Tax Takings Are Up

According to HMRC's recently published Annual Report and Accounts 2011/12, total tax revenues hit £474.2 billion representing a slight growth of 0.96%  on 2010/11's £468.9 billion. This was achieved by the department focusing on three strategic priorities – maximising tax revenues, stabilising the taxpayer experience and reducing costs sustainably.

Despite HMRC only increasing their year-on-year revenue by less than 1% this minimal growth may suggest that tax receipts are on their way to recovering from the effects of the recession.

The £474.2 billion of taxes collected was comprised as follows:

Out of the above revenues, HMRC paid out £42 billion in benefits and payments.

Following last year’s fiasco in which HMRC failed to notify taxpayers of PAYE underpayments within good time, £12.7 million of tax had to be written off. Lin Homer, the departments Chief Executive recognised that the service given to PAYE 'customers' fell short of what it should have been but is confident that outstanding cases will be cleared by the end of the year.

VAT receipts were up from £90.3 billion due to the increase in the rate of VAT and higher revenues from the oil and gas industry and business services sectors.

Due to difficulties in the financial sector, corporation tax revenue fell from £45.9 billion although the loss was cushioned, in part, by increased taxes from offshore companies as a result of higher oil and gas prices.

Compliance activities in 2011/12 raised £16.7 billion, an increase of £2.8 billion on the previous year and double that achieved in 2005. The Revenue believes that this puts them well on course to bring in an extra £20 billion per year by 2015.

Other low and highlights from the report included:

• During 2011/12, the Revenue handled 74% of all calls to their contact centres, marking an increase of 48% from the previous year and was the department’s second best annual performance since the formation of HMRC in 2005! If HMRC believe that was some kind of achievement then they should try and experience being on the other end of the telephone and forced to wait for an eternity to speak to someone. The report does acknowledge however that further improvements in 'customer' service standards are needed.
• A record 9.45 million Self Assessment tax returns were filed on time, with 90.4% of taxpayers meeting the deadline. A new online filing record was also created with7.65 million returns being submitted through the internet, representing 80.9% of total returns.
• HMRC say that they continue to adopt a sympathetic approach to businesses that have genuine short term difficulties in paying their tax. In March 2012 the department had nearly 600,00 Time to Pay arrangements in place amounting to £1.4 billion in value.

Lin Homer points out that HMRC's achievements was done during a period of considerable uncertainty for its staff, as the Revenue becomes smaller, more highly skilled Departments. Some of the more specialist departments may be highly skilled but it all starts at ground level which, unfortunately, is still sadly lacking.

Ms Homer is confident that HMRC can build on their achievements in 2011/12 and continue to improve the service they give to taxpayers which will be done in part by:

• Understanding taxpayers and their needs; and
• Doing their own jobs well.

The writer looks forward to that day!