Corporate report

HMRC Capacity Building Unit: evaluation (April 2020 to March 2022)

Updated 26 June 2023

1. Overview and purpose

A 10-year programme to increase the capabilities of tax authorities in developing countries.

	Details
Programme title	Tax Reform and Institutional Development: HM Revenue and Customs (HMRC) Tax Capacity Building Unit (CBU)
Programme costs	2020 to 2021: £3.171 million, 2021 to 2022: £4.030 million
Programme start and end dates	The Capacity Building Unit was formally established in April 2015. Its funding currently runs to April 2025 under the settlement reached at the most recent Spending Review covering the period 2022 to 2023 and 2024 to 2025.
The programme	The Capacity Building Unit delivers tax capacity building to revenue authorities (including finance ministries when appropriate). This means helping developing countries to bring in the taxes they are due and to strengthen their administration in support of the UK’s international tax, transparency and development commitments. Priority countries for our capacity building align with the UK’s Official Development Assistance (ODA) requirements and cross-government International Development strategies. We use HMRC staff to build capacity, principally via peer-to-peer techniques and methodologies.
Countries	In the review period the Capacity Building Unit operated programmes in eleven countries, at various stages in their lifecycle, from inception to closure. The countries where the Capacity Building Unit operated programmes are from the list of those that are eligible for Official Development Assistance (ODA): where UK government aid promotes and specifically targets the economic development and welfare of developing countries. The UK works with countries that are listed as eligible for ODA by the Organisation for Economic Cooperation and Development (OECD) Development Assistance Committee (DAC): Ethiopia, Ghana, India, Jordan, Kenya, Nigeria, Pakistan, Rwanda, Sierra Leone, Uganda and Zimbabwe.
Official Development Assistance	The Capacity Building Unit programmes are funded directly from Official Development Assistance – also known as the overseas aid budget.
Evaluation period	1 April 2020 to 31 March 2022.

2. Background and context

The UK engages in tax capacity building alongside multilateral organisations and other donors (including developed countries). It works with other OECD countries and donors from a variety of backgrounds using formal and informal networks, including the OECD Forum on Tax Administration’s Capacity Building Network, to help coordinate global efforts to raise developing countries’ ability to administer their tax regimes and to interact with the international tax system.

The Capacity Building Unit peer-to-peer operating model is delivered both by using in-house experts and by drawing on short-term expertise from wider HMRC. As described above, for the period April 2020 to March 2022, it operated programmes in 11 countries.

The Capacity Building Unit provided support with Transfer Pricing, Tax Transparency, Human Resources and Organisational Design and Compliance, in countries where it did not operate an ongoing wider programme. These topics are the Capacity Building Unit’s focus both because they are the issues that most frequently are brought up by developing countries and because the UK has comparative strength in those areas of tax administration.

The Capacity Building Unit also delivers the Commonwealth Association of Tax Administrators (CATA) Senior Leadership Programme.

The Capacity Building Unit aligns with His Majesty’s (HM) Government’s International Development Strategy, which encompasses the UN Sustainable Development Goals and the Addis Tax Initiative (2015).

The Capacity Building Unit’s main governance mechanism is its Steering Group, with representatives from the Foreign, Commonwealth and Development Office (FCDO), HM Treasury (HMT) and HMRC. This group has responsibility for decision-making and oversight of the programme as a whole, including issues such as resourcing and country selection.

The Capacity Building Unit maintains close relations with the FCDO, particularly around tax and public finance programmes. It liaises regularly with FCDO country offices.

Operational level discussions are held at the programme management committee, a working group jointly attended by FCDO, HMT and HMRC. Discussions, governance and challenge focus on the outcomes articulated in the Capacity Building Unit’s Theory of Change and the programmes’ ‘logframes’. A logframe is short for Logical Framework, a planning tool consisting of a matrix which provides an overview of a project’s goals, activities and anticipated results. It provides a structure to help specify the components of a project and its activities and for relating them to one another. It is intended to make clear to both parties what the goal of activities is.

The Capacity Building Unit is also developing a process for the ongoing sharing of success stories.

