Payment methods
16. To make payment more convenient and efficient,
the Department produced a strategy in January 2003 to increase
the use of electronic payment. The Department offers 33 different
payment methods, 23 of which are electronically based. Payment
by cheque is the most popular, but two-thirds of payments (almost
55% by value) are made by electronic means. The Department introduced
the facility to pay by debit card in 2003 for debts settled by
its Telephone Centre and it plans to extend this to local offices
from mid 2005. The Department does not accept payment by credit
card because this attracts a service charge and would increase
collection costs. The Department is looking at ways of minimising
the costs, but legislation would be needed to allow it to pass
on the costs to taxpayers. The Department also has some concerns
about increasing the level of consumer credit card debt although
it already expects taxpayers to draw on bank or building society
deposits, call on amounts owed by third parties, realise stocks
and shares, sell assets such as cars or borrow funds to pay any
taxes due.[17]
17. Where the taxpayer does not have sufficient realisable
assets, or is unable to borrow sufficient funds, the Department
considers requests to pay by instalments. In 2002-03, it received
thousands of requests from customers for additional time to pay.
For example there were over 27,000 arrangements in place in the
local recovery offices for paying off arrears on self assessed
Income Tax. Instalments can be paid by direct debit but the Department
is unable to impose this arrangement even when the taxpayer has
defaulted on a tax bill in the past. Such a requirement would
help in recovering debts but a change in legislation would be
required.[18]
18. Of the £14 billion outstanding at 31March
2003, £4.9 billion was on PAYE. Employers should pay this
over to the Department by the 19th of each month but,
during 2002-03, only 52% of employers had paid by the 23rd
of each month.[19] In
our previous Report on Tax Credits and Tax Debt Management
(HC 332, Session 2002-03) we concluded that the Department
should increase its current target of half of all employers paying
over tax deducted from employees' earnings by the statutory date.[20]
Since April 2004, the Department has required employers with 250
employees or more to pay their PAYE electronically and a new surcharge
has been introduced for persistent late payment. No similar measures
were in place for small and medium sized employers.[21]
Information and advice for taxpayers
19. The Department provides a range of support and
advice to help taxpayers understand their responsibilities for
paying tax on time. It has set up a Payment Helpline to provide
information to those experiencing difficulties in paying their
debts. It has also seconded staff to voluntary sector organisations
that advise taxpayers on debts and provides a dedicated phone
line for voluntary sector debt advisers to obtain information
to help in dealing with clients' problems.[22]
20. Some of the Department's leaflets on debt recovery
were written in 1994, pre-dating the introduction of self-assessed
Income Tax, and are out of date and inaccurate. The Department
has therefore withdrawn these leaflets, and is updating them for
issue during 2004. The material on the Department's website was
limited to a high level summary of the collection processes, operational
functions and enforcement actions. It does not include information
on the Payment Helpline, which deals with time to pay requests,
and the codes of practice. There are no links to other pages on
the Department's website containing guides on enforcement action
or links or contact details for other organisations that could
help a taxpayer. Having upgraded its website in January 2004 the
Department planned further improvements.[23]
21. Between 1999-2000 and 2002-03 the Department
wrote off £789 million in National Insurance contributions
debt, mainly owed by businesses that had become insolvent. Although
the employer's debt is written off, the individual employee's
contributions are deemed to be paid so the write-off does not
reduce their entitlement to related welfare benefits. Entitlement
to pension and benefits is however reduced if an individual employee
has not made sufficient annual contributions. The Inland Revenue
has started to send out deficiency notices to people who have
made insufficient annual contributions. Pension forecasts are
also available on request, to help people decide whether it would
be worthwhile making additional contributions. In time the Inland
Revenue and the Department for Work and Pensions hope to enable
people to check their contribution and pension forecast electronically,
but this depends on linking up the departments' computer systems.[24]
In Simplicity, security and choice: Informed choices for working
and saving the Department for Work and Pensions announced
plans for increasing the range and number of pension forecasts
it provides, together with employers and pension providers.
[25]
16 C&AG's Report, Executive Summary para 16 Back
17
C&AG's Report, paras 4.2-4.5, Figure 15; Qq 87-89, 205-206 Back
18
Qq 103-105 Back
19
C&AG's Report, para 4.9, Figure 4 Back
20
29th Report from the Committee of Public Accounts,
Inland Revenue: Tax Credits and Tax Debt Management (HC
332, Session 2002-03) Back
21
C&AG's Report, para 4.9; Qq 90-92 Back
22
C&AG's Report, para 4.13; Qq 120, 123 Back
23
C&AG's Report, para 4.15; Q 17 Back
24
Ev 22; para 10; Qq 64-66, 72-81 Back
25
Department for Work and Pensions, Simplicity, security and
choice: Informed choices for work and saving (Cm 6111) February
2004. Back
