Examination of Witnesses (Questions 20
WEDNESDAY 6 MARCH 2002
20. Which is what?
(Mr Banyard) Fifteen years.
21. £500 million over 15 years?
(Mr Banyard) That is right, yes.
(Mr Banyard) From 1993-94.
Chairman: Right. Thanks very much.
23. I am tempted to ask, will all of you be
in post at the end of that 15-year period?
(Mr Banyard) Some of us will not.
24. It is the happy ones that will not. Can
I just ask you, in all the documents with reference to Working
Together, and there is some appreciation by the users of it, but
there is also some exasperation about points that seem to be sensible
that do not seem to have had any response from yourself, are there
issues in Working Together that you simply will not accept?
(Mr Banyard) I do not think there are issues we will
not accept; there are some issues which are more difficult for
us to resolve straightaway. There are some things which agents
find frustrating, and we can address them quickly; there are other
things which are more difficult to address because they are more
built into the system.
25. You know these. Do you think you could give
us a note of the issues that you feel have been raised in Working
Together, obviously mentioned in our evidence, but you have some
difficulty with? And it would also be useful if you have got any
points that you, Inland Revenue, would like to deal with but probably
need Government action; is that possible?
(Mr Banyard) We can certainly let you have a note
of the things which agents find difficult, and which are pending,
if you like, with Working Together at the moment.
I think there is understandable frustration, not least because
the pace at which a large organisation moves does not always match
the pace at which somebody working with us, but perhaps from a
small firm, an accountant from a small firm may be able to change
things within that firm very quickly, we are a larger organisation
and we cannot always move with such fleet steps.
26. What about the business of Government action;
have you any item that has been raised that you cannot resolve
without legislation or Government approval?
(Mr Banyard) We would need to talk to Ministers about
that, but I am not aware of anything at the moment. We are trying
to approach the review; if I could help, at paragraph 52 of the
Memorandum that we sent to you, we did flag up the areas in which
we recognised we needed to do better, and, to a large extent,
they reflect comments that we have received from agents and from
27. I appreciate you have drawn our attention
to this; it would be good to have a note to tell us what you are
doing and why the frustration is there, just practical reasons.
But, if I can move on, how many old-age pensioners are in that
nine million who are sent forms?
(Mr Banyard) We do not have an exact number, but we
estimate that there are about 1.2 million pensioners.
28. Old-age pensioners?
(Mr Banyard) Yes. Some of those will have complex
affairs and substantial income, but, obviously, not all of them.
29. TaxAid have raised the question of the difficulty
the elderly get when they find a form. Now there are a number
of questions arising from their submission. How do people know
if they are required to complete a return, and where is it spelled
out, or is it spelled out? I will ask you just three questions
and you can give us the three answers together, because really
it is one question. How do you know to whom to send a return,
particularly new recruits to Self-Assessment? And, thirdly, how
frequently do you review whether Self-Assessment continues to
be appropriate for that individual?
(Mr Banyard) Can I take, firstly, who is in Self-Assessment.
Broadly, the people who come within Self-Assessment are people
for whom we need to have in Self-Assessment either so that we
can find the information, so that we know what the tax is, to
assess, or it is the only machinery we have to collect that tax;
and the broad groups that come in it are the self-employed, company
directors, higher paid employees who have benefits in kind, people
with more complex tax affairs, trustees, partners. There are a
number of other situations where we have to issue a Self-Assessment
tax return as well; for example, and these are only examples,
people who have foreign income, members of the clergy, people
who have the reduced age allowance, and so some pensioners. We
do not, currently, publish the criteria, and I think that was
one of the questions you asked, because of the enormous number
of situations which could, or not, bring people into Self-Assessment,
but we are looking at how we can provide greater transparency
so that people have a clearer idea of whether they are in it or
30. That answer brings you back to the first
question then. An elderly person gets this form, knows there are
penalties, reads your adverts, and surcharges, and the like, where
on the form does it tell them that they may not need to complete
this form, they may not be covered by Self-Assessment?
