Yesterday’s spending review placed a pretty hefty burden on the new, digital HMRC to improve its services and create huge efficiency savings in the process. Here, Kevin Reed, editor of our sister title Accountancy Age, takes a look at the task ahead for the tax man.
So, the chancellor has found himself with some nice, shiny, new numbers.
A rather bullish Office of Budget Responsibility expects an improved economy to contribute more in tax through to 2020/21, while lower interest payments have enabled George Osborne some wriggle room at a time when he was in a bind over accelerated tax credit cuts. A theoretical £27bn windfall.
It’s also afforded him the ‘luxury’ of keeping police force budgets in place – at a time when the Paris attacks have left him in a precarious political position.
His ‘new funds’ have been allocated pretty sharpish. And so now there’s the no-small matter of making sure the taxman collects the receipts.
Expecting extreme savings
Yesterday was, of course, Spending Review day as well. And HM Revenue & Customs is committed to making £717m of sustainable resource savings a year by 2019/20. The £1.9bn cumulative savings over the next four years will be offset, in a sense, by £1.3bn reinvested to digitally transform the tax administration.
The key issue then, is can HMRC make such a massive transformation, one which will see it make a 31% reduction in headcount? An administration with the consistently lowest morale among government departments?
An administration where more and more ‘customer’ phone calls are going unanswered and of which PAC chair Meg Hiller said this month was a “genuine threat” to tax collection?
That HMRC predicts digitisation to lower customer calls from 38 million to 15 million in 2019/20 as info and services will be online, shows you clearly that the current system is out of date – and that there is a hell of a lot to cover in the next three years.
Note also that HMRC chief executive Lin Homer has committed the taxman to collecting an extra £7.2bn in currently evaded tax.
There are a myriad of assumptions upon which the chancellor is relying on for the numbers to come good.
This piece first appeared in Accountancy Age.