Select Committee on Treasury Appendices to the Minutes of Evidence


Third supplementary memorandum submitted by the Inland Revenue

  1.  This note provides the information you asked for about our Budget Payment Plan pilot and also explains briefly our current thinking on payment methods.

  2.  We first introduced a small scale Budget Payment plan pilot three years ago to test whether SA taxpayers found paying by direct debit attractive. We contacted a sample of taxpayers around our Newcastle office, offering them the choice of paying monthly instalments towards their SA liability providing they had no previous unpaid liabilities. More than 400 people joined the scheme, paying nearly £100,000 each month.

  3.  We have looked extensively at promising initiatives like the Budget Payment Plan and at our whole range of payment methods as part of two Better Quality Services Reviews of Banking and Debt Management. These recommended moving to electronic payment methods (and, for individuals, direct debit in particular). We are now taking forward those recommendations by establishing the convenience and cost of the payment channels and payment methods people use to pay us. Those channels include internet, bank counter, automated bank payment systems, post, call centre and so forth. And the payment methods include direct debits, debit cards, credit transfers like bank giro and cheques. By doing that, we will be able to identify preferred combinations that are convenient for people in different circumstances to use and are cost effective for us. Those are the combinations that we will develop and promote.

  We have made slower progress than we wished for two reasons. The first was the need to take account of the two Better Quality Service reviews and of substantial changes in our customer base, such as the introduction of tax credits, and how we contact people, such as the development of contact centres, outbound telephony and use of the internet. The second, related, reason was that the costs in money and demand for expertise of these changes to the department, meant that we had to make hard choices about substantial investments, and payments was one of the areas scaled back as a result.

Inland Revenue

13 May 2002

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