This review covers the period April 2020 to March 2022. It considers the extent to which the programmes’ outputs are meeting the objectives of the Capacity Building Unit. It provides an assessment of progress and identifies lessons and considerations for future years.

The start of the review period coincided with the UK-wide lockdown in response to the COVID-19 pandemic. Much of the review period therefore includes periods of enforced travel restrictions, in the UK and abroad. This was then followed by the gradual relaxation of these restrictions, albeit at a different pace internationally, as vaccine programmes and other countermeasures mitigated COVID-19 impacts. In July 2021 (in England) most legal limits on social contact were removed and closed sectors of the economy reopened. Full resumption of in-person and in-country activities, where appropriate for Capacity Building Unit programmes, soon followed.

This review focuses mainly on the adaptation of programme delivery to a virtual state, with the resumption of in-person visits later in the period. It discusses challenges, positive impacts, and lessons that the Capacity Building Unit can learn from the experience.

This review has been informed by interviews and other interactions with Capacity Building Unit staff, long-term advisers, HMRC staff, HMT staff, and FCDO staff (UK and overseas). It also takes account of feedback from counterparts from partner revenue authorities and donor organisations.

3. Evaluation summary

The Capacity Building Unit continued successfully to deliver vital support to developing countries, even during challenging periods when it had to operate entirely remotely. Despite the pandemic restrictions the Capacity Building Unit was able to adapt and provide sustained technical assistance using virtual means, thus ensuring that all commitments were met, as illustrated by, but not limited to, the following examples:

• progress against recommendations in multiple revenue authorities linked to an improvement in tax collection
• agreeing new memorandums of understanding, terms of reference, specialist logframes and workplans with multiple revenue authorities
• realigning a programme to support the UK government’s commitments to the rights of women and girls, as reaffirmed in March 2022 by Baroness Deborah Stedman-Scott, Minister for Women, at the 66th UN Commission on the Status of Women
• increasing the number of countries supported with data analytics from one to nine (including one wholly completed during the period of travel restrictions)
• establishing and proving the value of the Transfer Pricing support programme with multiple countries
• adapting programming in the light of experience and using that experience to inform future activity to support capacity building
• offering targeted self-development and learning to improve the Capacity Building Unit offer on HR
• supporting the introduction by Nigeria of fully reciprocal exchange of information under the Common Reporting Standard with 111 participating jurisdictions
• helping Ghana prepare for its successful June 2022 Information Security Assessment, which provided similar access

The Capacity Building Unit’s internal report on performance shows its programmes as on track during the period covered by this review. Where circumstances changed, the Capacity Building Unit adapted its activities and objectives to reconcile with the revised needs of partner countries. Changes to indicators and milestones were explicitly articulated and agreed at the appropriate governance level.

COVID-19: impact of restrictions

Although COVID-19 restrictions diminished or removed the Capacity Building Unit’s ability to deliver face-to-face, the issues of tax administration that challenge developing countries remained broadly the same: this includes Data Analytics, Tax Transparency, Transfer Pricing, Organisational Design and Compliance.

There is no single answer to the question of how COVID-19 impacted Capacity Building Unit delivery. While on-site missions are the standard form of implementing bilateral capacity building projects, the COVID-19 pandemic led the Capacity Building Unit to review the way in which it delivers assistance. This highlighted the potential of remote or virtual support as a sustainable and valuable tool in capacity building, in times where cross-border travel is greatly reduced. As many tax administrations have introduced and enhanced their remote working capabilities, this has allowed the Capacity Building Unit to expand the range and impact of capacity building assistance that can be conducted remotely, potentially allowing for more frequent contact with the recipient authority.

However, in-person delivery mitigates any adverse impact of IT system challenges and infrastructure, or dissimilar IT platforms between HMRC and revenue authority partners. These challenges were brought into focus during the COVID-19 pandemic.

The Capacity Building Unit’s own assessment, as well as feedback from respondents outside the Capacity Building Unit, suggests that some programmes, or specific elements of those programmes, could have been more effective had in-person delivery been possible. Conversely, feedback suggests that significant progress was made even without in-person delivery. Those reporting on successful outcomes in the absence of in-person activities believe the main contributing factor to those successes was the dedication and expertise of the individuals and teams working on capacity building initiatives, both within HMRC and in partner administrations.

