This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
A speech given by Lin Homer to the HMRC stakeholder conference on 18 July 2013.
Welcome, everyone, to our first annual stakeholder conference.
It’s great to see so many of you here today, from so many of our partner organisations.
From tax and customs professionals, through to charitable organisations, and representatives from the media, including TV, although possibly not as many as we might have had without the excitement of the possible arrival of a Royal Baby this week.
It’s a diverse audience, but one that I know is united by a strong interest in tax matters.
It’s the first time we’ve done something like this.
We want to be more open and transparent about what we do and how we do it.
And we want to share our longer-term thinking with you, introduce you to HMRC’s leadership, and give you the opportunity to ask questions and raise issues directly with us.
We’ve two question and answer sessions in the programme for you to do that.
We’ve also set up market stalls in the lobby area outside, staffed by some of our most knowledgeable folk, where you can get more information about what we’re up to, so please take the time to visit them if you can.
As Ian said we hope that you will all find today useful and interesting, and we’d welcome your feedback on what we can do to improve this event next year.
As the Minister has already said, public interest in tax – and with that, HMRC – has grown enormously in recent times.
The business of HMRC touches almost everyone in the UK, and we must do the best job we can.
For the country.
For individual and business taxpayers.
For people who receive benefits and tax credits from us.
We recently published our Annual Report and our very first Tax Assurance Report.
And I am very proud of what these say about our performance last year and the progress we have made in improving the transparency of our large tax settlements.
[Slide: Performance highlights]
I’d like to touch on some of the highlights from last year, before focusing on what I see as the priorities for HMRC over the next three years, and setting out how HMRC will change to meet them.
This slide is in your pack, it captures some (a few) of our key statistics. I’m not going to go through everything that’s on it now – I’d just like to mention a few key points.
Last year, we collected a record £20.7 billion in additional revenues, beating our target by some £2 billion – thanks in part to the £917 million the Government has reinvested in HMRC to tackle avoidance, evasion, error and fraud.
We stepped up the pace of prosecutions for fraud and evasion; had some really notable wins in tax tribunals; and in the customs arena, we reached agreement after a year of intense EU negotiations on the Union Customs Code, which will provide the legal basis for customs requirements from 2016.
We reprioritised our resources, investing £34 million to employ a thousand additional staff in our contact centres.
This has been a major factor in our being able to meet our call targets of 75 per cent last year, even in the run-up to Tax Credits renewals, the Self Assessment filing deadline, and the introduction of the High Income Child Benefit Charge and Real Time Information.
And we achieved 90 per cent in the last five months of the year.
We have also introduced greater flexibility in how we deploy people across the Department, so we can quickly move people between calls handling and other work in response to demand.
That’s how we managed also to meet post targets and finish clearing the legacy open cases.
I’m particularly proud of our staff’s results, because we achieved them while delivering further efficiency savings across all areas of our business, reducing our costs last year by £245 million.
I’ve no doubt that an improved performance across each of our three main objectives – revenue, service and costs – was an important factor in the decision of Ministers to give us additional funding.
This includes £77 million in the Autumn Statement to further tackle avoidance and evasion, as well as an additional £200 million share of the Government’s investment in digital technology announced in the recent Spending Round.
But I am the first to acknowledge that we need to do more, because there are still too many times when our service, for some of our taxpayers and customers, isn’t satisfactory.
But I believe we are making progress, in many cases thanks to your feedback, and your willingness to work with us, and challenge us, which we are keen to build on through events like today.
We have three priorities over the next three years.
First, we need to continue to generate additional compliance revenues.
Our target in 2014/15 is £23.5 billion, and we have been tasked with raising £24.5 billion in 2015/16.
That £1 billion stretch means we will have almost doubled compliance revenues in just six years.
Second, on top of the efficiencies that we have had to make as a result of the 2010 Spending Review, we now need to reduce our costs by a further five per cent, or £166 million, during 2015/16.
Third, we need to continue to improve the service we provide, to offer a tax service to the people and businesses of the United Kingdom, and to people who receive tax credits and child benefit, that meets their needs and expectations.
