Thanks Ian [Hargreaves CBE, Professor of Digital Economy, Cardiff University]. I’m very glad to be here this morning for the second of these annual conferences.
And I remember that this time last year I also opened this conference. And that it was also the first day of a England Test match at Lords.
We were playing Australia. We were ranked as – I think – the second or third best Test nation in the world. And we were six games into a ten match run without defeat.
And while England were regarded as one of the best cricket teams in the modern game. Spain were regarded as the greatest football team in the modern game – if not the history of the sport.
Of course, fast forward twelve months and things are very different!
Germany are now the so-called ‘team of the future’. Spain are a team of the past. And England haven’t won in eight Test Matches.
7. And the reason I think this is worth reflecting on, is because it serves as an example of how, if you don’t keep changing and improving…
As the Spanish football team haven’t…
As the English cricket team sadly haven’t…
Then you’ll very quickly be overtaken and left behind by others.
The same thing is true of Government departments.
As with sports team. As with businesses. If we don’t continue to adapt. Particularly to external changes. Be they societal. Or technological. Or international. Then we will be left behind.
And ultimately, that will leave us providing the British public with a service that isn’t cost effective and that doesn’t suit their needs.
And avoiding that happening is what I’d like to talk to you about this morning.
I’d like to make the case – and I believe it is a very strong case – that as a result of the action we’ve taken on digital, and on compliance over the last four years… HMRC does offer a much better service for businesses and individuals and agents than it did four years ago.
But I’d also like to set out where I believe HMRC needs to keep alert, and keep changing, if it wants to remain an organisation fit for purpose.
I’d like to start by talking about digital. Because this has been – and it has to remain – one of the absolute priorities for HMRC…
Because if one sector has – over the past twenty years – proven its ability to constantly move with the times. And to constantly amend and adapt, then it is the technology sector…
And we see that constant change reflected in the monthly launches of new smartphones and tablets and e-readers. [And – of course – the monthly demand for new smartphones and tablets and e-readers from our children that goes with it!]
The fact that this sector is developing so far and so fast presents any Government department with two challenges.
First – we need to ensure that as more and more of people’s lives move online, that more and more of our services move online with them.
And second – we need to ensure that as the next technological changes come about, that our Departments have the fleet of foot to adapt our services around them.
And I think this is an area where HMRC has made very impressive progress. And can stand up as a model example of modern Government.
If I’m a tax credit claimant I can now:
- renew my Tax Credits claim online
If I run a business I’m able to:
- file online for Self Assessment, VAT, PAYE and Corporation Tax
- and access a better service on VAT and PAYE registration
And if I’m one of the agent firms representing 8 million individuals and businesses I‘ll soon be able to:
- let HMRC know online – quickly and easily – when I take on a new client
- and access a personalised ‘homepage’ where I can view and manage all my clients’ affairs in one place
And all of these services – for individuals and businesses and agents – will be available on various platforms. And run through systems where people can be assured that their data is securely protected.
Now it’s worth stressing that of course some people will always need to write or to speak to HMRC on the phone. Either because they aren’t au-fait with the latest technology, or because their problem demands a face to face – rather than interface – response.
And HMRC’s new Needs Enhanced Support programme – which it launched back in May – will provide just that.
I know this change hasn’t been without its detractors. And I know that the change hasn’t been easy. But early feedback from staff shows that the new system is working well for them. And – most importantly – early feedback from customers shows the system is working for them too.
Ultimately, we know that the vast majority of straightforward enquiries or transactions can be dealt with online. And we know too that not only does our new system better suit the needs of those trying to pay tax. It also provides better value for money for the wider taxpayer.
The other way that we are making a real difference – and we can make further difference – in saving the public money is by improving compliance.
It’s my opinion that politicians have – for far too long – had a single response when under pressure on an issue. Which has been to throw money at it. And I think that – in general – they hope that people will hear ‘£200m extra investment’ or ‘new £150m scheme’ and be satisfied.