Notwithstanding the many challenges presented by COVID-19 and the impact they had on the Capacity Building Unit’s peer-to-peer operating model, the Unit adapted delivery, mitigated adverse impacts to make good progress in some new programme strands, and maintained momentum in others.

In particular, many programmes or work strands were at the scoping stage, when it is especially challenging to establish traction without face-to-face interaction. Notwithstanding those barriers, the Unit achieved momentum, with some notable successes.

To compound these challenges, most embedded long-term or regional tax advisers were drawn back to the UK as the pandemic took effect, meaning that valuable in country support was lost.

In addition, many revenue authority personnel were themselves diverted from normal duties to work on domestic COVID-19 tax countermeasures, as were some Capacity Building Unit team members.

Resumption of in-person activities

Once international travel was again possible in certain circumstances, changing COVID-19 regulations and restrictions, both in the UK and in partner countries, added to the administrative challenges. This included the requirement for internal sign-off processes to confirm certain standards were being met before in-person activities could take place.

Conclusions

The Capacity Building Unit successfully provided tailored assistance to support developing countries’ tax administrations during this period. This strengthens their ability to finance their own development priorities, helps lower their dependence on aid, and assists in the implementation of international standards which deters non-compliance and tackles tax evasion. It supported their ongoing delivery during the pandemic period and during the recovery, in line with the UK’s tax, transparency and development commitments. It enhanced developing countries’ ability to provide a positive environment for better business, increase security of foreign investments and reduce tax barriers to global trade.

This was a period in which in-person engagement was largely not possible. In-person activities help the Capacity Building Unit develop rapport, build relationships and check its understanding of what is going on with partners. However, as described above, the Unit has learnt that remote or virtual support can be a valuable tool for delivery.

Also, many of the teams in revenue authorities with which the Capacity Building Unit works were themselves diverted to work on COVID-19 mitigation measures.

Despite the many challenges, the Capacity Building Unit team members adapted and learned and ultimately delivered well during this period of extraordinary challenge. In doing so, the Unit met the UK government’s objective to support Sustainable Development Goals (SDGs). Tax capacity building was a priority of the UK’s 2013 G7 Presidential legacy and the UK continues to take this forward through the G20. This work also consolidates and maintains the UK’s position as a global leader in tax capacity building, harnessing its skills and comparative advantages to support developing countries

4. Summary of activity in main countries and of activities not associated with a country programme

The following observations are not intended as exhaustive accounts of activity in the review period. They present summaries, based on the teams’ comments on how they responded and adapted to the issues presented by the COVID-19 pandemic.

Ethiopia

A country visit in March 2022 enabled the new programme team to meet its senior stakeholders and re-engage post-Covid and conflict, demonstrating HMRC/UK commitment to continuing support. In-person discussions were held with the State Minister of Revenue (and others) who confirmed HMRC as the priority partner with capacity building for the Ministry of Revenues. The Capacity Building Unit met with the Ministry of Revenues Transfer Pricing team, as well as individuals from the risk directorate.

There were productive scoping sessions with Risk Management Directorate. Senior and working level contacts developed and preliminary workplan agreed in April 2021.

Ghana

The High Net Worth Office and Data Analytics Unit benefited from data analytics training in March and July 2022, which has allowed them to make good use of domestic third-party data in profiling potential high net worth individuals and to look into these further in a number of cases. HMRC experts supported the Ghana Revenue Authority to prepare its Information Security Management (ISM) re-assessment in June 2022. This allowed them to achieve Common Reporting Standard (CRS) membership in time to receive 20% of data from the jurisdictions currently participating with the Standard. The full range of reciprocal data will be received in September 2023. The Ghana Revenue Authority continues to work with HMRC to launch a voluntary disclosure ‘offer’ targeting high net worth citizens and encouraging them to come forward ahead of any compliance action by the Ghana Revenue Authority.

