The administration and effectiveness of HMRC

Written Evidence submitted by HM Revenue & Customs

EXECUTIVE SUMMARY

1.1 From the formation of HMRC in April 2005 until March 2010, we have collected £2188.3bn of tax and paid out £157.6bn in benefits and tax credits. Annex 1 has the breakdown by year.

1.2 We have six key objectives. They help us strike the necessary balance between delivering services to the public at maximum value to the Exchequer while building a professional and sustainable organisation:

· maximising revenue flows;

· improving customer experience;

· improving our professionalism;

· reducing the cost base in a sustainable way;

· creating a working environment that motivates our people; and

· transforming the performance of the Department through exploitation of information and technology services.

1.3 Although we have faced a number of delivery challenges since formation in 2005, we are able to demonstrate significant achievements against each of these objectives.

1.4 We have had an important impact in maximising revenue flows, improving our overall compliance intervention yield from £7.4bn in 2005-6 to £12.6bn in 2009-10 [1] . Ministers have recognised this level of achievement and have allowed HMRC to reinvest £917m of savings to tackle avoidance, evasion and fraud in the 2010 Spending Review (SR) settlement.

1.5 Our aim is to improve the customer experience. This goes beyond customer service to ensure that our products and processes are efficient and effective for our customers. We have made it easier for our customers to transact with us and continue to do so by widening and improving our online services and finding ways that we can deal with our customers through agents and intermediaries.

1.6 An example is Self Assessment (SA) Online. Customers and their agents are making online the channel of choice as it offers an easier and more cost effective service than ever before. More than two thirds of SA returns are filed online and numbers are increasing year on year; the online service has received external recognition by winning a number of prestigious awards for excellence and take-up. And our customer service has been recognised through a number of call centre awards, including recognition of Peterlee as winner of the best outbound campaign award in 2009 and winner of team manager of the year award in our St Austell contact centre in 2010. Nonetheless, more recently performance levels in contact centres have dropped and we have put in place a programme of work to address this and are confident that our performance will improve.

1.7 HMRC is committed to improving professionalism within the organisation. We have a programme in place to improve the skills of our staff across our core professions of tax, policy and operational delivery. That includes a programme to upskill our 18,000 tax professionals and recent introduction of a new qualification that will be recognised across government for staff in our debt management and banking function.

1.8 We have demonstrated a good track record in delivering efficiency savings. Between 2005 and 2010, HMRC achieved over £1.1bn value for money savings without overall negative impact on performance. Our Commercial Directorate has been ranked as the top procurement organisation in the latest Office of Government Commerce (OGC) capability review and the pricing benchmark exercise undertaken by Sir Philip Green placed our contracted rates as generally being at the lowest end of the price range.

1.9 Although, we know we have challenges in creating a working environment that motivates our people, we have done a great deal of work with groups across the Department to really look into the underlying issues. We will use this to engage with our people and develop our leadership capability.

1.10 Finally, we are transforming our IT capability. We have renegotiated our IT contract with our suppliers three times since 2006 and this, combined with decommissioning old computer systems, will save £161m a year from 2011-12, while continuing to invest in new technologies and cutting carbon emissions. We are also replacing 25,000 old PCs with new, eco-friendly PCs at no extra cost to the Department. The work we have done to raise the performance and reliability of the Department’s IT, while cutting costs and carbon emissions, has been recognised when we won the National Outsourcing End User of the year 2010.

1.11 HMRC recognises the need for continuing this transformation and our future priorities demonstrate the scale of change we believe we need to deliver against our current and future challenges. However, these challenges should be seen within the context of the externally validated success we have had to date in meeting our key objectives.

HMRC’S PERFORMANCE AS AN ORGANISATION AND WHETHER IT IS DELIVERING ITS KEY AIMS

2.1 HMRC’s Vision is to close the tax gap, to make our customers feel that the tax system is simple and even-handed for them and to be seen as a highly professional and efficient organisation.

2.2 Although we recognise that the coming years present challenges for HMRC, we have a strong track record in making big cost savings, and increasing revenue. We have invested in the tools and skills that will enable us to cut costs and raise revenues even further.

2.3 Between 2005 and 2010, HMRC achieved over £1.1bn value for money savings, and we are on track to deliver about another £300m in 2010-11. From April 2004 to April 2010, we reduced staff numbers by almost 26%, some 24,000 Full Time Equivalents (FTEs) to around 69,000. We also transferred a further 4,641 FTEs to the UK Border Agency during 2009. Annex 1 has the breakdown by year.

