06 Accounts: The Comptroller and Auditor General’s Standard Report

On tax credits

“The first full results of the new tax credit scheme since its introduction in April 2003 show that the level of claimant error and fraud was unacceptably high. I have therefore once again qualified my audit opinion on the Trust Statement. HMRC must now use this baseline figure to continue to target future reductions in error and fraud. HMRC closed the tax credits e-portal because of a serious attack by organised criminals submitting false claims using stolen identities. It must ensure that the new system fully complies with established government standards on security.”

On income tax (Pay As You Earn)

“HMRC has identified a number of problems with the way PAYE is working, especially for more complex cases, which have led to employees paying too much or too little tax. HMRC should closely monitor the effect of its planned improvements in ensuring that taxpayers pay the right amount of tax.”

On VAT missing trader fraud

“Missing trader fraud is a fraud perpetrated against the VAT system that has affected EU Member States. HMRC has sought to use all of the tools at its disposal to combat the fraud, but the confidence of the fraudsters over the last eighteen months has increased. The Department should continue to work with the European Commission and other Member States. Such concerted action is essential in successfully tackling this problem.

Published:
11 Jul 2006

VAT on e-commerce

The National Audit Office has today backed HM Revenue and Customs’ assessment that the overall risk to VAT revenue from on-line shopping, or e-commerce, is currently low. The Department has been alert to specific areas of risk which have emerged and is well-positioned to tackle these. As activity increases in this fast changing environment, it … Read more

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VAT on e-commerce

“I find it encouraging that HM Revenue and Customs is well positioned to manage the current risks to VAT from electronic commerce. With internet sales set to mushroom in the next few years, the Department faces a challenge to ensure it stays ahead of the game. Some businesses are inventive at side-stepping VAT, and the Department must be equally innovative in guaranteeing the Exchequer gets the revenue it is due.”

Published:
26 May 2006
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Financial Auditing and Reporting: General Report of the Comptroller and Auditor General 2004-05

“I am pleased to see an increasing recognition of the key role that financial management has to play in the efficient use of resources and the delivery of efficiency programmes. The continuing steps being taken by the Treasury and departments to improve the professionalism of the finance function are therefore very welcome.

“A number of departments are still finding it difficult, however, to submit good quality financial accounts in time for them to be audited and laid before Parliament before its Summer Recess. It is essential for all departments to recognise the immense benefits to themselves of producing robust, accurate and up to date financial information throughout the financial year and not leaving it to the end of the year. This is essential if they are to improve their resource planning and decision making.”

Published:
31 Mar 2006
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National Insurance Fund Account 2004-05

“I am pleased that I am able to give an unqualified opinion on the National Insurance Fund Account following the advances made by DWP and HMRC in improving their systems”

“Nevertheless, HM Revenue and Customs and the Department for Work and Pensions need to correct errors in Incapacity Benefit records on the two Departments’ systems. There may be difficult decisions to be taken in undertaking what could be a large and complex task which comes on top of routine processing”

“Poor quality NI contributions information from some employers continues to cause difficulties for HM Revenue and Customs and potentially for the individuals seeking benefits. The hoped for effects of initiatives to improve employers’ data quality cannot yet be demonstrated because of problems with some IT systems in the summer of 2005”

Published:
6 Feb 2006

National Insurance Fund Account 2004-05

Clarification Point 2 in the C&AG introduction (page 26), should read: “From April 2003 an additional one per cent National Insurance contribution has been collected and allocated directly to the National Health Service, bringing the total payments to the NHS to some £16.8 billion in 2004-2005 (£14.9 billion in 2003-2004).” Head of the National Audit … Read more

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Corporation Tax: Companies managed by HM Revenue and Customs’ Area offices

“I welcome the improvement in the Department’s management of Corporation Tax over the last five years, which has led to higher tax yields from fewer formal enquiries, bringing benefits to the Department and company taxpayers alike.

“My report highlights how HM Revenue & Customs can build on these achievements, by deploying its staff to focus its work on tax returns that pose the greatest risk, while helping companies to meet their obligations.”

Published:
13 Jan 2006

Corporation Tax: Companies managed by HM Revenue and Customs’ Area offices

The management of Corporation Tax by HM Revenue and Customs’ Area offices has improved in recent years, according to the National Audit Office. However, the variations in performance across offices offer scope for further savings in the costs of managing the tax and generating additional tax revenue. The Department’s Area offices administer Corporation Tax for … Read more

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Comptroller and Auditor General’s Standard Report on the Accounts of HM Customs and Excise 2004-05

“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.”

Published:
10 Oct 2005