The Capacity Building Unit has embedded a long-term adviser with the Ghana Revenue Authority who has been in post since February 2020. The adviser leads on the development of a Compliance Improvement Plan for Ghana and helped establish a crosscutting ‘integrated compliance improvement group’ comprising 30 staff across all compliance disciplines. The adviser’s strategic proposals for future recruitment and training were endorsed by the Ghana Revenue Authority top management in December 2022. The Capacity Building Unit is working with the data analytics unit to develop a compliance dashboard to improve senior leadership oversight of compliance performance and to better inform compliance planning across the Ghana Revenue Authority.

India

The FCDO colleagues in country supported the Capacity Building Unit in its understanding of structural arrangements of the 2 Indian revenue boards: Central Board of Direct Taxes (CBDT) and Central Board of Indirect Taxes & Customs (CBIC).

Using that insight, high level introductory meetings were held remotely between HMRC and both the Indian revenue authorities in March 2021. The areas of interest were Making Tax Digital, Strategic Picture of Risk, Data Driven Policy, Customer Communications and Engagement Strategies, Risking Model and Risking Parameters, Data Science, Predictive Analytics in Compliance, Behavioural Insights and Taxpayer Services. Subsequently remote scoping was carried out and proposals were shared over this period.

Regular weekly Foreign, Commonwealth and Development Office India calls were maintained and engagement with Central Board of Direct Taxes progressed with virtual bilateral calls.  Work on the MoU continued with CBDT and HMRC, alongside preparing for an in-person visit to India (which took place in August 2022).

Jordan

The first in country visit since COVID-19 took place at the end of the review period. The HMRC team included risk and compliance data experts.

The team delivered continued technical assistance to the Income & Sales Tax Department. It engaged with key stakeholders in the FCDO and met with other donor partners working in Jordan (such as US Agency for International Development and the International Monetary Fund) to coordinate delivery and determine next steps.

The Income and Sales Tax Department made significant progress on the agreed recommendations from previous visits, despite the impact of the pandemic, including evidence of a link to an improvement in tax collection. A lot of work was also undertaken with assisting the tax authority in preparations for a Global Forum peer review by working through the legislation to strengthen areas around Automatic Exchange of Information in line with international standards.

Activity and engagement during the review period brought out the need for future peer-to-peer support to concentrate on tax transparency, with the Income and Sales Tax Department looking to strengthen exchange of information and data analytics capabilities.

In the period from January to June 2021, Transfer Pricing assistance was also requested by the Income and Sales Tax Department. The advice sought was largely related to the updating and amendment of Jordan’s Transfer Pricing legislation and guidance. Draft regulations were reviewed in detail and comments and suggestions offered, most of which were adopted or acted on. During the review process, regular contact was maintained with OECD counterparts, who were working on part of the regulations, to ensure no duplication of effort or conflicting advice.

Kenya

Data analytics specialists scoped and started the workstream remotely. The programme supported the Kenya Revenue Authority in its development of data policies and strategy and established positive working relationships. The Capacity Building Unit and Kenya Revenue Authority teams viewed this work as highly successful, leading to new proposals for data use by the Kenya Revenue Authority. A country visit took place in February 2022 to review progress on the talent strategy work strand. This helped to reset assumptions on engagement and explore any obstacles to progress, resulting in refreshed milestones and related activities.

Capacity Building Unit specialists supported drafting and reviewing legislation and regulations for Kenya Revenue Authority’s Automatic Exchange of Information requirements; the primary legislation is now in place. Support for initial industry consultation, which is ongoing, was also provided.

Nigeria

Support for Nigeria’s implementation of Automatic Exchange of Information included assistance with linking their IT system to the OECD’s Common Transmission System, a two-day webinar with 700 industry representatives (August 2020) and a peer-to-peer learning session (November 2020). Follow up support included an experience sharing session on analytics and data (September 2021).

