More Tax Squeezed out of Evaders

A report by the National Audit Office (NAO) has revealed that HMRC's programme to improve the way the department tackles tax evasion has yielded £4.32 billion of additional tax between 2006 and 2011. In the same period the Revenue also cut staff numbers by thousands and implemented a range of improvements in its compliance work, notably the use of IT to identify potential tax evasion. HMRC are not, however, exploiting the full potential of the new systems.

HMRC's Compliance and Enforcement Programme cost £387 million to 2011-12 and comprised of over 40 projects. It aimed to increase compliance yield by £4.56 billion between in the five years to March 2011. In the next four years to March 2015, HMRC forecasts that it will generate an additional £8.87 billion. The NAO says, however, that the department will not achieve this because of “changes to scope or slippage in delivering projects as well as over-optimism in its forecasts.”

The Revenue reduced staff numbers by the planned amount of 3,374 full time equivalents by the end of 2008-09, two years ahead of schedule. It also generated an improvement in productivity of approximately 36% which fell short of its forecast of 42%.

HMRC did not routinely measure the impact of the Programme on taxpayer experience. Over the last five years tax professionals have complained about a decline in HMRC service and that the large job cuts has left the department short staffed and has damaged morale.

Amyas Morse, head of the NAO said, “This major programme has helped HMRC to increase tax yield substantially and has introduced ways of working which will strengthen HMRC's compliance work in future. The Department could, though, achieve better value for money from its investment in compliance work by improved understanding of the impact of individual projects and ensuring that its staff have the capacity to exploit new systems to the full.”

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