2.4 As a result of HMRC’s activity, the percentage tax gap decreased from 9% of expected receipts in 2004-05 to 7.8% in 2007-08. It rose to 8.6% in 2008-09, due largely to an increase in the VAT debt as a consequence of the recession when taxpayers experienced reduced cash flows. Latest published figures show that the increase in the VAT gap (and VAT debt) has reversed in 2009-10.

2.5 We have not been as successful as we would like to have been in all areas of our business and HMRC’s reputation has suffered. As set out in paragraph 3.5, there have been a series of well publicised issues around the introduction of our new National Insurance and PAYE system (NPS). We have taken action to ensure that, in future, codes will not be affected by the data quality problems we experienced early in 2010. This has involved additional clerical and computer checks on outputs which ought to be processed automatically, and we have plans for changes to our software to minimise the need for this exceptional processing in future. We will also work with employers to improve the quality of the data they supply. We have committed to clearing the backlog of "open" PAYE cases from past years by the end of 2012.

2.6 The introduction of NPS was one of the factors that had an impact on recent contact centre performance. For a variety of reasons, such as the peaky nature of tax and claim deadlines, we have not met the industry standard of 90% of calls answered. In 2009-10, we improved the percentage of call attempts answered from 57% to 76%. However, we have experienced a significant rise in demand in 2010-11, with caller numbers rising by 16% in the first seven months of the year. Consequently, the number of call attempts rose by 85% as customers redialled to get through. Call attempts answered therefore slipped back to 40% in 2010 but we are correcting this and developing plans to improve service levels towards the industry standard of 90% call attempts answered. Over the last four years, both overall customer satisfaction with the service and the quality and accuracy of the service have matched or exceeded industry standards and have been recognised through a range of industry awards.

2.7 The recent dip in contact centre performance has contributed to a fall in our previously improving customer satisfaction scores. The last six months have seen falls for all customers, primarily as a result of scores in the "Ease of Getting in Touch" score.

2.8 These issues have had an impact on staff morale within the Department, which was already showing that our people are disengaged with HMRC (although not with their work).The 2010 Civil Service People Survey results give HMRC an Employee Engagement Index score of 34% which has reduced from the 36% achieved in the 2009 autumn survey. HMRC still has the lowest engagement across the Civil Service. Although the reasons for low staff engagement include uncertainty about job security, reduced development and promotion opportunities, as well as lack of confidence in senior management, we also recognise that challenges related to NPS and HMRC’s damaged reputation make it more difficult for us to improve the staff engagement within HMRC; particularly when seen against the backdrop of future job losses over the SR period. We are currently considering these new results and how best we communicate our change programme (see paragraph 6.3 for further details) to our people.

2.9 To help us deliver our Vision, we have developed a customer-centric business strategy using our understanding of customer attitudes and behaviours to focus our efforts where they will have the biggest effect , tailoring our services - and the way we work - to the needs, abilities and motivations of our customers. We aim to shift the behaviour of customers where we can in order to keep our and our customers’ costs to a minimum, maximise revenues , and provide good customer service.

2.10 We are using our customer-centric strategy to re-model and re-design our services, tailored according to our customers’ needs and behaviours. This means we will migrate "willing and able" customers to online channels; releasing more of our contact centre resource to dealing with tax credits customers, where telephone contact is the most effective channel. Services that we have put online have had a high take-up rate. Current rates for online filing are 75% in Self Assessment, 37% in Corporation Tax, 98% in PAYE for employers End of Year returns and 71% in VAT compared to rates of 23%, 2%, 65% and 5% respectively in 2005-06; Annex 1 gives details for years from 2005-06.

2.11 Understanding our customers means we can also reduce their costs. For example, we have committed to reducing the overall costs to business from 2005 levels by 10% by March 2011. This includes offsetting new burdens, equivalent to savings of £510m. We have exceeded this, delivering £564m of admin burden savings for business since 2006, and have significantly reduced information requirements for Self Assessment returns from 2009 and online filing between 2008-11; Annex 1 has year on year figures of reductions.

2.12 We have stabilised and significantly improved the services for tax credit customers over the last few years by improving our understanding of their needs and listening carefully to their concerns. We have cut work backlogs and processing times, reducing complaints and increasing customer satisfaction. We have worked with HM Treasury to introduce a series of policy changes to significantly cut the level of overpayments, which were a big area of customer concern. We have made good progress in recovering HMRC’s reputation as an effective administrator of the tax credits system from what was a very poor position four years ago. We have done all this in close co-operation with the relevant elements of the voluntary sector who acknowledge the progress that has been made.