In November 2021 the Capacity Building Unit met in person with the newly appointed Executive Chairman for the Federal Inland Revenue Service (FIRS) in the UK, and agreed a bilateral programme between HMRC and FIRS. Following this, a positive high level remote introductory meeting was held with FIRS directors, HMRC and FCDO highlighting areas of interest specifically to assist FIRS to become a data-centric organisation. As a consequence, a FIRS Single Point Of Contact (SPOC) was appointed and FIRS work strand business leads identified. Initial conversations for various work strands were held with requests received for support in Data, Country-by-Country Reporting, Transfer Pricing and Audit. Preparations began for the first in country visit (in June 2022).

Pakistan

The Pakistan programme of technical assistance to the Federal Board of Revenue has multiple strands:

• Automatic Exchange of Information/Exchange of Information on Request
• Transfer Pricing
• Country-by-Country Reporting
• data analytics
• change management
• compliance risk management
• Tax Inspectors Without Borders programme for criminal investigations
• anti-money laundering

Ad hoc support has been provided on Automatic Exchange of InformationExchange of Information on Request and change management.

HMRC provided technical advice around Country-by-Country Reporting and data matching which the Federal Board Revenue used and implemented the majority of recommendations, helping to improve and streamline their processes.

Rwanda

The review period saw the completion of the long-term programme of support on HR with the Rwanda Revenue Authority. Some of the outcomes focused on performance management:

• transformed performance management communication approach
• performance management ‘champions’ identified across the organisation to partner with HR, supporting managers and staff
• introduction of performance-based bonus system
• talent management and succession planning processes developed and implemented

The Rwanda Revenue Authority produced a refreshed HR strategy in 2020 employing tools and methodology learned from its HMRC-supported HR strategy launch in 2016.

The Rwanda Revenue Authority delivered recommendations from the HR functional review completed by Capacity Building Unit HR and Organisational Design specialists:

• senior HR lead recruited with HR qualifications and external HR experience
• upskilling of HR Function in professional capability
• reduction of the number of processes unnecessarily requiring senior HR sign-off
• improved staff engagement with people issues

A new long-term adviser was appointed to post in May 2022, replacing the previous adviser whose tenure had ended.

New terms of reference were agreed between HMRC and the Rwanda Revenue Authority in March 2022.

Sierra Leone

A visit in February 2020 established the continuing need and desire on the part of the National Revenue Authority for support. In light of the challenges presented by remote delivery of the data analytics strand of this programme, the Capacity Building Unit specialist provided advice in writing on the requirements for the National Revenue Authority to establish a data analytics team. Further discussions took place in February 2022 in country to establish where support for the National Revenue Authority’s aim of becoming a data-driven organisation might best be targeted.

Uganda

Virtual scoping commenced in 2020 with the Uganda programme subsequently agreed at senior level. This included Voluntary Disclosure technical scoping discussions between HMRC and Uganda Revenue Authority specialists and discussions to identify areas where technical assistance could be provided in Transfer Pricing.

Following an introductory presentation on transfer pricing to the Uganda Revenue Authority Commissioner General a scoping mission was completed (May 2021), identifying support required on reviewing Uganda’s domestic Automatic Exchange of Information Common Reporting Standards legislation, Information Security Management and industry consultation. HMRC also led an industry consultation awareness session (August 2021) and during the review period engaged (with the Global Forum) on Uganda’s draft Automatic Exchange of Information regulations.

Zimbabwe

Virtual scoping commenced in 2020. Terms of Reference for an HMRC/Zimbabwe Revenue Authority programme to 1 April 2025 were subsequently agreed by both parties during the review period.

The data analytics strand of work was scoped and designed remotely: a significant achievement to overcome the challenges of restrictions on in-person engagement.

During the review period the programme team reported extremely positive engagement on this programme with a country visit planned for summer 2022, data analytics workshops delivered and assessment of capability completed, and taxpayer services assessment submitted to the Zimbabwe Revenue Authority for consideration.

Commonwealth Association of Tax Administrators Senior Leadership Programme

Key guiding principles were developed as part of a strategy to design and deliver a robust programme suitable for senior leaders in tax administrations across Commonwealth Association of Tax Administrators member countries and Capacity Building Unit programme countries.

