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Departmental Overview: HM Revenue & Customs 2019

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Departmental Overview: HM Revenue & Customs 2019 DEPARTMENTAL OVERVIEW 2019 HM REVENUE & CUSTOMS MARCH 2020 If you are reading this document with a screen reader you may wish to use the bookmarks option to navigate through the parts. If you require any of the graphics in another format, we can provide this on request. Please email us at www.nao.org.uk/contact-us HM REVENUE & CUSTOMS (HMRC) This overview summarises the work of HMRC including what it does, how much it spends, recent and planned changes, and what to look out for across its main business areas and services. Bookmarks and Contents. CONTENTS Overview. About HM Revenue & Customs (HMRC). How HMRC is structured. Where HMRC spends its money. Major programmes and developmentsOVERVIEW. Exiting the European Union. PART [04] page About HM Revenue & Customs (HMRC) PART [01] 3 – Income Tax and devolution Part [01] – Tax revenues and expenditures. page Tax revenues and expenditures page – Tax revenues and expenditures continued– How. HMRC is structured 8 – 14 of powers The tax gap. Tax revenues and expenditures continued– Where HMRC spends its money The tax gap continued Tax revenues and expenditures continued Major programmes and developments Tax reliefs. – Exiting the European Union Part [02] – Customer service performance– 2018-19. PART [02] PART [05] Part [03] – HMRC and the border. page 12 – Customer service performance page 16 – What to look out for Part [04] – Income Tax and devolution of powers. Income tax and devolution of powers continued Devolved taxation powers – Scotland and Wales. Part [05] – What to look out for. PART [03] page 13 – HMRC and the border The National Audit Office (NAO) helps Parliament hold government to account for the way it If you would like to know more about the NAO’s work on HM Revenue & Customs, please contact: If you are interested in the NAO’s work and support for spends public money. It is independent of government and the civil service. The Comptroller and Parliament more widely, please contact: Andy Morrison Darren Stewart Auditor General (C&AG), Gareth Davies, is an Officer of the House of Commons and leads the NAO. Director, HMRC Value for Money Audit Director, HMRC Financial Audit [email protected] The C&AG certifies the accounts of all government departments and many other public sector [email protected] [email protected] 020 7798 7665 bodies. He has statutory authority to examine and report to Parliament on whether government is 0191 269 8877 0191 269 8883 delivering value for money on behalf of the public, concluding on whether resources have been used efficiently, effectively and with economy. The NAO identifies ways that government can make better use of public money to improve people’s lives. It measures this impact annually. In 2018 the NAO’s work led to a positive financial impact through reduced costs, improved service delivery, or other benefits to citizens, of £539 million. Design & Production by NAO External Relations – DP Ref: 006881-001 © National Audit Office 2020 OVERVIEW DEPARTMENTAL OVERVIEW 2019 [HMRC] – About HM Revenue & Customs (HMRC) UK tax revenues, 2014-15 to 2018-19 HMRC’s role UK tax revenues have increased over the past five years HMRC is the UK’s tax, payments and customs authority. It collects the Tax revenue (£bn) money that pays for public services and helps families and individuals 700 with targeted financial support. 600 HMRC’s objectives 500 HMRC’s objectives, as agreed by the government, are to: • collect revenues due and bear down on avoidance and evasion; 400 • transform tax and payments for its customers; and • design and deliver a professional, efficient and engaged organisation. 300 3 Tax revenue 200 HMRC reports to Parliament on revenues collected in its Trust Statement, published in its Annual Report and Accounts. In 2018-19: 100 • HMRC reported £627.9 billion in revenue, an increase of £22.1 billion (3.6%) on 2017-18. • The UK tax gap was £35 billion, 5.6% of total tax liabilities in 2017-18. 0 The tax gap is the difference between the amount of tax that should, 2014-152015-16 2016-172017-18 2018-19 in theory, be paid to HMRC, and what is actually paid. Hydrocarbon oils 27.2 27.7 28.0 27.9 28.0 Corporation Tax 41.4 45.5 51.1 53.3 53.5 Other 64.1 66.2 75.1 79.5 81.8 Benefits and Tax Credits VAT 113.9 116.0 124.4 128.6 135.6 HMRC paid £40.1 billion to its customers in 2018-19, the main part National Insurance 108.0 112.0 122.5 130.5 135.0 of which was on Personal Tax Credits (£22.3 billion) and Child Benefit Contributions (£11.5 billion). Income Tax 163.1 169.4 173.8 186.0 194.0 Total revenue 517.7 536.8 574.9 605.8 627.9 Note Partners 1 Figures shown in nominal terms. HMRC works with HM Treasury to produce tax policy advice for HM Treasury