2.13 We also have a target to reduce the combined levels of tax credit error and fraud to no more than 5% of finalised entitlement by the end of March 2011. Our approach to tax credit error and fraud has significantly changed over the last 18 months. We have used our customer segmentation to get a better understanding of those interacting with the system and have developed data analytics to better understand where tax credit losses are greatest. From this analysis, we developed a series of pilots embedding the principle of "Check First, Then Pay", and leveraging data-matching of both public sector and third party data. This approach is wide-ranging and includes pre-payment checks on new claims, sophisticated risk-based tools, data-matching and mining to identify inconsistencies in customer claims, campaign-style interventions and customer education and support to prevent errors arising. As a result of this we have increased intervention coverage from 123,000 interventions to one million last year, and increased yield from £253m to £770m. We have plans to deliver a further £8bn of intervention yield over the next four years. The National Audit Office’s (NAO) recent report on HMRC’s Accounts noted that our new approaches are beginning to deliver positive results. [1] In October 2010, the Department for Work and Pensions (DWP) and HMRC announced a new approach to reduce error and fraud in the benefits and tax credits system. [2] The approach has been created jointly by the DWP and HMRC and includes additional measures to reduce error and fraud.

2.14 We have developed our focus on tackling the highest tax risks and changing the way we work in our compliance functions. This has improved compliance intervention yield (the additional money that customers should have paid, identified through enquiries, visits and other checks) from £7.4bn in 2005-06 to approximately £12.6bn [3] in 2009-10; Annex 1 gives a breakdown by year.

2.15 We collect almost all tax debt (overdue payments) coming into our debt management processes each year and write offs are relatively low. Historically, write offs, which are the real loss to the Exchequer, run at £5bn-£6bn a year. Our latest Accounts show that in 2009-10, HMRC wrote off around 1% (£6.3bn) of total revenue and around 90% of that was due to insolvency where further debt pursuit is barred by statute. The remaining 10% is lost either because debt cannot be collected cost effectively or debtors cannot be traced. We achieve this high rate through a number of actions including making it easier for willing and able customers to pay on time by accepting debit/credit card payment or setting up direct debits online, and enhancing access to "time to pay" arrangements for those in genuine, but temporary financial difficulty through our Business Payment Support Service (BPSS). Between its launch in November 2008 and the end of September 2010, some 371,200 "time to pay" arrangements were granted involving £6.38bn of tax. £5.41bn has already been paid over to HMRC from mature arrangements and over 90% of tax is being paid in line with agreements. The launch of the BPSS has been almost universally welcomed both as a lifeline for business and as a pragmatic and cost effective way of collecting tax debt. We have brought an increasing number of customers into compliance through BPSS by encouraging people who need help to contact us before their payment becomes overdue and agreeing with them how to pay their tax bill.

2.16 We have delivered these improvements against a backdrop of tight financial settlements. In SR04, HMRC delivered within a flat rate cash settlement, while absorbing the very significant upfront costs of merging the Inland Revenue and HM Customs and Excise to form HMRC. In SR07 HMRC reduced costs year on year by 5% in real terms whilst maintaining performance and delivering departmental objectives. We accessed £300m from a Modernisation Fund over the three years from 2007-08 to 2009-10 to meet specific costs directly related to transformation and achieving ongoing efficiency savings.

2.17 We have done this by making significant efficiency savings by modernising and improving processing operations, using PaceSetter [4] continuous improvement techniques and transformation programmes. Savings have also been made through efficiencies in IT, other central and corporate services, and ensuring best value procurement. However, these savings have not been at the expense of investment in building and sustaining our business. They have been made in a sustainable way. Between 2007 and 2010 we invested £1,750m in tools and skills that will allow us to further cut costs and raise revenues, and delivering cross Government services, for example:

· investing in online filing for PAYE, Self Assessment, VAT and Corporation Tax and moving further services online, such as creating the cross-Government Businesslink website which HMRC runs for all of government;

· improving our compliance capability through a programme of improvements. This includes new risk tools and changing the way we work with Large Business to improve revenues, customer experience and efficiency;

· creating the Government Banking Service;

· delivering policy changes such as the HMRC Powers Review which aligned tax penalties, compliance checks and our investigative powers across taxes;

· improving our productivity by expanding Lean [5] ways of working across HMRC through PaceSetter;

· investing in the National Insurance and PAYE Service (NPS) to replace old systems, thus giv ing a single view of taxpayers, rather than having their information stored on different regional database s ; and

· working with the Department for Business, Innovation and Skills and Companies House to create a "one-click" online registration process for new businesses.