But the next questions should always be what will that money achieve? And what real change will that scheme trigger?
In short, I don’t believe that Government departments should be judged by how much money they invest. Or how many staff they employ.
Government Departments should be judged by what the combination of that money and those staff members achieve…
And – again – on compliance, HMRC can boast real achievement over the last four years.
Since 2010 the Government has invested £1 billion in HMRC. Which is – of course – a huge amount of money. But by next March it will have bought about a return of £18 billion of compliance revenues.
Compliance has already improved significantly since 2010.
In 2011-12 we generated £18.6 billion in additional compliance revenues from our work. The following year the figure was £20.7 billion. And last year it was £23.9 billion.
All that has been achieved by making sure that the vast majority of people who want to pay their taxes can do easily. And that the small minority of people who try to avoid paying their taxes can’t get away with it easily.
The Government and HMRC have achieved this by cracking down on tax avoidance:
- winning 80% of cases heard in court
- and reducing by more than 75% the number of newly marketed schemes
We’ve achieved this by tackling rule breakers:
- with over 2 500 individuals prosecuted
- and over 5 000 individuals and businesses that have broken the rules being closely monitored
And we’ve achieved this by tackling offshore evasion:
- with over 5 000 people having come forward through our disclosure facilities…
- and disclosing – in the process – over £1.3bn in tax liabilities.
This morning though, I’d like to give special praise to HMRC’s High Net Worth Unit. As some of you may know, they had a target of delivering £894 million in compliance yield. They delivered £1 billion. And this is a clear example that where Government invests wisely, in the right products and projects – targeted in the right places – then the taxpayer receives the best possible return.
Further improvements are – of course – underway. From this month, our Accelerated Payments initiative will ensure that anyone involved in tax avoidance cases has to pay HMRC the disputed amount of tax upfront, while the dispute is resolved. And from next year, through our Direct Recovery scheme, we’ll be targeting a small core of taxpayers who owe significant debts, have sufficient funds in their accounts, but are reluctant to pay.
And at this point let me just address one argument that is sometime made, which is as follows…
Taxpayers are entitled to minimise their tax and Government – least of all a Conservative-led Government – should take a relaxed vew about avoidance.
I think this misses two very important points.
First, the aggressive avoidance behaviour that HMRC seeks to address is so contrived, so artificial, that no one could argue that it was consistent with intentions of Parliament.
Second, the consequence of that behaviour is that the vast majority of the tax-payers have to pay more in tax…
That is not fair.
And that is why I am proud of that fact that no Government has done more to address artificial and contrived tax arrangements.
A Good Year
But let me turn to the outcome – to date – of HMRC’s improvements to its digital service and its improvements in compliance.
Well. Last year saw HMRC’s best-ever performance.
- it brought in over £500 billion in tax revenues for the UK
- as I mentioned, it secured nearly £24 billion in additional compliance revenues
- and it achieved its best-ever customer service levels
- and all this was achieved by around 2 000 fewer staff
- who oversaw £235 million of efficiency savings
So I’d like to take a moment to thank all the staff at HMRC for all their achievements. Because I think we have managed real – positive – change in the organisation.
It is now a leaner, more effective, more successful Department, which provides a better service, and better value for money to the public.
But – unlike the England cricket team, or the Spanish football team…
And more like those technology companies that continue to invent lighter, smarter, more user-friendly products – HMRC has to keep changing and adapting.
And we need to keep looking at ways it can use new research, and new ideas, and new technology to continue improving its digital offer, and continue improving its compliance levels.
Now. I believe that HMRC is in a strong position to do just that. And I’m confident that – whichever Minister is standing here at the conference in twelve months time –
If the team continue to work hard, and look ahead, and continue to take decisions with the taxpayer in mind…
That Minister will be able to stand up here and talk of a Department that is still very much at the top of its game.