Examination of Witnesses (Questions 40-59)
SIR NICHOLAS
MONTAGU KCB, MR
BARRY GLASSBERG
AND MR
TERRY HAWES
MONDAY 18 MARCH 2002
40. How many agents are there serving these
four million people who use agents?
(Sir Nicholas Montagu) I do not think we have a figure
for that.
41. So we cannot compare that. You save £3
a time for every tax return you do. Have you thought of offering
a £3 voucher for everyone who electronically files their
tax return?
(Sir Nicholas Montagu) That of course would be a policy
decision for ministers, Mr Davies, as the original incentive was.
42. Has there been any discussion?
(Sir Nicholas Montagu) As I said to the Chairman,
I do not talk about what we talk about with ministers. I am sorry,
I do not mean to be unhelpful but this is well-tried—
43. But we are talking about value for money
here. We are saying that for every person you fail to convince
to get them electronically to file their returns, the taxpayer
loses £3. I am saying why do we not just neutralise that
and give them the £3 in future years?
(Sir Nicholas Montagu) I can only suggest that you
talk to my ministers about that.
44. Okay. To what extent are you helping some
of these people who are not that literate in terms of being used
to using the Internet by actually going out there with trainers
and showing them how to fill in the form? Are you doing any of
that?
(Sir Nicholas Montagu) We are not going out there
and showing them how to fill in forms. That would not be practical
at the individual level. What of course is true is that a lot
of individuals make contact with our Inland Revenue Enquiry Centres
and they would get help from there and they could get help from
a range of intermediaries—again the Citizens Advice Bureau
is an obvious example—and the whole time and iteratively
we are talking to people who file—
45.—No doubt you are.
(Sir Nicholas Montagu)—And finding out what
they like and what they do not like.
46. If I went to a big public library like the
one in Croydon, would there be an opportunity for people to come
along and someone from your team to help people along and advertise
your facility so that they could be coached?
(Sir Nicholas Montagu) What of course there would
be would be the opportunity, if there was a telephone, for people
to ring a helpline and get help with completing on-line. In some
cases, I am told, in some libraries, we have actually done that.
It is not a generally available service but obviously, as you
point out, we have a vested interest in making it as easy as possible
for people to file electronically.
47. Where does this occur? Mr Hawes seems to
know that this is happening in some libraries.
(Mr Hawes) Our local offices, if they are able to
spare the resource, will put people alongside a machine for a
while in a library office or they may put, as Sir Nicholas said,
a phone connection there, but we do not control that centrally.
48. In terms of segmentation, Sir Nicholas,
you are talking about the particular social and tax profiles of
individual clients. Presumably you find that there is a greater
propensity among certain groups to engage in internet tax returns?
(Sir Nicholas Montagu) I think that is right. When
I am talking about segmentation I am talking about different groups
of customers.
49. If you segment the market into five categories
and you had the ones who were most likely to engage in the internet
down to the least likely, what is your strategy in terms of devoting
resources? Do you tend to target those groups that are already
showing high take up or do you tend to target the people with
lower take up?
(Sir Nicholas Montagu) An essential part of our customer
relationship management approach—and I use that as a term
of art—is precisely to target each group of taxpayers and
tax credit claimants according to what we know of them, their
needs and their aspirations and tailor the service to them.
50. So are you targeting your resources towards
the segments which have the highest marginal return?
(Sir Nicholas Montagu) We are targeting our resources
across the piece. If you are saying—
51. That is a no then?
(Sir Nicholas Montagu)—If you are saying would
we have a major blitz on pensioners, the answer is no. If you
are saying would we have a major blitz on large and small businesses
and individuals filing for self assessment more widely, the answer
would be yes.
52. Do you find people with larger incomes are
less likely to use electronic means or more?
(Sir Nicholas Montagu) On the whole people with larger
incomes—and again this is a wild generalisation—would
be more prone (because they tend to have correspondingly more
complex tax affairs) to use tax agents, and they would therefore
benefit either from the electronic lodgement service or from the
facility I mentioned available since last November.
