In a letter to Lin Homer, newly appointed Chief Executive of HMRC, Chancellor George Osborne has laid down his remit for the Revenue for the current fiscal year.
At the Spending Review the Chancellor set HMRC an ambitious target to increase tax revenues via compliance activity by an additional £7 billion per annum by 2014-15, whilst at the same time increasing efficiency and improving taxpayer service. The year 2011-12 saw the department make good progress and additional revenues from compliance activity were above forecast.
Mr Osborne sees the current financial year as a pivotal one as many of the change initiatives move into implementation phase and he has set out five priorities for HMRC:
- Improving tax collection
Not surprisingly this is the Chancellor's top priority and he expects the Revenue to raise at least £17 billion in additional revenue.
Following on from HMRC's highly successful Large Business Strategy the department has been told to “invest in the skills and expertise to deal with the complex tax affairs of the largest business.”
- Delivering cost reductions
HMRC are already committed to efficiency savings of 25% in real terms by the end of the coalition government’s term. The department will continue to work towards reducing staff numbers and moving over 3000 of its workforce to compliance work.
The Revenue must also ensure that it has a sound contingency plan to counter any unforeseeable pressures, something it was criticised for last year by the National Audit Office.
- Improving service for taxpayers
In keeping with the Chancellor's ambitions for a more transparent tax system that is also easier to understand, he has impressed upon HMRC that it must make further strides to make it as straightforward as possible for both individuals and businesses.
Over the next 12 months the Revenue will deliver the final pieces of the 'One Click' programme making the UK one of the speediest countries in the world in which to start up a new business.
HMRC is to work closely with the Government Digital Service to improve the online service to all taxpayers.
- Implementing Real Time Information (RTI)
RTI represents a significant change to the PAYE system, where employers will inform HMRC of PAYE payments at the time they are made, instead of at the end of the year. A pilot scheme is currently underway involving ten volunteers, including HMRC. The Revenue expects an additional 310 employers and pension providers to join the pilot during the next two months and, provided the scheme is successful, around 1,300 volunteers to be reporting via RTI by September. The aim is to have all employers using RTI by October 2013.
- Tax policy & the policy partnership
Chancellor Osborne harbours a desire to make the UK's tax system simpler, fairer, harder to indulge in evasion or avoidance and the most competitive in the G20. HMRC will assist him by identifying further policy reforms.
So another difficult year lies ahead for HMRC but we thought tax doesn't have to be taxing!