ministers. Source: HM Revenue & Customs, Annual Report and Accounts from 2014-15 to 2018-19 HMRC supports the Office for Budget Responsibility to provide predictions of revenues to Parliament in Budgets and Spring Statements. Here is a bar chart showing UK tax revenues, 2014-15 to 2018-19 OVERVIEW DEPARTMENTAL OVERVIEW 2019 [HMRC] – How HMRC is structured HMRC is a non-ministerial department. This is intended to ensure that the administration of the HMRC’s Executive Committee HMRC’s governance tax system is fair and impartial. Customer Strategy HMRC Board and Tax Design Executive Committee With effect from 29 October 2019, Jim Harra Overseas the department’s Provides challenge and advice became HMRC’s Chief Executive and First performance and transformation, on HMRC strategy, performance both in terms of immediate and and capability Permanent Secretary, and the Principal future objectives 1 Accounting Officer for HMRC. With effect from Customer Services 15 October 2019, Melissa Tatton became HMRC’s Tax Assurance Commissioner (whose role is to ExCom sub-committees Board sub-committees strengthen the governance of tax disputes). Customer HMRC’s Board provides support, challenge and Compliance Strategy and Design Committee People and assurance to HMRC’s Executive Committee Ensures HMRC is on track Nominations Committee strategically and that it has the Provides advice and scrutiny on (ExCom). Board members are the chair and five right business and operating model nominations, succession planning, other non-executives, the Permanent Secretary in place to deliver, develop and leadership and HR strategy Chief Executive 4 and the chief finance officer. Chief people officer agree strategy and design HMRC has three arm’s length bodies. The Valuation Audit Risk Committee Organisational Provides assurance and Office Agency is an executive agency of HMRC. Capabilities Committee Deputy scrutiny on financial control, Revenue and Customs Digital Technology Chief finance officer Ensures HMRC has the Chief Executive risk and governance Services Limited and R.N. Limited are both required capabilities to fulfil its strategic ambitions non-departmental public bodies.2 Customer Experience Committee ExCom is HMRC’s most senior decision-making Chief digital and Strategic Performance and Provides challenge and support body. The Chief Executive and Deputy Chief information officer Resources Committee on customer experience-related Executive, together with the director generals who Ensures that performance issues and monitors departmental is on track relative to the lead HMRC’s business groups, make up ExCom. performance against ‘Your Charter’ five-year Business Plan and ExCom oversees and assures all of HMRC’s General counsel decides on the prioritisation work and is responsible for setting and delivering and solicitor of investment resources its strategic objectives. New committees for 2018-19 Border Coordination Valuation Office Agency 1 On 18 July 2019, HMRC announced that Sir Jonathan Thompson will step down as HMRC Chief Executive in the Autumn. 2 R.N. stands for Revenue Nominees. Source: HM Revenue & Customs, Annual Reports and Accounts 2018-19, HC 2394, July 2019 OVERVIEW DEPARTMENTAL OVERVIEW 2019 [HMRC] – Where HMRC spends its money As well as collecting taxes, HMRC administers Personal Tax Credits and Child Benefit. Analysis of HM Revenue & Customs’ (HMRC’s) total net expenditure 2018-19 Of the £44.1 billion spent by HMRC in 2018-19: • £40.1 billion related to payments to HMRC’s customers, the main part of which Pay bill was on Personal Tax Credits (£22.3 billion) and Child Benefit (£11.5 billion); and £2.2bn IT • £4.0 billion were running costs. £0.6bn The amounts paid out through Personal Tax Credits have fallen in the past five years, Personal Tax Credits HMRC’s running £22.3bn Other from £29.1 billion in 2014-15 to £22.3 billion in 2018-19, as people transfer to Universal costs administration £4.0bn1 Credit. Total amounts of Child Benefit paid have remained around the same level for £0.4bn the past five years. Depreciation The average number of full-time equivalent persons employed during 2018-19 was Valuation £0.3bn Office some 57,300 for the core department. This average has fallen from some 58,900 Accommodation Child Benefit Agency in 2014-15. £0.3bn £11.5bn £0.1bn 5 HMRC reports that the efficiencies it has delivered, together with increasing revenues, mean that the cost of collecting taxes in the UK is less than a penny for every pound collected − down from 0.58 pence in the pound in 2014-15 to 0.52 pence in the pound in 2018-19. HMRC’s spend on benefits and other payments HMRC’s reported cost of tax collection 2014-15 to 2018-19 £40.1bn Pence per £ collected Corporation Tax reliefs 0.58 0.58 £5.9bn 0.56 0.55 0.55 0.54 0.53 0.52 Tax-Free Childcare Lifetime ISA 0.52 £0.1bn £0.3bn 0.50
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