HMRC has made great strides, says NAO

HM REVENUE & CUSTOMS is among the strongest-managed government departments, according to the National Audit Office.

In a report taking stock of progress since 2010, the NAO found the tax authority had made good progress in maximising revenue and making sustainable cost savings and responded positively to the recommendations from the Public Accounts Committee.

In particular, it noted HMRC’s reorganisation to tackle some of the root causes of marketed tax avoidance. It has sought and received new powers to disrupt the behaviour of promoters and challenge the users of avoidance schemes.

Similarly, the body’s response to criticisms from the NAO and the PAC over the settlement of large tax disputes has improved, particularly in transparency and accountability. It has clarified and updated its guidance on its litigation and settlement strategy and appointed a tax assurance commissioner to oversee large tax settlements. The commissioner reports annually on HMRC’s progress in resolving major disputes and how its new governance arrangements are working.

The main areas of criticism centred on its ‘customer’ service and replacing its Aspire IT system in 2017.

The PAC has warned that HMRC’s complacent approach to renewing its IT administration could wreak “havoc” in the tax system, while it is set to miss its own targets of answering 80% of calls and responding to 80% of letters within 15 working days.

HMRC chief executive Lin Homer said: “We have significantly improved our customer services from a low point in 2010/11, increasing our performance in answering calls from 48% to almost 80%, in clearing post within 15 days from 51% to more than 80 per cent and the accuracy of PAYE tax codes from 80% to 98%.

“We accept that we are still not consistently providing the right levels of service, which is why we are accelerating our investment in digitisation to provide the much more modern services that customers now expect.”