The next three years will be challenging, but given the momentum we have established, I’m confident that we can deliver.
Better service is about so much more than how quickly we pick up the phone – important as that is.
It is about us providing services that the vast majority of people understand and can use without needing to call us or write to us or arrange a meeting.
So we are simplifying letters and guidance to make our letters clearer and more straightforward, using text messages to provide information, directing customers to our website, and reducing incoming calls.
We need to respond faster so people don’t have to phone to check progress.
Our people should be able to transact with us online when they want to, like they do in Self Assessment and for VAT registration.
So our investment in digitisation over the next three years will transform how people deal with HMRC.
And HMRC will aim to treat taxpayers in a joined-up way, without the need for them to talk to different parts of HMRC on different things.
Investing in improved service for the overwhelming majority of our customers who pay their taxes is one part of our story.
We are also focusing on those who seek to avoid paying their fair share of tax.
The vast majority of the UK’s businesses, individuals and tax advisers are honest and pay the tax that is due under the law.
Most people understand it is important that they do the right thing.
Tax avoidance is practised by a minority, and a small minority at that.
But I know how much it annoys the vast majority of us who pay our dues.
Indeed, recently people have got annoyed that we don’t collect the tax they wish was due.
That is much harder for us, unless there is a change in the law.
So it is important that people know and trust that we have a clear, strategic approach to tackling that minority, whoever they are, dissuading them from tax avoidance activities as far as possible and challenging them when they persist.
We recently published ‘Levelling the tax playing field’, which updates our anti-avoidance strategy, and shows the considerable success we have had in tackling it since 2010.
More specialists, working on more data and using new technology, helps us to identify and tackle tax avoidance and evasion.
More communications to taxpayers, warning them of the risks of tax avoidance and that most marketed avoidance schemes do not succeed.
More work with accountancy bodies to better understand the markets in which they operate, to ensure publicity of their disciplinary codes, and to improve communication on the dangers of tax avoidance to their members.
And if necessary and to be clear – we want the tax not the penalties –we’ll be relentless in closing in on people.
And we are setting global standards for dealing with tax avoidance, encouraging international co-operation in the OECD, the G8 and the G20 to tackle it, close loopholes and identify abuse.
Tax avoidance is not our only compliance issue.
We are also focusing on evasion, fraud, debt, the hidden economy and criminal attack.
We are putting an increasing focus on tackling debt, which we have halved since 2009 – and reducing Tax Credits fraud and error.
You’ll hear more about that later.
As we step up this work, making better use of technology and investing in our people’s capability in this area, HMRC in 2016 will be a very different organisation from the HMRC of 2010.
We will be more cost efficient.
Our annual budget will be £3.4 billion, down from £4.2 billion, as we deliver more for the country, with less resource
We will be more effective.
We will secure £24.5 billion in additional revenues from our compliance activities, up from £12.6 billion.
We will be smaller, and we will add further to our skills and professionalisation.
We will have 52,000 full time equivalent employees by the end of March 2016, down from 75,000 in March 2010.
We will be an increasingly online organisation, with most individuals and businesses increasingly being able to deal with their taxes online, though we will always have accessible services for those who cannot deal with us in that way
We will be better at serving customers.
We will meet or beat our customer service targets, such as the proportion of calls answered, and the turnaround time for post and Child Benefit claims.
We will be smarter in pursuing tax dodgers.
By investing in qualified people, data analytics and international data sharing, and new approaches, we will be even more effective in targeting those who break the rules, wherever they try to hide it.
That is how we at HMRC are upping our game.
And as we do all of that we will continue to seek to be a good employer, investing in a skilled professional workforce, with diverse talents. We have a way to go on that agenda too – we still have the lowest engagement score in the Civil Service. It is as important for you as a customer as it is for me that our staff are engaged – because a valued and well trained workforce is an effective and motivated one.
So last night whilst I was delighted to receive the most recent NAO report and press notice on customer service - I was also delighted to see my staff scoop the Employers Network Award for Inclusion.
I hope we will continue to improve how we work for you and with you. That is the best way that we can make sure that the tax that is owed is collected and available to the Government to fund the public services from which we all benefit, and on which we all depend.