53. Thank you. I look forward to seeing you
in Croydon again.
(Sir Nicholas Montagu) I too.
Chairman
54. Sir Nicholas, just taking up one point from
Mr Davies' questions. Could you please turn to Page 27 and look
at Paragraph 6. You were rather coy with Mr Davies about his sensible
idea to give a bonus of £3 to everybody who takes up this
service. You suggested it was some great policy area. You will
see halfway down that paragraph: "A registration service
for taxpayers was available on schedule in April 2000. The department
offered a 10 per cent discount to taxpayers who filed their return
electronically . . . " There is nothing new about this. Without
getting involved in advice to ministers and policy and all the
rest of it, surely you can tell us a bit more about the incentives
you have given taxpayers?
(Sir Nicholas Montagu) I will try to be as helpful
as I can, Chairman. The difficulty is that if we get into the
quantum of discounts, that is a policy issue for ministers.
I could draw, if you like, a comparison with Singapore, which
Barry and I visited last summer to look at how wired up they are.
The tax administration for a start has spent a great deal promoting
`e', but it has got certain flexibilities in terms of incentives
that we do not have. If there were to be a question of our having
such incentives, that would be a major policy issue. The discounts
that we introduced were intended to increase the volume of early
adopters of the services, and I gather that small incentives are
commonly used in the internet industry to overcome the sort of
caution that people feel, "Well, I might be interested in
a year or two."
55. I think it might have been helpful if you
had said all that to Mr Davies when he asked you instead of giving
the answer as if this were an entirely new idea.
(Sir Nicholas Montagu) Mr Davies asked me about a
very specific proposition which, without wanting to be unhelpful,
would be a policy issue for ministers and not for officials to
introduce off their own bat.
Chairman: Thank you very much. Mr Richard Bacon?
Mr Bacon
56. Sir Nicholas, the Report says on Page 1,
Paragraph 3 says that "the Inland Revenue is at the forefront
of the development of e-services in the public sector and their
experience acts as a valuable exemplar to other Government departments."
Could you say briefly what you think are the two or three most
important lessons one can draw out of your experience if you are
an exemplar for other government departments?
(Sir Nicholas Montagu) The importance of build and
learn, which I was discussing with the Chairman, that iterative
process. Also critically the importance of talking to customers
which is part of the build and learn. Find out what they want,
find out what they do not like, find out what they like. I mentioned
this corporation tax portal, the so-called e-CT portal, when talking
to the Chairman. It is an interesting example in itself. It came
directly out of a so-called `incubator' which in my young days
we would call a `workshop'. If one was being very smug one would
call it an `accelerated solutions environment'—
57. No one would accuse you of being excessively
smug!
(Sir Nicholas Montagu) I am delighted to hear that!
Which we held last April with various sized businesses, the software
industry and our own people and we asked, "What do you want?"
We thought they were going to say, "We want to be able to
pay and file on-line." What they actually said to us was,
"We want to be able to understand the payments we have made
and the liabilities we have got," and between April and January,
which is a very short time for those projects, we worked with
them, and in January we rolled out this e-CT portal providing
what they wanted in direct response. I think that is also an extremely
important lesson. The third one, which also comes from it, is
that it is critical to engage with the software industry as our
partners in this and more widely, I think, to consider the use
of intermediaries, which has to make sense for the future.
58. You mean tax agents?
(Sir Nicholas Montagu) I mean far more widely than
that. I mean software houses, I mean bodies like the Citizens
Advice Bureaux, I mean other people who could be advising, and
indeed, not too fancifully in the future, the supermarkets who
are, after all, financial institutions in their own right these
days.
59. Could I ask you couple of questions quickly
about cost. How much money does the Inland Revenue spend at the
moment on administering tax assessment for individuals?
(Sir Nicholas Montagu) I think I will have to ask
the Committee's agreement to let you have a note on that. I do
not have that figure offhand.[1]
1 Note by witness: The present total cost of
administering SA annually is £427 million. This includes
staff and systems costs, receivables and certain relevant training
and head office overheads. Back
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