(Mr Banyard) I am afraid that once we have issued
a tax return then they do have to send it back to us, even if
it is a nil return; but we do offer a lot of help to people, and
we make that very clear on the outside of the form.
31. I will come to that, because that is one
of the questions. TaxAid, I wish they were in Leeds rather than
in London, we certainly do not have the same organisation. But
in the evidence we have got, there is reference to the difference
in quality of advice given from offices, and it is anecdotal;
of course, some, you get great service, some, you get very poor
service, and we do not have TaxAids round the country. So what
sort of help do you give particularly pensioners and those on
(Mr Banyard) We have got a network of 300 Inland Revenue
Enquiry Centres around the country, where people can go in and
get face-to-face help; we have a Self-Assessment Helpline, which
is open seven days a week, 8 in the morning till 8 at night. And
those are probably the main ways in which a pensioner would want
to get help from us. But we also provide home visits for people
who have mobility problems. And I would say that those people
who use our enquiry services, and particularly pensioners, find
them very friendly, very helpful and very understanding, and we
score very high in customer surveys for the empathy that our staff
show to people. So if you do get enquiries from your constituents
I would particularly recommend that you send them down to our
offices or get them to ring up our Helpline.
32. We have got comment from people who have
written to us that the service is not as glowing as you say. To
be fair to all the people who have sent in evidence, there is
a warmth that sometimes you do not find with Government Departments,
and so when there is a comment like that you worry about it; and
when you respond in that fashion that worries me too. How do you
pick up the bad service?
(Mr Banyard) We are in the process of doing a review
of our Enquiry Centres at the moment, and we are looking to see
what customers think of the service, where we need to improve
it and how we provide a consistent standard of service to everybody.
That review is nearing its conclusion, and it is one of the key
pieces of work for us next year, is to put it into practice. I
would repeat that I would expect, in almost all of our Enquiry
Centres, that people who visit them come away feeling they have
had good advice; the customer surveys show this consistently.
33. The Low Incomes Tax Reform Group have given
us three examples of pensioners, one, Jessie, 85, have you seen
it, have they sent it, as a matter of courtesy, to yourself?
(Mr Banyard) We have seen it. I have not studied it
34. Jessie is simply on the state pension, she
is in a care home and she has got National Savings Bonds, £2,525,
I think that £25 takes her over the coding limit. Is there
a case for introducing better procedures, so that this sort of
thing does not happen? I will take the last question at the same
time, is there a case for reviewing some of these codes and increasing
them so that this sort of thing does not happen?
(Mr Banyard) Other members of the Committee may also
have constituents who have approached them and wondered why they
were in Self-Assessment, perhaps they were pensioners with relatively
low income. Rather than deal with each one individually, I wonder
if it would help if I made a general comment, and that is that
we are aware that there are groups of low income people, pensioners
particularly, who at the moment are in Self-Assessment. We very
much want to help them, and other people with low income, either
by taking them out of Self-Assessment altogether or finding a
way of making it much easier for them to assess. So we are working
with the Low Income Tax Reform Group, and, through them, with
Age Concern and Help the Aged and TaxAid, to see how we can do
this. I have to tell you, there are no golden bullets here, it
is not easy, but I would want you to know that we do genuinely
want to find a way forward.
35. You refer in your memorandum to an initiative
to try to understand the reasons for and reverse the "slight
but persistent reduction" in the percentage of returns filed
before 31 January each year. What information do you now have
on why taxpayers fail to file, and what steps are you taking to
address this problem?
(Mr Banyard) The filing pattern under Self-Assessment
is very much better than what preceded it. We now get, broadly,
each year, 90 per cent of the returns in on time, whereas, pre
Self-Assessment, we thought we got only 50 per cent of the information
required at the due date; so it is a quantum improvement. But
we have recognised that the percentage of people who file on time
has been declining slightly. So in March we set up a review, the
Taxpayer Filing initiative, to see if we could establish which
groups of people were prone to filing late, and to carry out a
programme of initiatives to try to encourage them to file sooner.
