Supplementary written evidence submitted
by HM Revenue and Customs
Q58-59: Andrew Tyrie: And how much is the concession
that you have announced today costing?
Further clarified: in terms of writing off amounts
under £300 (is there any refinement of the £160 million
figure) and from not charging interest on amounts over £2,000.
Our estimate of the cost of temporarily increasing
the PAYE tolerance to £300 remains £160 million.
Ministers have asked HMRC to put in place a new process
for those with underpayments for the two years in question (2008-09
and 2009-10) that cannot be automatically paid back through monthly
salary deductions—generally those who owe £2,000 or
more.
Amounts under £2,000 can generally be recovered
through adjusting tax codes and therefore paid back through salary
deductions. This will normally be done through the 12 months starting
in April 11, though if this would cause financial difficulty,
this can be done over a period of up to three years. No interest
or penalties arise. Amounts over £2,000 (and some other cases,
for example, where there is no continuing source) are not being
recovered through adjusting tax codes. The individual can always
pay the full amount up front but where they do not, the amount
was collected through the formal self assessment system, where
interest, penalties and surcharges could arise where the individual
filed their return and paid any liabilities after due dates.
The new process will mean that these customers
will be dealt with outside the self assessment regime. They will
be offered at least the same length of time to pay as those with
smaller underpayments and not face interest or penalties, provided
they engage with HMRC and agree how they will make these repayments.
These individuals will also have the option of paying back up
to £2,000 through their monthly salaries.
The cost of this new arrangement for the 2 years
is the difference between what interest and penalties might have
been charged and collected without this new arrangement being
available and this has been estimated to be in the region of £0
to £10 million.
Q60: Andrew Tyrie: Perhaps it would be helpful
to have an estimate of the cost of managing the fallout from the
crisis, because that seems to me something that can reasonably
be laid at the door of HMRC.
The impact of the publicity around the end of
year reconciliation in terms of additional contact to HMRC has
been very low and absorbed into our existing running costs.
Q95: David Rutley: Sorry, I asked a question about
external benchmarks as well ...
Lesley Strathie: We would be happy to give you
a number of benchmarking exercises in PAYE—or income tax,
because not every country has a PAYE system, and ours is still
the envy of most of the world. We also have benchmarking across
a number of operations, but rather than get into numbers that
we don not have in front of us today, we can give you a note on
all of them.
INTERNATIONAL TAX
BENCHMARKING
An international tax benchmarking feasibility
study was commissioned in 2008 to compare HMRC with the Australian
Tax Office and South African Revenue Service. Benchmarks covered
specific aspects of tax administration such as customer contact,
returns processing and compliance activities, and used both quantitative
analysis (based on 2007-08 data) and in-depth qualitative understanding
in order to identify opportunities for performance improvement.
The benchmarking exercise showed HMRC to be leading
in a number of areas, for example, in resolving disputes with
large business customers. HMRC's High Risk Corporate Programme
has led to improved compliance and faster resolution of tax issues
of very large businesses, through Board to Board engagement, developing
strong and trusting relationships, and rigorous investigation
and debate of technical issues with customers.
The exercise has also identified opportunities for
HMRC to improve its performance. For example, it has confirmed
the value and potential cost savings associated with the introduction
of a single business identifier as part of its efforts to improve
interactions with business customers, leading to improved voluntary
compliance, reduced costs and improved customer experience. It
has shown potential ways to improve demand and capacity management
in relation to contact centres and returns processing, where initiatives
at the Australian Taxation Office in particular have led to significant
performance improvement.
However the study has also shown that improved
efficiency cannot be considered in isolation, and trade-offs such
as the level of customer service must also be considered, as well
as other contextual difference between the participating countries.
Overall the feasibility study was considered
to be a success and as a result a second phase of benchmarking
work is underway with the participation of nine other tax administrations.
Results are expected to be finalised in 2011. The final published
report will be subject to the agreement of all participating tax
administrations.
We have not formally benchmarked the operation
of the PAYE system. The UK PAYE system is more sophisticated than
other countries because it is designed to collect the correct
amount of tax from the majority of customers without the need
for a tax return, making like for like comparisons more difficult.
