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splashin
Rank; Really should become a politician


Belize
730 Posts

Posted - 12/03/2010 :  23:21:28  Show Profile Send splashin a Private Message
Could this be the reason for current activity in the Bullying Debt Collecting Department? HMRC is due to respond to this, by March 2010. Tick Tock, Tick Tock.

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HMRC’s tax collection systems are outdated, says Committee
10 December 2009


The Public Accounts Committee publishes its report on how HM Revenue & Customs (HMRC) is faring in trying to improve its processing and collection of various UK taxes.

•Report: HMRC: Improving the processing and collection of tax
•Public Accounts Committee
Edward Leigh MP, Chairman of the Committee, today said:

"The recession is placing the tax system under great stress and HMRC’s efforts to protect tax revenues and recover debt are being undermined by outdated systems.

"As the amount of tax collected drops steeply – in 2008-09, the tax take was some £22 billion lower than in the previous year - the protection of tax revenues has never been more important. But the trend in debt recovery is downwards.

"According to the latest estimate, no less than £11 billion of the nearly £28 billion of tax debt will probably not be collected. HMRC’s efforts to recover debt are being hampered by its systems which do not provide essential information such as a profile of debt across taxes.


"The money needed to upgrade systems would be well spent if it were outweighed by the amount of additional tax recovered.

"The picture on tax credit debt is also highly worrying. Since 2003, when tax credits were introduced, the Department has identified overpayments of £8.4 billion. By the end of March 2009, it had collected £2.7 billion of this debt and written off £1.3 billion.

"But of the £4.4 billion still to be collected, HMRC expects 53 per cent, or £2.3 billion, to remain uncollected. The department must decide by March 2010 exactly how much should be written off and be resolute in pursuing all the tax credits debt remaining on its books.

"Delays in introducing new systems have contributed towards backlogs in processing tax cases and have led to staff resources being diverted at critical times.

"The backlog of 17 million PAYE cases awaiting processing will not start to be cleared until the Department’s new systems are fully operational in April 2010.

"This and other backlogs must be cleared as swiftly as possible so that taxpayers know where they stand and what their liabilities are."

Mr Leigh was speaking as the Committee published its 2nd Report of this Session which, on the basis of evidence from HMRC, examined:

•how it is managing tax and tax credit debt
•what it is doing to clear a backlog of PAYE and Corporation Tax settlements
•how it is tackling tax avoidance
•how it is improving the administration of Stamp Duty Land Tax
•how it is seeking to reduce tax credits error and fraud
HMRC (the Department) is the engine room of public spending, collecting the income that finances the majority of services provided by government.

In 2008–09, total taxes and duties collected and receivable were £436 billion, some £22 billion lower than in 2007–08. The £436 billion included £28 billion in tax debtors.

The Department has made a provision for bad and doubtful debts of £11.2 billion, 40 per cent of the total, and £3.3 billion more than in the previous year.

At a time when the public finances are under pressure, protecting tax revenues has never been more important. The recession presents a number of challenges for the Department and places the tax system under a great deal of stress.

Taxpayers looking for support have been given more time to pay their tax liabilities.

But while the Department is working to improve its debt recovery, its efforts are constrained by outdated systems and it has deferred plans to invest in them due to lack of funding. Better systems would help the Department improve tax recovery and reduce losses.

At the same time the Department has to ensure that it counters risks of non-compliance and deals with backlogs of processing from previous years.

Delays in introducing new systems have contributed to processing backlogs and have led to staff resources being diverted at critical times.

The Department cannot now begin to clear the backlog of 17 million PAYE cases until its new systems are fully operational in April 2010.

Delays in introducing new computer systems and the loss of expertise following office closures led the Department to divert staff away from work to test compliance with Stamp Duty Land Tax, increasing the risk of lost revenue from non-compliance.

The absence of information on tax losses through non-compliance and avoidance makes it harder for the Department to analyse risk and to judge how to deploy its resources where they will have most beneficial impact.

It has saved £11 billion in potential tax avoidance since 2005, but does not have an estimate of how much tax has been lost because of avoidance or of the cost of the resources it devotes to tackling avoidance.

In 2007–08 claimant error and fraud resulted in incorrect tax credits payments of between £1.58 billion and £1.84 billion, leading to the qualification of the Comptroller and Auditor General’s opinion on the regularity of tax credits expenditure.

The Department is looking to reduce claimant error by improving the guidance and support it gives to people at the time they need to report changes in their circumstances.

It has a target to reduce claimant error and fraud to not more than five per cent of the value of finalised awards by 2011.

Wouldn't surprise me if HMRC hit this target. I like the way they say nothing about any target for reducing HMRC's processing errors. Oh but then it must have slipped my mind, they don't do errors.



Splashin

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Ali M-W
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3558 Posts

Posted - 16/03/2010 :  08:56:12  Show Profile Send Ali M-W a Private Message
"Claimant error and fraud" sums up HMRC's attitude to claimants; they cannot possibly be the creators of errors, and whilst some claimants obviously do commit fraud, even former government Paymaster Dawm Primarolo went on record saying "most claimants are honest". At TCC we've seen all too many HMRC errors passed off as "claimant error" until the data (reluctantly handed over by HMRC, often with crucial pieces inexplicably missing) proves otherwise. Then it becomes a case of "we - HMRC - made errors but it's the claimant's fault for not spotting them". So still, in HMRC's eyes - "claimant error".

The government accepts this tosh, this lumping together of ALL errors, HMRC and those that could possibly be the claimant's "fault" (although that's still debatable given how HMRC fails to "give correct advice" instructing claimants on what they expect from them), as well as all fraud found in the system, which HMRC workers have occasionally perpetrated themselves, as down to claimants, when it is clearly not so. HMRC don't, by Stephen Timms' admission, separate out what problems they caused from problems they rule to be the claimant's, so they can hardly plead accuracy with these figures.

New government soon, Maybe, just maybe, the double-dealings of HMRC will be under more scrutiny than this current bunch of self-congratulating shysters will allow.

Morpheus: I'm trying to free your mind, Neo. But I can only show you the door. You're the one that has to walk through it.
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