Examination of Witnesses (Questions 80-99)
HM REVENUE AND
CUSTOMS
14 NOVEMBER 2005
Q80 Greg Clark: So 8,000 plus 1,800
and the best estimate of the savings from this great efficiency
review of centralising processing is 200 to 300 staff, according
to paragraph 4.7. That does not seem very much.
Mr Varney: That is based on lifting
the performance of the processing centres. We are making a whole
series of interventions to try to see what we can do to lift the
overall standard beyond the three best.
Q81 Greg Clark: Is that right? Are
you making 200 to 300 staff years of savings or is there a higher
figure?
Mr Varney: No, we have at the
moment 200 to 300 which are in our plans so far.
Q82 Greg Clark: So this great review
of centralising administration is just going to lose 200 to 300
people out of the thousands you have working for you.
Mr Varney: I am trying to talk
about two different things. What that paragraph says is correct,
if we rise to the standard of the three most efficient offices.
Are we comfortable with their efficiency levels? No. We have a
programme which is talked about in here which is seeking much
greater efficiency savings. That will come from the quality of
training, redesign of process, involving the people who do it
and a big investment in frontline management capabilities.
Q83 Greg Clark: I just find it very
mysterious that there is such a great disparity of efficiency
and bringing the bottom up to the top is only going to make a
nugatory difference to staffing levels, but that now seems to
be it. On guidance with filling in forms, one of the problems
which means there is more work for you is that you get incomplete
or incorrect forms which you then have to reprocess. You have
helplines. At what times are they available? Are they open for
24 hours?
Mr Massingale: Our main helplines
are available from eight o'clock in the morning to eight o'clock
in the evening.
Q84 Greg Clark: Is there a reason
why they need to finish at eight o'clock in the evening?
Mr Varney: Just cost; it is a
cost efficiency argument of whether you think people are going
to ring in the early hours of the morning to do their tax return.
Q85 Greg Clark: Have you made an
assessment and determined that they do not do them after eight
o'clock in the evening?
Mr Varney: We have not come under
a great deal of pressure to do that.
Q86 Greg Clark: When you say "a
great deal of pressure", how would you detect this pressure?
Mr Varney: You talk to customers,
you talk to intermediaries. This is a public process in which
we get a lot of feedback.
Q87 Greg Clark: I should be surprised
if you were to do a survey if you did not find quite a lot of
people, particularly the people Mr Khan mentioned who perhaps
do not have professional advisers, might fill in their tax returns
after work, in other words between eight and 10 in the evening.
Do you find that a surprising suggestion?
Mr Varney: We do not see that
pressure. I think it is more a tribute to your imagination than
reality. I do not think there is a large demand.
Q88 Mr Williams: Following on the
figure Mr Bacon used of 80% of chartered accountants saying that
they spend extra time rectifying your errors, does that imply
that for those who do not employ accountants, but try to do these
things themselves, these errors probably go largely undetected?
Mr Varney: We hope not.
Mr Massingale: We are trying to
improve our internal performance.
Q89 Mr Williams: That was not the
question I asked you. I know you are trying to improve. All I
am asking is whether it means, for those who do not employ accountants,
that the probability is that they go undetected.
Mr Massingale: To the extent that
we do not detect errors we have made ourselves, they are in large
part detected by our customers.
Q90 Mr Williams: Do you know how
many people in the vulnerable areas do not use accountants? I
suppose the majority do in fact.
Mr Varney: We are trying to take
those people with simple affairs out of the tax system.
Q91 Mr Williams: We understand that.
I see that you failed to update tax codes for over 600,000 people
and you made two million tax coding errors, which are very large
numbers. You and I have been exchanging correspondence in relation
to a constituent of mine in such a situation and you imposed the
duty entirely on the taxpayer to identify your failures as far
as the coding was concerned. You seem to accept no responsibility
for getting it wrong.
Mr Varney: We have invested in
some IT to try to improve the accuracy. We have accepted that
we do need to improve it.
Q92 Mr Williams: That is not my point.
I am asking about imposing the duty on the taxpayer. Though I
do not know how many around here bother to check their tax codes,
I must admit that I am terribly remiss and do not and I suspect
an awful lot of people do not check their tax code and many people
may not even be aware of what their tax code entitlements may
be. Errors on this scale and the imposition of a duty on the taxpayer
seem grossly unjust.
Mr Varney: The taxpayer is in
command of the information on which the assessment is based. We
try to make as transparent as we can why we have reached the decision
we have on the coding and then, if we have made an error, they
come back and we correct it. [3]
Q93 Mr Williams: If they spot it. When
they come back later I was fascinated to find that you are so
conscious of the money which is coming in and yet we are told
that apparently you do not know how much compensation you pay
out as a result of the Department's errors. That is in paragraph
3.19. Why is that?
Mr Varney: I think that was correct
information[4].
Q94 Mr Williams: I did not ask whether
it was accurate. I asked you why. We assume it is accurate because
we know you have cleared these figures with the National Audit
Office and we are not here to argue about the figures. I am asking
you why you cannot tell us what compensation you have paid out.
Do you not keep any track of it? How can you be sure that the
money which has flown out is properly accounted for?
Mr Varney: It is properly accounted
for.
Q95 Mr Williams: You say it is probably
accounted for but can you say that it is certainly accounted for?
Mr Varney: I said that it is properly
accounted for.
Q96 Mr Williams: Probably accounted
for is less than certain it is accounted for. We actually expect
you of all people to be in control of your figures and yet you
sit there, the Revenue, saying you do not know how much your people
are paying out in compensation. I find that staggering.
Mr Varney: When the NAO came in
that was one of the things they uncovered in the report and we
think this report is very helpful and illuminates areas.
Q97 Mr Williams: It could be £1
million, £2 million, £3 million, £10 million, £20
million. You do not know.
Mr Varney: No, I do not.
Q98 Mr Williams: You just do not
know. This gets rather worrying when we look at the cost of some
of your errors. We are told that errors led to £70 million
being undercharged and £50 million overcharged; you have
detected errors of £120 million. These are large sums of
money where you have gone wrong. First of all, how do you determine
compensation? Whoever receives a letter does not just say they
will drop the taxpayer a note and give them £10 compensation.
There must be a system. There must be some accounting process
for it. Why are these figures not aggregated?
Mr Varney: They were not aggregated.
Q99 Mr Williams: If one of the people
whose tax return you are dealing with were to say they had not
bothered to add up the figures, you would not be very impressed
by that, would you?
Mr Varney: No, but—
3 Note by witness: Self Assessment operates on an annual
cycle and any coding errors in one year are corrected in the following
year. Back
4
Ev 22 Back
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