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Analysing the Tax Gap: Deep-dive Profile for HM Revenue and Customs

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									Analysing the tax gap

Deep-dive profile for HM Revenue and Customs

March 2013
                                                                                                                                                        2

Contents

1                            ................................................................
           Executive summary .............................................................................................4
           1.1                                                                          ..................................................... 5
                        Opportunities for ICT suppliers ................................................................
2                                                                 ..................................................6
           HM Revenue and Customs ................................................................
           2.1                                                                    ............................................................... 6
                        Organisational overview ................................................................
           2.2                                                                 .................................................................. 7
                        Delivery organisations ................................................................
                        2.2.1                                                                  .................................................. 7
                                 Valuation Office Agency ................................................................
                        2.2.2                                                                           ......................................... 8
                                 Government Banking Service ................................................................
3                               ................................................................
           External challenges .............................................................................................9
4                              ................................................................
           Internal challenges ............................................................................................10
           4.1                                                                        ................................................................ 10
                        Real Time Information ................................................................
           4.2                                                                                                      ..................................
                        Fixing PAYE, again................................................................................................... 11
           4.3                                                                        ................................................................ 12
                        Tax debt management ................................................................
           4.4                                                                                                    ....................................
                        Personal tax credits ................................................................................................ 13
           4.5                                                                                            ............................................ 14
                        Fraud, error and working with DWP ................................................................
           4.6                                                                                ................................
                        Digitising excise movement and control systems ........................................................ 15
           4.7                                                                                  ................................
                        HMRC change programme – transforming HMRC ...................................................... 16
           4.8                          ................................................................................................
                        Joint Working................................                                   .............................................. 17
           4.9                       ................................................................................................
                        PaceSetter ................................                                  ................................................. 18
5                                                                             .............................................19
           Departmental staffing levels ................................................................
6                                                                                      ................................
           Funding, expenditure trends and investment drivers ....................................21
7                           ...............................................................................................22
           Departmental ICT ................................                                ...............................
           7.1                        ................................................................................................
                        ICT strategy ................................                                 ................................................ 22
           7.2                            ................................................................................................
                        Digital strategy................................                                  ............................................ 25
           7.3                                                                                ........................................................ 28
                        Key suppliers and contracts................................................................
           7.4          Expenditure on ICT                                                                       ..................................... 31
                                           ICT................................................................................................
                        7.4.1                                                                                   ...................................... 31
                                  Hardware ................................................................................................
                        7.4.2                  ................................................................................................
                                  Software ................................                                    ....................................... 32
                        7.4.3                 ................................................................................................
                                  Services ................................                                   ........................................ 33
                        7.4.4                                                              ........................................................... 34
                                  Communications ................................................................
                        7.4.5                 ................................................................................................
                                  ICT staff ................................                                  ........................................ 35




Analysing the tax gap                                                                www.kable.co.uk / © The iD Factor Ltd / + 44 (0) 207 936 6997
                                                                                                                                           3

Table of figures

Figure 1:                                                                                      ................................
                        Staff (full-time equivalent) across HMRC and the VOA.......................................... 19
                                    time
Figure 2:               Combined HMRC and VOA expenditure, 2012                        ................................
                                                                         2012-13 .................................................. 21
Figure 3:               HMRC’s 13 machine strategy                                    ................................................... 24
                                              strategy................................................................
Figure 4:               HMRC transactional services 2010                                             ....................................
                                                        2010-11 ................................................................ 25
Figure 5:               HMRC spend on ICT, 2011                                             ................................
                                               2011-12 to 2016-17 (£millions) ............................................. 31




Analysing the tax gap                                                          www.kable.co.uk / © The iD Factor Ltd / + 44 (0) 207 936 6997
                                                                                                                              4


1                     ummary
           Executive summary
Whichever number you use to measure scale in Whitehall, HM Revenue and Customs tends to score on the large
side of things. In 2011-12, it collected £457bn on behalf of the government through taxation, it paid out £42.7bn in
                                                            workers,
benefits and credits, it employed over 68,000 public sector workers and cost over £3.3bn to run.

                                challenges.
HMRC now faces some significant challenges It has to close the tax gap by £7bn a year by 2014-15 and reduce
                                            £8.3bn;                              ducing
the amount spent on benefits and credits by £8.3bn and it has to do this while reducing the overall headcount of
the organisation by 10,000 and reducing the cost of undertaking these services by £955m by the end of 2015-16.
Against these challenges, it is trying to introduce a programme of significant change and importance to other key
policy initiatives.

To achieve its target of closing the tax gap by £7bn, HMRC is investing over £900m into additional measures
             ax                                                           ments debt
targeted at tax avoidance and evasion, organised crime, fraud, and improvements to debt-collection capability. This
budget has been expanded to include an extra £77m of funding, but it has to deliver an extra £2bn in tax over the
period.

Further, HMRC aims to push through measures aim
								
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