Whether paye reform is necessary

3.1 The PAYE system was introduced in 1944. Until the introduction of the new National Insurance and PAYE service (NPS) its processes had largely remained unchanged, with the management of individual records based on the location of employers. However, working patterns have changed. The job market is now much more flexible and it is relatively common to have more than one job or pension and to change employer frequently. This has led to difficulty in keeping track of all the records relating to one person.

3.2 PAYE aims to collect the right amount of tax during the year but there are circumstances where this is not possible, for example when taxpayers or employers do not tell us about changes in circumstances, when a person with two jobs gets an income increase moving them to a higher tax band or when a person receives a new benefit in kind, such as a company car.

3.3 PAYE has always included a process to reconcile the taxpayer’s account, after the end of the year, and make any adjustment needed. Each year most accounts are reconciled, with the right amount of tax being deducted over the year. Under and overpayments are more likely to happen when people have more than one employment or pension, or change employer frequently, or are in receipt of benefits in kind and expenses. And as the job market is increasingly flexible and unpredictable, this has become relatively common.

3.4 As the previous PAYE IT system was organised around employers and recorded data on 12 regional databases, this meant that some individuals had more than one record often on different databases. This made the process of reconciling records at the end of the year more and more difficult. NPS creates a single record of each individual’s pay, tax and national insurance details on one database. As a consequence, HMRC can look at the whole of an individual’s liability in one place. The new system will deal with most over and underpayment cases automatically, issuing a repayment or a request for payment, whereas in the past underpayments and overpayments had to be dealt with clerically which was resource intensive.

3.5 When we conducted the annual issue of tax codes for the first time using the new NPS system, incorrect codes were sent to a number of customers. This was a result of the interaction of NPS with wrong, or out of date, data that had been migrated from the old PAYE computer system. We took action to resolve this by diverting resources to check over 9 million customer records that were at risk of incorrect tax codes. As a result all codes that were affected by the data issues were checked and, where necessary, reissued before they were used by employers or pension payers. We are therefore taking a number of concerted actions to resolve these issues related to NPS as modernisation of the PAYE system will be dependent on the effective functioning of the system.

3.6 The transition to NPS also led to a delay in processing over and underpayments in respect of the 2008-09 tax year, so that they were issued at the same time as those for 2009-10. To help manage the volume of cases and provide a satisfactory customer service, HMRC agreed to write off all underpayments of less than £300, and set up a process to ensure that those who had larger amounts to pay did not incur interest charges.

3.7 Looking to the future we will use more frequent or Real Time Information (RTI) to improve the tax system.

3.8 Collecting information from employers when the employee is paid, rather than waiting for it to be submitted in end of year returns, will, in time, allow us to automatically update and correct tax codes throughout the year on a targeted basis, leading to a more accurate service for many individuals. RTI should also reduce the burdens on employers by reducing the requirement for them to submit separate returns. For example, we will be able to update records automatically when a taxpayer changes employer, potentially removing the need for the separate P45 process, and making sure that the individual pays the right tax sooner.

3.9 Real Time Information will also help improve the accuracy of tax credit awards and income related benefits, cutting error and fraud. It is also a critical enabler for Universal Credit and we are working closely with DWP on its development.

3.10 We plan to have the infrastructure in place in 2012. We will then progressively migrate employers to the new system.

3.11 The investments in NPS and RTI will substantially improve PAYE operation and attune it to 21st century work patterns. We will be working with employers, businesses and representative bodies to ensure that these modernisations work as effectively as possible for both them and HMRC. We can then evaluate the need for further enhancement in the light of changing employment patterns and technology.

What the implicatIons are of Hmrc’s spending review settlement

4.1 The scale of the deficit means there has never been a more important time for us to be an administration that is at once more efficient, more flexible in dealing with customers and more effective in bringing in revenues. Our settlement reflects the vital dual role that HMRC plays in reducing the deficit. We will make significant savings – reducing costs by 25%, including a 33% reduction in administrative costs. We will reduce our capital spend by 44%. But we will also reinvest £917m of these savings to tackle avoidance, evasion and fraud and bring in an additional £7bn of revenues a year by 2015. Additionally, we are committed to delivering £2bn per year in yield from tackling tax credit error and fraud.

