3 Planning to meet future commitments |
16. The Department's aims for 2011-15 are to be more
efficient, more flexible in dealing with customers and more effective
in collecting revenue. Under the Government's spending plans,
the Department will do more to tackle tax evasion, avoidance,
organised criminal attacks and debt. It is expected to bring in
an additional £7 billion a year by 2014-15, compared to a
total tax gap of £42 billion. At the same time it is to reduce
its costs by 25%, although it can spend £917 million of the
resulting savings on more enforcement and compliance work. 
17. The Department is currently developing its plans.
It aims to increase steadily the additional revenue raised each
year beyond the £13 billion additional yield it expects to
achieve from all of its activities in 2010-11. As a result, over
the next four years, it plans to bring in an extra £18 billion
in total, giving a return of around 20:1 on the £917 million
spending. Meanwhile, the savings will be made across the whole
Department, allowing for the prospect that staff and resources
may be redeployed to increase the scale of enforcement and compliance
work. The Department
is due to publish its Business Implementation Plans by April 2011.
18. The Department wants to develop its ability to
take different approaches to different types of non-compliance
in future, recognising that non compliance occurs for a range
of reasons from innocent errors through to deliberate, concealed
fraud. It aims to concentrate further its more experienced staff
and specialist skills on the larger, more serious cases, and to
deal with errors in a less resource-intensive way, and to spend
the £917 million on the areas of greatest risk. It plans
to spend around 65% of the funding on tackling non-compliance
among small and medium-sized businesses, individuals and the hidden
economy which accounts for around 60% of the tax gap. Its aim
is to increase its coverage of the 4.8 million customers in these
sectors. It plans to spend the remaining funding on work covering
large businesses and wealthy individuals, collecting more debt
and tackling organised crime.
19. The Department recognises that it needs to improve
its management information so it can determine the most cost-effective
use of its resources. While it has monitored spending and progress
towards targets in the past, it has not had sufficiently detailed
information about the specific costs and returns of different
enforcement and compliance activities.
It is seeking to address these gaps through the new case management
system and economic model (paragraph 5), but will need to do so
quickly if the extra spending on enforcement and compliance is
to achieve maximum effect.
20. The Department's performance framework does not
capture the full effects of civil investigations and other enforcement
work. Yield is the element of performance that is most readily
measured, but the effect of the Department's work on taxpayers'
future behaviour and its work to prevent error and fraud are also
very important. The Department has worked with others internationally
to estimate the deterrent effects of its activities which will
inform the decisions it takes about where to put its resources.
In 2011, it plans a broader set of measures to assess its performance
on enforcement activities, including a measure of the actual cash
collected as a result of its work.
It also told us that it will periodically reassess the tax gap,
which it regards as a longer term indicator of its performance.
21. The Department recognises that its staff have
considerable commitment to its work but that there is a lot of
dissatisfaction, as demonstrated in successive annual staff surveys.
The next survey is due to be completed in December 2011.
The organisation has been through major change in the last five
years, and career prospects have been restricted by office closures
and reducing staff numbers. The Department has also made changes
to strengthen management systems that do impose constraints on
the way work is carried out, leading to concerns among staff about
whether processes have become too bureaucratic. The senior management
recognise they need to understand and address staff worries, and
communicate better the reasons for change. Future plans will undoubtedly
bring further changes that will be uncomfortable for some, but
the planned expansion of enforcement and compliance work presents
a clear opportunity to motivate staff.
26 Q13; Business Plan 2011-2015, HM Revenue
& Customs November 2010; Ev 13 Back
Qq 11-16, 34-35; Ev 13 Back
Business Plan 2011-2015, HM Revenue & Customs November
Qq 9-10, 13, 74-78; Ev 13 Back
C&AG's Report paras 7 and 16 Back
Qq 37-40, 69 Back
Qq 36,69; C&AG's Report paras 6, 4.14 Back
Q 46 Back
Qq 55-56, 62 Back
Qq 55-56, 61-67 Back