As a result of that review, we experimented with a few steps this
year. We looked at our advertising and we retargeted that on particular
groups that we felt were at risk. We used some of our existing
mail-shots and added reminders to people to file on time. Using
our outbound telephone units, we made 200,000 calls to taxpayers
who, from our data-mining, we thought might be in groups that
were at risk, and we worked with agents in the Working Together
initiative, because they, too, suffer from bunching of returns
at the end, and it is something we want to do in partnership.
In these ways, we have been able to reverse the four-year downward
trend, and this year we have effected a small upturn. We are quite
pleased with that.
36. Were there any general characteristics of
the people who returned late?
(Mr Banyard) One of the groups we found who return
late are people who are new into Self-Assessment, and if you look
at the self-employed customer group, about a quarter of them are
new in any year. And I think the reminder that we gave them, through
the telephone calls, was a useful prompt, because when we telephoned
we did not only remind, we offered them help as well.
37. You have given us figures for the filings
on September 30 and January 31, presumably there is a peak just
before those days?
(Mr Banyard) The experience round the world, where
you have Self-Assessment systems with a filing date, is that you
get a big peak up to whatever date you set. What we have been
able to do, with our 30 September date, is pretty nearly split
it in two and bring about a half of the Self-Assessment returns
four months forward.
38. Is there anything more you can do to even
this out, because it must be a difficulty having peaks like this
over two periods, of two months?
(Mr Banyard) I think the first thing to say is that
we have got one of the biggest incentives there is with the 30
September filing date, and that does actually break the peak very
effectively, it is as good an incentive as you can get; 65 per
cent of the unrepresented taxpayers come in by that date. What
we have found is, it is more difficult to spread back some of
the 31 January peak. One particular incentive that exists in some
parts of the world is that many foreign tax regimes, the Australian,
the Dutch, the American, for example, all have an overdeduction
system, so that during the year you pay slightly too much tax,
so when you send in your return you get a tax repayment, and that
is a huge incentive to people to file on time. The British system
is different; we try to get people's tax right during the year,
either with the Pay As You Earn system, or with the Self-Assessment
system, so for many people that incentive does not exist. And,
I think, if you moved to cash incentives, you would have to bear
in mind the fact that if you introduced the incentive you would
also be paying it to the overwhelming majority of people who already
do file on time. We have not got a closed mind to incentives,
we would like to find some more, but they are not easy to see.
39. The Chartered Institute of Taxation, in
their memorandum to us, said ". . . if a tax practitioner
is asked by a client whether it makes sense to file earlier than
the filing date, they may draw attention to various disincentives
that are perceived to exist. Prime among these is the perception
that earlier filing gives the Inland Revenue a longer `enquiry
window' and indeed that it increases the chances of the return
being selected for enquiry. Despite Inland Revenue assurances
that this is simply not the case, many practitioners simply decide
not to take the risk. . . " So what are the incentives really
for filing early?
(Mr Banyard) This is a common misconception, that
by filing early people have a greater chance of being selected
for enquiry. And what we have done, and what I think we will repeat,
is that we have put out a note, through the professional associations,
confirming that there is no greater risk of being enquired into.
What you might be interested in though is that our risk analysis
shows that people who file late have a greater chance of filing
inaccurately, and therefore we have increased their risk score
in our enquiry risk analysis; and the professional associations
have asked us to publicise that, because they can use that with
their clients to encourage them to produce their books earlier,
so that they can produce their accounts to us.
4 Note by witness: Meaningful costs and benefits
were established in early 1995 but the ITSA business case reflects
the picture over a 15 year lifecycle running from 1993-94 to 2007-08. Back
See Ev 22, para 1. Back