4.2 Making these changes means focusing on our core functions and transforming our organisation.

4.3 We will become smaller. We expect to have around 56,000 FTEs by April 2015, about 10,000 less than in April 2011. We have developed a customer- centric business strategy and this will reduce the costs of collecting tax for HMRC and taxpayers, whilst enabling us to reinvest in efforts against tax avoidance, evasion and fraud. We know that our products and communications drive contact, and, that in some areas, our processes create re-work and delay. By simplifying products, processes and our letters to taxpayers we can reduce confusion and error, and the need for many customers to contact us. We will also continue to improve and expand the use of our online services and the degree of automation in key processes. These steps will enable us to re-design our internal organisation, removing waste and costs by streamlining our organisation.

4.4 In common with other departments, our capital expenditure has been reduced in this Spending Review compared to SR07. While RTI for PAYE is a significant new IT project, in the main our plans are based on reusing and leveraging the insight and capabilities we have already created, such as our customer-centric strategy, online services and risk targeting tools, to better effect.

WHETHER HMRC IS ABLE TO DELIVER THE GOVERNMENT’S AIMS ON TAX COMPLIANCE

5.1 HMRC’s ability to deliver the government’s aims on tax compliance are key to our successful delivery of the Spending Review commitments. While we do not underestimate the challenge ahead, HMRC has a proven track record of delivering increased productivity alongside efficiency savings. Since 2005 HMRC compliance resource [1] has reduced by approximately 5,000 to just over 20,000 while delivering an overall increase in compliance yield performance from £7.4bn in 2005-06 to £12.6bn [2] in 2009-10 (see Annex 1 for yearly figures), for example:

· increased Large Business Service yield from £3.6bn in 2005-06 to £6.3bn [3] in 2009-10. In addition, between April 2007 and April 2010, the number of LBS enquiries which were over 18 months old has declined by 58% from 2,612 to 1,092;

· average productivity improvements of 10% per annum in Local Compliance from better targeting resource to risk. In some areas we have been able to double the average yield per case, for example Income Tax full enquiries average yield has moved from £9,646 in 2005 to £24,153 in 2009-10;

· Specialist Investigations delivered yield of £1.8bn and protected revenue loss of over £0.68bn in 2009-10, exceeding annual performance targets by over 16% and yielding total future revenue benefits of £0.54bn, bringing the total revenue protected to £1.22bn; and

· achieving substantial reductions in carousel fraud on VAT repayments through an extended verification programme and reduced the losses by £1bn in alcohol, tobacco and oils sectors.

5.2 All this has been achieved through an increased focus on tackling the highest risks and changing the way we work. We have increasingly made use of intelligent technologies to profile for risks and assist in the selection of cases for investigation. We have far greater capability to link our own and third party information. We have also used PaceSetter techniques to help us take a fresh look at all our business processes from a customer point of view.

5.3 W e plan to build on our successes , whilst focusing on activities that change customer behaviour and improve the underlying levels of voluntary compliance. For example, we are developing a comprehensive offering of online support, including a range of interactive tools, to help small and medium enterprises (SMEs) understand their obligations at key points in their lifecycle, particularly when they are starting up in business. We have targeted our approach i n order to positively influence customers’ attitudes to compliance by ensuring we tackle not only criminal attacks but also difficult areas su ch as evasion and avoidance , e nsuring we maximize the impact of each intervention.

5.4 For l arge businesses , the relationship management approach has delivered successes to date both in terms of tax revenues and customer experience, so we will extend and develop th is . We will increasingly work in real time with these customers , and improve the speed of dispute resolution by rolling out best practice (tight project management and collaborative engagement) from specific initiatives such as HMRC’s High Risk Corporate Programme. A new management information system will be introduced for the whole large business population, allowing us to identify and tackle the biggest risks wherever they are. We will continue to tackle avoidance vigorously: minimising opportunities through policy and legislative design; detecting it quickly where it still arises; and challenging it robustly, using litigation where appropriate.

5.5 We will tackle avoidance in wealthy individuals through extending our coverage of the 150,000 individuals within the scope of the 50% tax band where there is evidence of avoidance. We will work jointly with other fiscal authorities, using innovative approaches to limit the opportunities for individuals to conceal untaxed assets offshore.