The Commonwealth Association of Tax Administrators Senior Leadership Programme 2021 was delivered remotely from October to December, through a combination of HMRC expertise, external leadership development consultants, and input from Commonwealth Association of Tax Administrators member countries.

Content was adapted for remote delivery, taking into account feedback from delegates. This process of refinement was continued forward into the 2022 programme, which was a mix of remote and in-person components. Subsequently, the Commonwealth Association of Tax Administrators Senior Leadership Programme leads successfully introduced an objective to encourage more applications from women. The Programme also put in processes to support that objective, resulting in more balanced representation.

Engagement was high during the pandemic period with delegates reporting significant gains in confidence in their leadership skills as a result of attendance and several promotions for delegates.

Other specialist activities

HR and Organisational Health: Positive examples of adaptive programming include the transition to online delivery and the Commonwealth Association of Tax Administrators online offer. This adapted approach helped inform future programme interventions.

During the period the HR team continued to develop its diagnostic and assessment toolkit, an important self-designed and developed resource enabling the baselining of performance across organisational functions. The toolkit also allows the Capacity Building Unit and the partner administration to assess progress.

Transfer Pricing

Cambodia

Transfer Pricing support for Cambodia was provided under the Tax Inspectors Without Borders (TIWB) programme. The formal launch was hosted by the OECD and the United Nations Development Programme (UNDP) in November 2020. Collaboration with the UNDP country office in Cambodia secured the necessary access for Cambodia to secure email and a common online platform, with delivery beginning in January 2021. Eighteen months delivery of weekly peer-to-peer support followed, entirely through these online systems.

Meetings were used to deliver bespoke upskilling presentations, conduct case surgeries and to provide advice on the aspects of risk assessment and case control in addition to specific Transfer Pricing issues. Progress was made on a number of Transfer Pricing audits, including a fundamental challenge on Transfer Pricing methodology, considerations of a sectoral approach and the adoption of a more co-ordinated approach to a group with a diverse range of income streams.

Ecuador

The OECD was keen to have UK support with a Tax Inspectors Without Borders (TIWB) request for support to Ecuador. Once arrangements were made for the provision of interpreters, scoping conversations with the Ecuadorian tax administration, Servicio de Rentas Internas (SRI), led to agreement that HMRC would provide some support based on SRI’s desire to review and update its practices on Advance Pricing Agreements, all support to be delivered virtually. Terms of reference were discussed and agreed in principle during the reporting period.

Thailand

Support has been provided to the Revenue Department of Thailand (RDT) under the Tax Inspectors Without Borders (TIWB) scheme, which formally started in November 2021. A series of virtual meetings were held with the RDT audit team. This consisted of a mix of upskilling presentations and discussion of fully anonymised case studies. The Director General of the RDT noted that Thailand was especially pleased to be receiving support from HMRC and that applying the advice given had already resulted in increased revenue collection. Subsequent online sessions were expanded in scope, to include the Competent Authority team of the RDT and their work on Advance Pricing Agreements.

CATA – Taxation of International Transactions (TOIT)

A collaboration with the OECD was agreed to revise and deliver a multilateral TOIT Transfer Pricing workshop as a jointly badged event in July 2020. One of the first such workshops to be delivered virtually, the event was well attended with participants joining who might not have been able to attend had an in-person event been possible. The workshop was successfully repeated in 2021, again in collaboration with the OECD.

Other International Organisations

Transfer Pricing support was provided to the OECD Global Relations programme in the reporting period. This included core Transfer Pricing concepts, auditing multinationals and specialist topics such as financial transactions. These were delivered virtually to multilateral audiences and in a country specific event to Egypt.

Transparency

The team was engaged during the review period with Egypt, Thailand and Malaysia and provided technical support and upskilling in a number of different areas, sometimes jointly with other organisations, such as the OECD under its Tax Inspectors Without Borders programme. Topics included:

• (Automatic) Exchange of Information
• Common Reporting Standard
• Country-by-Country Reporting definitions

HMRC specialists also contributed to the OECD peer review process, carrying out a review in Slovenia (on site visit February 2022) and planning for a review in Belize in September 2022.

