Annual Report and Accounts 2014-15 GOV.UK/HMRC HM Revenue and Customs Annual Report and Accounts 2014-15 (For the year ended 31 March 2015) Accounts presented to the House of Commons pursuant to Section 6(4) of the Government Resources and Accounts Act 2000 and Section 2 of the Exchequer and Audit Departments Act 1921 Annual Report presented to the House of Commons by Command of Her Majesty Ordered by the House of Commons to be printed on 16 July 2015 HC18 This is part of a series of departmental publications which, along with the Main Estimates 2015-16, the document Public Expenditure: Statistical Analyses 2015, present the Government’s outturn for 2014-15 and planned expenditure for 2015-16. © Crown copyright 2015 You may re-use this information (excluding logos) free of charge in any format or medium, under the terms of the Open Government Licence. 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Contents 2 Your Charter 3 Who we are and what we do 4 Our achievements in 2014-15 6 Foreword by Lin Homer 10 Performance 11 Strategic report — reviewing our performance 26 Delivery against our 2014-16 Business Plan 28 Debt, complaints and powers 32 Delivering a high-quality tax and payments system 33 Simplifying the tax system 34 Sustainability 37 Long-term liabilities 38 Accountability 39 Governance Statement 39 Lead Non-Executive foreword 41 How we are structured 56 Current control challenges — statement by Principal Accounting Officer, Lin Homer 60 Recommendations made by external scrutiny bodies 64 Directors’ report 67 People 73 Valuation Office Agency 74 How we share our data 75 Remuneration report 83 Statistical tables 95 Financial statements R1 Report by the Comptroller and Auditor General 1 Your Charter Our role • We make sure that the money is available to fund the UK’s public services by collecting taxes and duties as laid down by Parliament. We help families and individuals with targeted financial support. • We want to give you a service that is even-handed, accurate and based on mutual trust and respect. We also want to make it as easy as we can for you to get things right. To find out more about our Vision go to www.gov.uk/government/publications/hmrc-purpose-vision-and-way Your rights — what you can expect from us: • Respect you • Help and support you to get things right • Treat you as honest • Treat you even-handedly • Be professional and act with integrity • Tackle people who deliberately break the rules and challenge those who bend the rules • Protect your information and respect your privacy • Accept that someone else can represent you • Do all we can to keep the cost of dealing with us as low as possible. Your obligations — what we expect from you: • Be honest • Respect our employees • Take care to get things right. More information For more information about what we do, your rights, and where you can get help and support, please go to www.gov.uk/government/publications/your-charter or speak to one of our advisers. HM Revenue and Customs 2 Annual Report and Accounts 2014-15 Who we are and what we do Introduction We are an effective, efficient and impartial tax, payments and customs authority. We collect the money that pays for the UK’s public services and help families and individuals with targeted financial support. We help the honest majority to get their tax right and make it hard for the dishonest minority to cheat the system. We are also one of the UK’s biggest organisations: we have around 56,000 full-time equivalent employees in 170 offices across the UK, collecting tax and duties from 45 million individuals and 5.2 million businesses, and pay tax credits to 4.6 million households and Child Benefit to 7.5 million families. We contribute to the country’s economic and social wellbeing and support growth. The UK is the world’s seventh largest economy and the second largest in the EU and we play our part by making it as easy as possible for industry and business to trade. Our key objectives, set by the government, are to: • maximise revenues • make sustainable cost savings • improve the service that we give our customers. To these, we have added a fourth objective: include and involve our people in how we meet these key objectives and ensure that we invest in their skills, capability and the experience they have of working in HMRC. We work closely with HM Treasury through the Policy Partnership to deliver effective tax policy which meets government objectives, working together on policy design through to implementation. We are uniquely placed to provide advice on the implementation of tax policies using our considerable expertise, knowledge and insight of our customers and their behaviour, tax compliance and tax legislation. We also work with a number of other government departments to help deliver their objectives; for example, in collecting student loans and in enforcing the National Minimum Wage. “Our work is challenging, but by winning the leading case against Eclipse 35 at the Court of Appeal we protected about £635 million in tax and sent out a strong warning against involvement in avoidance schemes.” Christina Parkinson Solicitor’s Office, London 3 Our achievements in 2014-15 Maximise Make sustainable revenues cost savings £517.7bn £210m £11.9 billion more than in 2013-14. Sustainable cost efficiencies. In 2014-15, total revenue increased by We made a further £210 million in £11.9 billion, or 2.4 per cent, to £517.7 sustainable cost savings last year, billion as a result of growth in the exceeding the target the government UK economy and increased compliance set us. We have continued to reshape our activity by HMRC to tackle tax evasion workforce and have reduced the cost of and avoidance, fraud, error and debt. our administration, estate, and the goods and services we buy. Achieving more... with less... £26.6 billion 170 Record compliance revenues HMRC offices, compared to 539 in 2005 £768 million 19 million Compliance revenue from new Accelerated Fewer sheets of paper we printed Payments legislation 8 out of 10 £9.79 billion Of our workforce located in our 16 key centres Tax protected through successful litigation 16 million £469 million Work items we now process electronically that Tax credits error and fraud losses identified keep people’s records up-to-date and prevented £17 million 1,289 Savings made to our estates running costs Prosecutions for tax offences following our investigations HM Revenue and Customs 4 Annual Report and Accounts 2014-15 Introduction Improve the service that Include and involve we give our customers our people 10.2m 1,404 Self Assessment returns submitted The number of events our by midnight on 31 January 2015. employees attended during Phase 1 We improved our handling of the and 2 of Building our Future. peaks in demand during the January The increasing expectations placed on Self Assessment and July tax credits us from customers requires new ways deadlines, but we missed our phone of working and digital services that are and post targets overall. We continue to more focused on customers. Building our invest in digital services for customers. Future will ensure that we have the right people, skills and locations to deliver this. and delivering... with our people 71,727 5.96 Customers helped by our new Needs Extra Average number of days our employees were Support service; one in four of them through involved in learning activities face-to-face visits by mobile advisers 4,500 2.4 million Of our people were promoted Businesses subscribed to Your Tax Account 50 211,405 Joined our first-ever tax apprenticeship Customs checks cleared within agreed targets programme (95 per cent) to facilitate UK trade 77 £335 million Of our people serve as reserves in the Armed Net customer cost reductions for all customers Forces since April 2011 £908,000 410,000 Donations made by our people to good causes Tax credits customers who renewed their claims through payroll giving online 5 Foreword HM Revenue and Customs 6 Annual Report and Accounts 2014-15 Introduction Lin Homer Chief Executive and Permanent Secretary Foreword by Lin Homer Welcome to our Annual Report and Accounts for 2014-15. It has been another good year for HMRC and we have delivered record results in some areas — although we know that there is still more to do to deliver a consistent service to all our customers. We generate, protect and secure the money that pays for the UK’s public services — and I am delighted to report that we generated a total of £517.7 billion in tax revenues last year — £11.9 billion more than in 2013-14. The impact of our compliance activities has increased again this year — realising record results with £26.6 billion achieved this year against £23.9 billion in 2013-14. This means our compliance revenues have increased over each year of the last Spending Review period — a truly fantastic achievement that is due to the thousands of hard-working, dedicated people at HMRC.