MPs have welcomed ‘good progress’ in HMRC’s investigation work but called for improved performance and strong leadership to boost low staff morale.
MPs have welcomed ‘good progress’ in HMRC’s investigation work but called for improved performance and strong leadership to boost low staff morale.
The two HMRC directorates responsible for civil investigations work brought in £8.5 billion in 2009/10, an increase of 49% in real terms since 2007/08, despite a 10% reduction in expenditure, the Commons Public Accounts Committee reported.
‘This was good progress and we welcome that. But the Department now has a much more stretching target. Government spending plans require HMRC to bring in an extra £18 billion of tax revenue over the next four years while reducing its costs,’ said Margaret Hodge, Chair of the Committee.
The MPs’ report was published a week after the Association of Revenue and Customs, representing senior HMRC staff, claimed that investment in extra staff to tackle evasion and avoidance would offer 'spectacular returns’.
But Hodge warned that HMRC ‘must improve its performance’ in key areas. ‘Its targets for its investigation directorates have not been demanding enough, sometimes being set below the yield achieved in the previous year,’ she said.
‘Only a quarter of civil investigations of fraud cases were completed within the 18-month target. The level of penalties being imposed in cases of fraud has been too low. And the systems for tracking whether tax debts are being collected are poor.’
'Limited understanding' Some £15 billion of tax a year is lost through evasion, fraud and criminal attack, the Committee said. It reviewed the work of Specialist Investigations, which deals with higher value, more complex cases, and Local Compliance which handles lower value cases.
It noted that HMRC recognises that it has lacked detailed information on the costs and returns of different types of enforcement activity.
‘At present, it does not know, for instance, the costs and returns on civil investigations or the point at which further investment in a particular type of activity would produce diminishing returns. Similarly, it has only a limited understanding of the performance and capability of its various investigation teams.
‘Without this information, the Department cannot decide how best to deploy its resources. Yet, under the Government’s latest spending plans, that is exactly what it must do. In the Spending Review, it has been set a stretching goal of bringing in an additional £18 billion of tax revenue from its work on evasion, avoidance and debt over the next four years.
'At the same time, it must make further efficiency savings across the Department, although around £900 million of these savings can be spent on additional compliance and enforcement work.’
'We know there is an alternative' The Association of Revenue and Customs called for investment of £260 million in HMRC to ‘raise an additional £6 billion through closing the tax gap’.
ARC President Graham Black said: ‘We know there is an alternative to spending cuts and increased taxes: it is to ensure that everyone in the UK pays their fair share of taxes.’
He said the proposed investment package would fund ‘an extra 250 senior tax professionals to tackle large business and corporate avoidance; 400 tax professionals to ensure compliance by employers; and 200 lawyers and legal support staff to bring cases in litigation to speedy resolution’.
MPs have welcomed ‘good progress’ in HMRC’s investigation work but called for improved performance and strong leadership to boost low staff morale.
MPs have welcomed ‘good progress’ in HMRC’s investigation work but called for improved performance and strong leadership to boost low staff morale.
The two HMRC directorates responsible for civil investigations work brought in £8.5 billion in 2009/10, an increase of 49% in real terms since 2007/08, despite a 10% reduction in expenditure, the Commons Public Accounts Committee reported.
‘This was good progress and we welcome that. But the Department now has a much more stretching target. Government spending plans require HMRC to bring in an extra £18 billion of tax revenue over the next four years while reducing its costs,’ said Margaret Hodge, Chair of the Committee.
The MPs’ report was published a week after the Association of Revenue and Customs, representing senior HMRC staff, claimed that investment in extra staff to tackle evasion and avoidance would offer 'spectacular returns’.
But Hodge warned that HMRC ‘must improve its performance’ in key areas. ‘Its targets for its investigation directorates have not been demanding enough, sometimes being set below the yield achieved in the previous year,’ she said.
‘Only a quarter of civil investigations of fraud cases were completed within the 18-month target. The level of penalties being imposed in cases of fraud has been too low. And the systems for tracking whether tax debts are being collected are poor.’
'Limited understanding' Some £15 billion of tax a year is lost through evasion, fraud and criminal attack, the Committee said. It reviewed the work of Specialist Investigations, which deals with higher value, more complex cases, and Local Compliance which handles lower value cases.
It noted that HMRC recognises that it has lacked detailed information on the costs and returns of different types of enforcement activity.
‘At present, it does not know, for instance, the costs and returns on civil investigations or the point at which further investment in a particular type of activity would produce diminishing returns. Similarly, it has only a limited understanding of the performance and capability of its various investigation teams.
‘Without this information, the Department cannot decide how best to deploy its resources. Yet, under the Government’s latest spending plans, that is exactly what it must do. In the Spending Review, it has been set a stretching goal of bringing in an additional £18 billion of tax revenue from its work on evasion, avoidance and debt over the next four years.
'At the same time, it must make further efficiency savings across the Department, although around £900 million of these savings can be spent on additional compliance and enforcement work.’
'We know there is an alternative' The Association of Revenue and Customs called for investment of £260 million in HMRC to ‘raise an additional £6 billion through closing the tax gap’.
ARC President Graham Black said: ‘We know there is an alternative to spending cuts and increased taxes: it is to ensure that everyone in the UK pays their fair share of taxes.’
He said the proposed investment package would fund ‘an extra 250 senior tax professionals to tackle large business and corporate avoidance; 400 tax professionals to ensure compliance by employers; and 200 lawyers and legal support staff to bring cases in litigation to speedy resolution’.