Data analytics

As of the end of the review period, the data analytics specialists were engaged with 9 countries at various stages of support and delivery, having started the review period with capacity building with one developing country.

5. Partnership feedback

The review team took feedback from partner country revenue authorities, the FCDO and HMT.

Feedback showed that the response to the challenges of COVID-19 was good, maintaining contact and finding acceptable means of maintaining momentum. This put programmes in a good position to resume an in-person model once restrictions ended and enabled progress during pandemic restrictions.

Feedback from partners demonstrated that the Capacity Building Unit continued to provide vital support during this period, including in line with the UK’s commitments to its international tax, transparency and development goals.

6. Monitoring, evaluation and learning

There is a Capacity Building Unit Theory of Change and logframe for the team as a whole. In addition, each of the established Capacity Building Unit country programmes has a Theory of Change and logframe.

During the last 3 months of the review period the Capacity Building Unit appointed additional temporary resource to conduct an assessment of its monitoring, evaluation and learning principles, tools and methodologies. This was driven by the Capacity Building Unit’s diagnosis that its focus had been on delivery and that it was the right time to consider whether processes for monitoring and evaluation should be further developed. This assessment concluded that, subject to resources, the Capacity Building Unit should deploy monitoring, evaluation and learning expertise to strengthen good practice and drive consistency.

7. Risk

Overall risk rating: The overall programme risk is assessed as low to medium.

Overview of programme risk: the main risks to delivery remain:

• the varying levels of engagement and commitment from partner organisations, such as revenue authorities and ministries. This is characterised by internal structural changes, senior level personnel changes, competing internal cyclical demands, and wider political uncertainties, which commonly interrupt momentum or act as a barrier to traction in the first place
• the ability to travel to deliver technical assistance during pandemic restrictions
• the risk of further pandemic related restrictions

To allow for the effective management of risk of the programme as a whole, the appropriate governance arrangements monitor individual country programme risks as well as portfolio risk.

To continue to mitigate these risks the programme as a whole has structures in place to facilitate the sharing of information between HMRC programme managers, HMRC specialists, long-term advisers and FCDO Public Finance and Tax Department, regional advisers and country offices. This aids the early recognition of risk, enabling the development of possible HM Government counter-strategies, as well as providing a fuller picture for the identification of lessons learned and the assessment of risk and escalation purposes.

Fiduciary risk is low. HMRC are accountable for the funds in line with HMRC business processes. Financial management is effective, with the Steering Group providing oversight.

8. Main costs for the years 2020 to 2022

Costs	Amount (£)
2020 to 2021	£2.561 million
2021 to 2022	£3.100 million
Total spend	£5.611 million
Underspend	£1.540 million

The review period coincided with the UK-wide lockdown in response to the COVID-19 pandemic. Much of the review period therefore includes periods of enforced travel restrictions, in the UK and abroad. This was then followed by the gradual relaxation of these restrictions, albeit at a different pace internationally.

The underspend therefore reflects this as the budget could not be used for in country activity.

9. Value for money/principles

This review has found that the programme demonstrates strong value for money.

The review of the April 2020 to March 2022 period recommends that the next review of the Capacity Building Unit’s activity should pay particular attention to lessons learned from variations to the operating model during COVID-19 in the context of a ‘deep-dive’ into the value for money. This will ensure the ongoing efficiency and effectiveness of the Capacity Building Unit.

10. Improvements and lessons since 2020 (April) to 2022 (March)

The Capacity Building Unit has appointed a compliance lead to strengthen its capacity building response in this area; commonly requested by revenue authorities as an area for support.

As the overall programme has increased in scale, the Capacity Building Unit has appointed a lead official to act as a Programme Management Office in order to coordinate and monitor reporting requirements and to support teams delivering programmes in individual partner countries.

The Capacity Building Unit has the capabilities to deliver its work virtually, but with a recognition that face-to-face capacity building results in best outcomes.

The Capacity Building Unit continues to learn from its partnerships with other donor countries and multilateral organisations, including Regional Tax Organisations, and is committed to working with other capacity building administrations to coordinate and amplify the impact of international efforts.