The introduction of the new computer system (NPS) also means that
the administration of PAYE is changing. However, we do compare
levels of customer service in our contact centres against industry
standards (see below).
CONTACT CENTRE
BENCHMARKING
Our Contact Centres regularly review performance
against a wide range of different benchmarks using contact centre
industry standard measures.
A recent NAO study sets out our recent performance
against key benchmarks such as Staff Utilisation and Call Attempts
Answered. A link to the internet site is below:
http://www.nao.org.uk/idoc.ashx?docId=15db76e0-bfa7-4695-9d47-a6d8e7039265&version=-1
All our Contact Centres are accredited by the
Customer Contact Association, to ensure adherence to global standards
for contact centre operations.
CORPORATE SERVICES/OTHER
BENCHMARKING
HMRC has recently completed a benchmarking exercise
for a number of corporate and support areas, reporting against
value for money indicators for HR, Finance, Estates Management,
ICT, Procurement, Knowledge & Information Management, Legal
Services, and Communications & Marketing. The Efficiency and
Reform Group in Cabinet Office expect to publish the results of
this cross-government exercise around the time of the Spending
Review announcement in October. In total this will show the results
for more than thirty efficiency and performance indicators, such
as the cost per employee (FTE) of HR and Finance functions, and
the summary result for our IT stakeholder survey. We would be
happy to provide TSC with a link to the published results in due
course.
Q113: Andrew Tyrie: I think it would be very helpful
if you set out for us on a piece of paper the reconciliations
going back for each year, for as many years for which you have
data, prior to the introduction of the computer system, to show
what effect the computer system is having on those numbers. Could
you do that for us?
Further clarified: how many reconciliations have
been issued each year for as far back as possible and how many
have been left open each year?
The previous system did not keep the information
asked for in the question.
We know the numbers of open (unreconciled) cases
on hand in respect of all back years at each year end and these
are shown in column 2 in the table below.
We estimate[11]
that prior to the implementation of NPS in June 2009, around 30%
of all PAYE cases were not able to be reconciled automatically
and therefore required manual review. Column 3 shows our estimate
of the numbers of open cases created each year for manual review.
Column 4 shows the number of open cases actually cleared mainly
by manual review in each year.
Of the open cases cleared (column 4) we estimate
that 77% had no tax effect. Accordingly 23% would have resulted
in an under or overpayment with overpayments (resulting in a repayment
to the customer) outnumbering underpayments (which normally resulted
in an adjustment in the code) by around three to one.
The NPS system does this work automatically
(subject to some exceptions for manual handling).
1. Year
Ended
| 2. Total of all
Years Open
Cases On Hand At Each Year end
| 3. Estimate of
Open Cases
Created in
Year*
| 4. Cases Cleared
(mainly by
manual
intervention)
|
| 05-Apr-01 | 11.4m |
9.9m | 9.1m |
| 05-Apr-02 | 12.2m | 10m
| 14m |
| 05-Apr-03 | 8.2m | 10.1m
| 11.1m |
| 05-Apr-04 | 7.2m | 11.7m
| 11.8m |
| 05-Apr-05 | 7.1m | 11.9m
| 6.8m |
| 05-Apr-06 | 12.2m | 12.1m
| 11.3m |
| 05-Apr-07 | 13m | 12.3m
| 9.1m |
| 05-Apr-08 | 16.2m | 15m
| 11.2m |
| 05-Apr-09 | 20m | 16m
| 17.8m |
| 05-Apr-10 | 18.2m |
| |
| * These are open cases created in the year but which relate to the previous year's data eg 16m open cases created in the year 2008-09 relate to earnings received and tax paid in the year 2007-08.
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Q121-122: George Mudie: So there is a line for the public|.What
is that number?
The number of our taxes helpline is 0845 300 0627; and a
link is provided below:
http://search2.hmrc.gov.uk/kbroker/hmrc/contactus/search.ladv?raction=view&fl0=__dsid%3A&sm=
0&ha=34&as=1&sf=&sp_scope=hmrc&sc=hmrc&nh=10&sr=0&cs=ISO-8859-1&tx1=&tx0=
49612
October 2010
11
HM Revenue & Customs 2007-08 Accounts (HC 674) published on
14 July 2008. Back
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