HM Revenue and Customs
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HMRC standard report and accounts 2006-07
HM Revenue & Customs (HMRC) Chairman Paul Gray said today's NAO report into HMRC's accounts shows that the Department is getting it right in many ways.
In 2006 -07 HMRC:
* delivered £437 billion in revenues to the Exchequer. This represents an increase of £31.7 billion (7.8%) on last year.
* reduced VAT fraud
* beat its target of 35% for the number of self assessment tax returns filed on line
* processed record numbers of employers' returns faster than ever before
HMRC Chairman Paul Gray said:
"I'm pleased that the NAO has recognised the improvements HMRC has made to the quality of PAYE processing and the good progress we've made in engaging with taxpayers on-line."
"Six million families and ten million children benefit from tax credits. We have reduced the amount of error and fraud in the tax credit system and I have put in place a fundamental review to accelerate the testing of levels of errors and fraud. This will enable us to set clear targets to reduce this further."
"HMRC's work affects everyone, man, woman and child in the UK. Much of our work is technically complex relying on sophisticated computer systems or professional financial and legal skills. Our intelligence led, risk-based approach efficiently focuses our resources, for example, on those who deliberately avoid paying their fair share of tax or to counter attempts to smuggle dangerous drugs."
"But there is still more to be done to ensure that we provide a high quality service to all our customers."
"We will take on board the NAO's recommendations and work closely with interested parties and stakeholders to help us to improve. We are committed to delivering a top class service to the public."
Income tax PAYE
The report recognises the improvements HMRC has made to its income tax processing, including work to bring all the information on individual taxpayers together under a single computer record. This will make our PAYE service much quicker and more accurate.
The Department continues to be at the forefront of on-line services. Our target of receiving 35% of Self Assessment returns on-line has already been exceeded.
The Department has already begun work to ensure that small pensions are taxed fairly. We will not normally collect any tax unpaid on small pensions before 2007-08. HMRC has improved its guidance and local office procedures for the future and will take up the NAO's recommendation on communication with stakeholders.
HMRC tax credit compliance teams carried out checks on 137,930 claims and potentially incorrect payments of £138 million were prevented. In 2006 -07 HMRC compliance work prevented tax credit claims with a value of £212 million being paid out incorrectly on suspicion of organised fraud.
HMRC's strengthened strategy for tackling Missing Trader Intra-Community (MTIC) fraud, including the extended verification of suspect VAT repayment claims, has greatly reduced the level of fraud-related activity in the UK. HMRC is determined to build on this success. On 1 June 2007 the Government introduced a targeted Reverse Charge, and this year's Finance Bill strengthens HMRC's ability to respond rapidly should the fraud mutate into commodities not covered by the Reverse Charge. MTIC related trading activity has fallen by around 90 per cent since the summer of 2006.
Notes for editors
1. Our employer on-line service has also continued to improve. Four months after the end of the employers' filing deadline, 86% of employers' returns had been successfully processed - an improvement of 29% over the previous year.
2. HMRC pays out some £18 billion a year in tax credit support to families and the low paid. Around six million families with children directly benefit from tax credits by an average of £1,550 a year.
Some £3.9 billion in overpaid tax credits was owed to HMRC by the end of March 2007 (down from an earlier total of £6 billion). HMRC will recover £1.5 billion of this direct from tax credit claimants and will recover a further £1.7 billion from future awards. The balance is not currently under active recovery for a number of reasons e.g. because the claimant's appeal period had not ended.
The 2005 Pre Budget report set out a substantial package of measures which will reduce overpayments in future years by around a third.
4. All tax credit claims are subject to verification checks before payments. HMRC also conducts a risk assessment on all claims and reported changes with examination of cases where sufficient risk is identified. The number of cases currently subject to formal examination prior to payment has doubled to just under 50% of all tax credit cases enabling errors to be corrected at a very early stage. Rigorous compliance checks are also regularly carried out on claims in payment direct tackling paper based fraud attempts.
Issued by HM Revenue & Customs Press Office