5.6 Outside these specific groups, we will deploy more compliance staff to tackle those areas where there is the highest risk of non-compliance. Alongside this we will reduce the number of customers who unintentionally get things wrong by redesigning our processes to reduce the potential for errors and by giving better support to those who are trying to get it right. This will allow us to concentrate our most skilled resource on deliberate tax evaders. This approach will include:

· using our better knowledge of customers’ needs and behaviours to tailor our compliance interventions to get the best results;

· using a light-touch approach to correct non-deliberate errors at low cost to HMRC and to customers, through a quick exchange of letters or telephone calls;

· targeting high-risk groups such as labour providers through specialist teams and compliance taskforces;

· using a campaign approach to bring large numbers of customers back into full compliance with their tax obligations; and

· increasing the number of criminal investigations and "Civil Investigation of Fraud" cases that we carry out; relentlessly pursuing those who break the rules.

5.7 To counter criminal attacks we will improve our methods for preventing, deterring, disrupting and dismantling criminal operations by:

· strengthening our authentication and validation processes;

· deploying risk teams to ensure better protection of repayments against criminal attack; and

· developing cyber crime teams to tackle attacks on our electronic systems and strengthen our criminal investigation response.

5.8 Our strategy includes the use of more robust and innovative sanctions such as naming deliberate defaulters alongside new behavioural based penalties. These are all designed to bolster our deterrent leverage and create an optimal environment for tackling evasion and should result in considerable tax gap closure.

what hmrc’s priorities should be in the future

6.1 Looking to the future, we have a number of key priorities. Firstly, we will stabilise and improve the service we provide. Secondly, we will maximise revenues by transforming our compliance capability. Thirdly, we will implement the evolving policy agenda.

6.2 We are acutely aware that we are not always meeting the needs of our customers now; particularly our PAYE customers. We recognise the need for a major and concerted programme of work to stabilise the PAYE system by protecting resources in PAYE until 2012 and clearing "open" cases. Together with the improved access to payroll data from the Real Time Information programme, this will allow us to improve levels of customer service and give taxpayers confidence that their affairs are in order. The implementation of RTI and the improvements for taxpayers are dependent on improving PAYE data quality and the successful migration of employers to the new system. Both aspects are being taken forward as projects within HMRC’s RTI programme.

6.3 To support this, we will focus on improving our service. We are changing the way we are organised to ensure HMRC delivers the scale of change we are committed to. We will reduce management layers, ensure clear accountabilities and build our leadership capability. There will be fewer staff and fewer offices and we will continue to improve our overall productivity, focus on the areas where we can have deliver greatest value, improve sick absence and embed PaceSetter across the whole of HMRC. We have put in place a single change programme with the Chief Executive as Senior Responsible Officer and led by a Director General. We will plan and allocate resources across the organisation corporately, but deliver locally using front line expertise and knowledge. We consulted extensively with external stakeholders in the period following the Spending Review announcement and a series of events were hosted by our C hief E xecutive , non-executive Chairman, senior managers and our Minister , the Exchequer Secretary to the Treasury .

6.4 Our second priority will be to deliver a step change in our ability to tackle avoidance, evasion and criminal attacks. To target our efforts on these risks we will shift our focus as an organisation to design out error and stop opportunities for avoidance before it can happen. Where individuals and businesses continue to avoid and evade tax, our approach will be robust as we ensure that everyone pays their fair share of tax. We will accelerate efforts on avoidance and offshore evasion; use more dedicated tax experts to tackle high risk areas for large businesses; undertake targeted campaigns to address risks cost-effectively and strengthen deterrence; significantly increase coverage against tax evasion, with more investigations and prosecutions; and strengthen debt collection techniques. We will also tackle organised criminal attacks, in particular repayment and excise frauds. We will increase customer understanding to identify the customers that pose the highest risks, and the interventions that will yield the biggest returns and will support us to deliver £7bn per year in additional revenues by 2015.

6.5 Finally, our business does not stand still. We stand ready to implement the funded commitments for tax administration related to the policy agenda. These include changes to Child Benefit, Universal Credit, and implementing the tax proposals in the Scotland Bill. We will support the Office of Tax Simplification and introduce further changes that the Government agree as part of their review. We will work with HM Treasury, through the policy partnership, to ensure that tax policy takes account of our customer understanding and ensure operational feasibility to deliver Ministers’ policy objectives.

December 2010