Policy paper

2010 to 2015 government policy: making the administration of the tax system more efficient

Updated 8 May 2015

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

This is a copy of a document that stated a policy of the 2010 to 2015 Conservative and Liberal Democrat coalition government. The previous URL of this page was https://www.gov.uk/government/policies/making-the-administration-of-the-tax-system-more-efficient. Current policies can be found at the GOV.UK policies list.

Issue

HM Revenue and Customs (HMRC) needs to be smaller and more efficient, updating the organisation and the services we provide to customers.

Making efficiency savings will enable us to invest in measures to reduce tax evasion and avoidance and narrow the tax gap.

Actions

By 2015, HMRC will reduce our costs by 25% compared with 2011. However, we will reinvest almost £1 billion of these savings in measures to bring in additional revenues.

To achieve these savings, HMRC will:

• make it easier for customers to self-serve, giving them more control over their own tax affairs, for example through better digital services
• make processes simpler and reduce the need for customers to contact HMRC
• provide extra help for those who need it, especially around major life events, such as retirement or bereavement
• invest more in relevant skills for our staff, to improve our understanding of tax risks, tax avoidance and how businesses make commercial decisions
• consult tax agents on a new approach, which will give them more control of their clients’ transactions.

Background

HMRC is a large and complex business. Our customers include nearly every UK citizen and business. Every day we collect more than £1.2 billion in revenue and pay out more than £109 million in benefits and credits.

The Chancellor’s 2010 Spending Review committed HMRC to making efficiency savings of 25% by making better use of new technology, using less office space and spending less on IT contracts.

HMRC’s Business Plan 2012 to 2015, published in 2011, sets out the changes that we’re making to our products and services and explains why we’re making them.

During 2010 to 2011, we reduced the size of HMRC’s workforce by 2,400 and released 116,000 square metres of office space. Since 2005, HMRC has achieved real-terms savings of £1.4 billion, at the same time as bringing in more revenue than ever before.

Appendix 1: what HMRC’s change plan means for customers

This was a supporting detail page of the main policy document.

HM Revenue and Customs (HMRC) is changing the way it works, updating the organisation and the services we provide to customers.

For individuals, HMRC will further support and improve customer services, particularly around PAYE. Over the next 4 years we will make processes simpler and easier to use, and increase opportunities for customers to self-serve, reducing the need for them to make contact. There will be more help for those who need it around major life events, such as retirement.

Small and medium enterprises

For small and medium enterprises (SMEs), work is already underway on many improvements to the online channel. By 2012 new SMEs will be able to register for all their main taxes using a single online service. They will be able to view their liabilities for the main taxes in one place.

Interactive guidance will give customers more reassurance that they have got it right. But where businesses are tempted or choose to break the rules HMRC will devote increasing resources to deterring, catching and monitoring them.

Large business customers

For large business customers, HMRC will continue with its current approach, which has already improved the customer experience and increased tax revenues. In addition to this, HMRC will invest more in relevant skills for the department’s people to improve understanding of tax risks, tax avoidance and what drives commercial decisions.

Where avoidance persists it will be detected through the recently extended and strengthened disclosure regime, and dealt with vigorously.

Agents

Agents are important intermediaries in HMRC’s relationship with businesses and individuals. HMRC is already improving services for agents.

We consulted agents in 2011 on a new approach to give agents a greater ability to process transactions on a client’s behalf, and is now taking forward this work.

Tax credit customers

For tax credit customers, HMRC will tailor its approach to different customer segments to ensure they get the right support at the right time. Working closely with the Department for Work and Pensions, the Department will increase efforts to identify and prosecute those who seek to defraud the system, continuing the ‘check now, then pay’ approach.

HMRC will increase the range of checks completed on the information that customers provide, and tighten controls as we issue new claim packs.

Appendix 2: developing HMRC’s workforce

This was a supporting detail page of the main policy document.

We want HM Revenue and Customs (HMRC) to be one of the best employers in the country, because we know our success rests on the performance and abilities of everyone who works here.

HMRC is one of the largest employers in government, with 62,900 staff (full time equivalent). Our priority is to have a workforce doing the right work, in the right place with the right skills to collect the taxes owed and make payments to those who are entitled to them in the most efficient way possible.

We have been given more than £150 million additional investment over the next three years by the government in the December 2013 Autumn Statement to reduce fraud, error and debt in the tax credits system and to continue to tackle tax avoidance and evasion. This is on top of earlier reinvestment of almost £1 billion to boost our compliance work which is providing opportunities for our people to learn new skills, earn promotion and to continue to develop rewarding careers.

We have not been asked to make cuts to our budgets, although we will have to continue to find savings. As part of this process, we have already reduced our workforce to become a leaner, more efficient organisation.

What we are doing

We have reduced management layers in HMRC to free up people for frontline, customer-facing and technical roles, helping us to concentrate on the core purpose of collecting tax and administering benefits.

Our Executive Committee members and senior leaders are spending more time with their teams to listen to their issues and concerns, and they’re making improvements, such as improving how we manage change.

Our “One HMRC, One Deal” programme sets out what our staff can reasonably expect from us as an employer and what HMRC expects from them in return.

We are also investing in technical training, to give people who are redeployed to new roles the new skills they need. We also help them with application forms, CVs and interviews. For example, some of our people will be redeployed from work on tax credit debt to collecting additional tax debt, as we begin to use debt collection agencies to expand this part of our work, as announced in the Autumn Statement.

Staff development

• HMRC have recruited more than 6,000 people into Enforcement and Compliance roles over the last two years
• we promoted 1,674 people into compliance roles from November 2012 to October 2013
• in November we launched a promotion exercise for a further 500 staff
• at least 120 graduates are expected to join our four-year Tax Professional Development Programme in the coming months, following the 200 who joined in September 2012
• we also recruited 156 staff on our Business-Driven Development Programme, which offers a way of progressing to Higher Officer grade
• we have also promoted about 1,950 administrative assistants to administrative officer status in an ongoing exercise that began in 2012

Efficiency drive

• we will have reduced our staff by about 44% to 52,000 by 2016 from 97,000 in 2005 to 2006
• we have reduced the number of Senior Civil Servants (SCS) from 400 to 313 since December 2012, meeting the Cabinet Office target to cut the SCS wage bill by 20%
• we have also cut the number of manager posts from 11,108 in September 2010 to 8,787 by September 2013

Our staff engagement score increased from 41% to 44% this year, following a long period of change. It is still well below where it needs to be and we are working hard to improve it.