HMRC brings in more tax, but it could have done better

HMRC has increased the amount of tax revenue it collects considerably over the last five years, but it could have brought in even more if it hadn’t reduced the number of people working in its compliance and enforcement teams.

Parliament’s public accounts committee says the Revenue brought in an extra £4.32 billion in the last five years; an impressive return on the £387 million investment.

However, the chair of the committee, Margaret Hodge, pointed out that HMRC could have collected much more if it had not decided to lose more than 3,000 staff members during that time. She went on to warn the Revenue not to make any further reductions to headcount in this area.

She welcomed the Revenue’s decision to reinvest £917 million of the money it has saved in order to generate an additional £7 billion each year in tax revenue, but said the government department must be a lot clearer about the rate of return it receives from the amount it spends.

Furthermore, she said the Revenue must provide better training and improve procedures for dealing with ICT contractors in order to better integrate new computer systems with working practices. Both the Caseflow and the Spectrum systems have seen implementation delays and this meant HMRC lost out around £743 million in extra tax revenue.

She finished off by saying that the Revenue needs to place greater emphasis on tracking and evaluating the benefits of its systems. The Committee was also concerned that customer service did not seem to be high on HMRC’s list of priorities and this is a problem that needs to be addressed urgently.

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