HMRC cuts over 150 offices to reduce running costs

DRASTICALLY fewer offices for HMRC in the hope to reduce their running costs.

The major transformation programme of HM Revenue & Customs (HMRC) from 170 offices to 13 regional centres is to redesign and reduce its estate.

The regional centres, described as “shared government hubs” will be supplemented with four specialist sites and a central London headquarters. The first regional centre in Croydon has had its contract signed by HMRC. HMRC believes that this will provide flexibility for a primarily digital service, in line with its Making Tax Digital (MTD) plans.

“During the transition to regional centres, HMRC must ensure that its service to taxpayers and its ability to collect tax revenue are not impaired,” the NAO said.

In a report from the National Audit Office (NAO), it was stated that HMRC has considered its original plan of reorganisation “unrealistic”. This is due to moving or replacing too many staff too quickly while delivering 14 other major change programmes.

The NAO said HMRC had underestimated the scale of the disruption involved, with up to 5,000 staff expected to leave as a result of the proposed move as 38,000 employees will need to move to regional centres or leave. HMRC currently has more space than it needs and much of it is in poor condition, which it considers reduces morale and productivity.

Amyas Morse, head of the National Audit Office, said: “HMRC should step back and consider whether this strategy still best supports its wider business transformation and will deliver the sustainable cost savings it set out to achieve in the long run.”

Since 2011, HMRC has reduced its estate by over a quarter with a saving of £102m (30%) in annual running costs. It estimates cumulative efficiency savings by 2025-26 of £212m, reduced from £499m from its November 2015 business case.

HMRC’s estimated estate costs over the next ten years have risen by nearly £600m (22%) to £3.2bn of which more than half is due to higher than anticipated running costs for new buildings. By 2025-26, HMRC expects its annual estate running costs to be £83m lower than they are now.

A HMRC spokesman said: “HMRC’s employees are currently spread across 159 UK offices. Our 13 new regional centres are an essential part of our work to modernise HMRC and provide an even better service for our customers, while delivering annual savings to the taxpayer of over £80m from 2025/26. It also means modern offices for our staff, with the latest technology.”

As of November 2016, HMRC had the fourth-largest estate across central government. It spends around £250 million each year running its estate to accommodate its 58,600 staff.

Mapeley STEPS’ (Strategic Transfer of Estate to the Private Sector) contract with HMRC of 20 years expires in 2021 and covers two thirds of its estate, which means leaving existing buildings needs to be negotiated. All the regional centres need to be up and running before the STEPS contract ends in March 2021 as rental and service costs will increase.

In response to NAO and PAC recommendations, HMRC has improved its working relationship with Mapeley, achieving cumulative savings of £189m since 2011.

The news comes as HMRC has seen an 80% jump in additional revenue from a crackdown on tax avoidance.

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