HMRC could have collected £1.1bn more in taxes if it had not cut the numbers of staff working on enforcement and compliance activity by more than 3,300 over the life cycle of its Compliance and Enforcement Programme, according to the Commons Public Accounts Committee (PAC).
Margaret Hodge, Chairman of the PAC, said today that there was ‘at least £35bn outstanding in uncollected tax’. She was quoting HMRC’s estimate of the tax gap, but the PAC acknowledged that ‘other estimates suggest the figure is much greater’.
The Programme had achieved a substantial increase in tax revenue – an additional £4.32bn over five years, she said – but HMRC ‘must consider’ whether further staff cuts would deliver value for money for the taxpayer.
‘The department told us that in the past it was working under a ministerial remit to reduce in size, consistent with the deal agreed in the [2010] spending review,’ the PAC reported in HM Revenue and Customs: Compliance and Enforcement Programme.
‘The department therefore reduced the number of staff working on compliance and enforcement activity by 3,387 to meet headcount reduction targets. It has estimated that around £1.1bn of additional revenue could have been generated had these staff reductions not been made, a loss in revenue of around £10 for every £1 of running costs saved. Although it had provided general advice to ministers, it had not set out what could have been achieved from different levels of investment.’
HMRC said in a statement: ‘The government made £917m available to us in 2010 to target avoidance, evasion and fraud. This has been used in part to boost the number of jobs in our enforcement and compliance work.
‘The development of e-services, allowing us to move staff into compliance roles, together with new computer systems such as Connect and more effective use of risk profiling has resulted in a doubling of our compliance take since 2005 to £13.9bn last year. We are set to increase this by a further £7bn a year by 2014.’
HMRC could have collected £1.1bn more in taxes if it had not cut the numbers of staff working on enforcement and compliance activity by more than 3,300 over the life cycle of its Compliance and Enforcement Programme, according to the Commons Public Accounts Committee (PAC).
Margaret Hodge, Chairman of the PAC, said today that there was ‘at least £35bn outstanding in uncollected tax’. She was quoting HMRC’s estimate of the tax gap, but the PAC acknowledged that ‘other estimates suggest the figure is much greater’.
The Programme had achieved a substantial increase in tax revenue – an additional £4.32bn over five years, she said – but HMRC ‘must consider’ whether further staff cuts would deliver value for money for the taxpayer.
‘The department told us that in the past it was working under a ministerial remit to reduce in size, consistent with the deal agreed in the [2010] spending review,’ the PAC reported in HM Revenue and Customs: Compliance and Enforcement Programme.
‘The department therefore reduced the number of staff working on compliance and enforcement activity by 3,387 to meet headcount reduction targets. It has estimated that around £1.1bn of additional revenue could have been generated had these staff reductions not been made, a loss in revenue of around £10 for every £1 of running costs saved. Although it had provided general advice to ministers, it had not set out what could have been achieved from different levels of investment.’
HMRC said in a statement: ‘The government made £917m available to us in 2010 to target avoidance, evasion and fraud. This has been used in part to boost the number of jobs in our enforcement and compliance work.
‘The development of e-services, allowing us to move staff into compliance roles, together with new computer systems such as Connect and more effective use of risk profiling has resulted in a doubling of our compliance take since 2005 to £13.9bn last year. We are set to increase this by a further £7bn a year by 2014.’
