Examination of Witnesses (Questions 1-19)
HM REVENUE AND
CUSTOMS
7 NOVEMBER 2007
Q1 Chairman: Good afternoon, welcome
to the Committee of Public Accounts. Today we are considering
the Comptroller and Auditor General's Report on Helping individuals
understand and complete their tax forms. We welcome back Paul
Gray, who of course is the Chairman of HM Revenue & Customs.
Good afternoon.
Mr Gray: Good afternoon.
Q2 Chairman: Would you like to introduce
your colleague?
Mr Gray: Yes, with me today is
Nick Lodge, Director of our Customer Contact Directorate, who
mainly oversees the staff in our contact centres, our enquiry
centres and a few other of our customer-facing functions.
Q3 Chairman: Thank you. I would like
to ask you first about the time it takes to answer people's telephone
calls, if I may. This is dealt with in paragraph 2.8, which we
can find on page 13. You have helpfully given us a note. The average
"wait before call answered" in the year 2006-07 is 45
seconds, is that right?
Mr Gray: That is right, Mr Chairman.
Q4 Chairman: In fact, if you look
across industry as a whole, apparently the average wait is 28
seconds; so you are not doing very well, are you? Forty-three
seconds is quite a long time to hang about at the end of the phone
with no answer, is it not?
Mr Gray: It is a fair time. Industry
comparisons are sometimes not quite like-for-like. The 28 seconds
you quoted for industry generally does not include in its definition
any initial messages once the caller phones in, whereas our 43/45
seconds includes the initial message they are greeted with.
Q5 Chairman: How long is your initial
message?
Mr Gray: About 11 seconds on average.
So we are a few seconds this year ahead of that industry average
but we are in pretty much the same bracket.
Q6 Chairman: So, including your initial:
"Hello, how are you, we want to get your money off you"
sort of stuff, you are going to get it down to the industry benchmark,
are you?
Mr Gray: That is our aim, if not
better.
Q7 Chairman: You are going to use
the industry benchmark on average time in future, are you, rather
than your own?
Mr Gray: We do use the industry
benchmark at the moment. I do not think we have a benchmark of
our own. We are aiming to do at least as well as the industry
average, and, if we can, to better it.
Q8 Chairman: Good. Thank you very
much. What about your website? This is mentioned on paragraph
2.25: "The Department recognises that it needs to improve
its website ... ." The website is not really particularly
consumer friendly, is it?
Mr Gray: It could certainly be
improved, Mr Chairman. Compared with other websites for similarly
complex organisations, it is not in great shape, but we are, as
was brought out in the Report, committed to introducing large
numbers of improvements.
Q9 Chairman: Would you accept that
the search engines are somewhat underpowered, as people try to
find their way around what is obviously a complex website?
Mr Gray: That is one of the particular
areas we are looking to improve.
Q10 Chairman: You are looking to
improve that as well.
Mr Gray: We are looking particularly
to improve the search facility because we have a lot of material.
At the moment there are 170,000 pages of content on the website
and obviously having as good a search capability and as quick
a search capability is something we need to do.
Q11 Chairman: Let us look at how
much people overpay as well as underpay on tax payments. This
is dealt with in paragraph 3.3. You estimate that: "3.3 billion
taxpayers or around one third of those filing self assessed income
tax returns understated their tax by a total of £2.8 billion
... " Fair enough, you know by how much and of course you
do quite a lot of work on this to work out how much people understate.
Why do you not know by how much people overpay in tax to you?
Mr Gray: Up until this point in
the random enquiry process which we use, which is the source of
the data quoted in that paragraph, we have not in the past identified
the overpayments as well as the underpayments. We are now putting
in place arrangements in the random enquiry programme from next
year, so that we will be identifying the overpayments as well
as the underpayments.
Q12 Chairman: I think this is a very
serious point. I think us taxpayers can deserve to feel a bit
irritated about this. If you look at the previous paragraph, it
states: " ... the Department identified and corrected 0.9
million minor errors and queried a further 11,000 returns, resulting
in £9 million of additional revenue and £13 million
of repayments to taxpayers." It would seem that in this one
sample of 11,000 returns there was as much as £13 million
of repayments. There are about nine million returns, are there
not?
Mr Gray: On self assessment, yes.
Q13 Chairman: I worked out that we,
your customers, could be overpaying you as much as £4 billion
and you are not really making a great deal of effort to find out
by how much we are overpaying you. Why should we be overpaying
you by £4 billion? It is our money, after all.
Mr Gray: You are grossing up that
relatively small sample, but clearly it is likely to be a significant
figure, which is why—
Q14 Chairman: All right, if it is
not £4 billion, what is it? Is it £1 billion or £2
billion or £3 billion?
Mr Gray: As I said to you in reply
to the last question, we have not been measuring it up until this
point. I quite accept the point you were putting to me that we
should be doing this in an even-handed way, which is why we will
be introducing that form of measurement. This year we will be
starting to do a similar sampling exercise but we will build the
estimate into our formal random enquiry process.
Q15 Chairman: When we next look at
this, this will all be in place? We can have confidence in the
system.
Mr Gray: Given the time lags between
the random enquiry process and the date to which it relates and
when we have the results, it will probably take us several years
to get to a fully mature state, so it depends when we next discuss
it, Chairman.
Q16 Chairman: Forgive me if I am
labouring this point, but us taxpayers think that you seem to
be very proactive in working out how much we are underpaying you
but you have been quite lackadaisical in working out by how much
we have overpaid you.
Mr Gray: We are talking here about
aggregate estimates of underpayments and overpayments. That does
not mean or imply that in our routine work we are not looking
actively, where there are inaccuracies either upwards or downwards,
to put them right.
Q17 Chairman: Anyway, I think you
have worked out by now that I take a particularly close interest
in this matter.
Mr Gray: Indeed.
Q18 Chairman: I hope our Report will
reflect this. Let us look at the complexity of the tax system.
The tax system is complex. Would you accept that statement?
Mr Gray: I think in any advanced
economy, such as ours, you have a pretty complex tax system, yes.
Q19 Chairman: How are you going to
make it easier for us to understand your forms and guidance and
all the information you give us? Let us look, for instance, at
paragraph 3.12, where we know, for instance, particularly capital
gains is very complex. Often pensioners have very complex tax
returns. They are trying to find a way around this guidance on
the website and the rest of it, so how are you going to make it
easier for us to understand what is going on?
Mr Gray: We have a large programme
of work in place to seek to improve the design of our forms. I
think you are raising two separate questions: one is the design
of the tax system and the second is how we seek to operate it
in a way to be as customer friendly as we can.
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