Whither Universal Credit?

In September 2013 I wrote the following about Universal Credit:

"As loyal readers know, RTI and Universal Credits are all part of the same beast and the fates of both affect the government, HMRC and the DWP.

The overall aim of PAYE Real Time Information and Universal Credits is to make the administration easier for HMRC and DWP and to reduce fraud by ensuring that employees and businesses pay tax more accurately, whilst claimants receive the benefits to which they are entitled.

Thus it is interesting to note that Cameron has publicly indicated that the UC deadline of 2017, being zealously proselytised by Iain Duncan Smith, may in fact not really be achievable."

Now that IDS, who zealously championed Universal Credit, has gone what will become of it?

Kicked into the long grass, drastically watered down or forever stranded in no man's land?

Your views and comments are welcome.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

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What is Solar Tax Investigation Insurance?

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To find out more, please use this link Solar Tax Investigation Insurance



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Don't Bother Looking At The Dashboard!

Despite the ongoing spin from HMRC that RTI is working well, reality it seems is not as rosy as the spin.

A quote attributed to an HMRC call centre employee sums up the situation in a nutshell:

"Oh don't bother looking at the dashboard, all the postings are wrong on there."

As per AccountingWEB:

"AccountingWEB member Kenny Achampong challenged this optimistic view: 

“Whenever I speak to them they tell me they can't give me clients’ PAYE income details either on the phone or by post as there is an issue with the details supplied by the employer. I try to find out what exactly the problem is and it’s normally not having the correct year end info reconciled, but have also been told they cannot give any details out as the information they have is just too unreliable now.”

Michael Harle offered a classic good news/bad news summary of the situation: “I agree this delay is of benefit to clients and accountants alike. I do fear the real reason is that HMRC finally worked out how many penalties they would have to issue, and then deal with, next month and realised they are hopelessly under resourced to cope with this.”

These observations are typical for many AccountingWEB members, who are having to wrestle with RTI’s technical and procedural details. But because of the direct link to the universal credit and welfare reform, those closely involved with the project highlight the top-level political significance of the issue. With universal credit now stalled, it’s difficult to tell what the operating parameters for RTI are supposed to be and which way HMRC and the Department of Work and Pensions (DWP) are likely to turn next."

The fact is that so much political capital has been invested in Universal Credit/RTI that it cannot be allowed to be seen to fail, even if it is failing!

The people who will bear the cost of the failure are both HMRC staff, who have to work around the problems, and the hapless taxpayers who have to waste time and money proving that their figures (not HMRC's) are correct.


Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

RTI and Universal Credits

As loyal readers know, RTI and Universal Credits are all part of the same beast and the fates of both affect the government, HMRC and the DWP.

The overall aim of PAYE Real Time Information and Universal Credits is to make the administration easier for HMRC and DWP and to reduce fraud by ensuring that employees and businesses pay tax more accurately, whilst claimants receive the benefits to which they are entitled.

Thus it is interesting to note that Cameron has publicly indicated that the UC deadline of 2017, being zealously proselytised by Iain Duncan Smith, may in fact not really be achievable.

Gosh, really?

Cameron told the Commons work and pension select committee that he was not "religious" about plans to roll out the universal credit across the country by 2017.

He is quoted by the Guardian:

"The secretary of state was questioned very closely in the House of Commons. That is the department's position – they are shooting for 2017.

But the key thing is getting the early part of the introduction right. The more you can test out and hold pathfinders and get people on to universal budget and then start to take existing benefit recipients on to universal credit – the more you can get that right in the early years, the more chance you have of hitting your target of total rollout.

My view is this is a good reform that will make work pay, that is widely supported across politics and other sectors. So we need to get it right. But we shouldn't be religious about timings. We should be religious as it were about the overall concept of what we are trying to do."

Personally speaking I don't think governments should be "religious" at all, they should be pragmatic.


Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Universal Credit

Universal Credit trials begin today.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

RTI Change Request At The Eleventh Hour

With 36 days to go until the introduction of Real Time Information (RTI), businesses are gradually waking up to what this may mean.

Payroll World reports that the Federation of Small Businesses (FSB) has called for an easing of the reporting requirements for RTI, so that firms only need to submit data to HMRC once a month in order to reduce the cost burden on SME's.

The FSB’s proposal is to replace RTI with ‘Regular Time Information’, under which employers could submit returns once a month and which would help businesses with weekly payrolls, for example.

Sadly, for the FSB, this request is being made far too late in the day for it to be considered. The reality is the RTI is the flagship of HMRC and the government's Universal Credits. In the event RTI fails, both HMRC and the government will be holed below the water line.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

PAC Sweats Over RTI

Despite HMRC's oft expressed public confidence over the certainty of success of its flagship RTI, due to be launched next year, not everyone else is so confident.

In amongst the mud and mire about avoidance in yesterday's PAC report on HMRC's annual report and accounts for 2011/12, were some telling paragraphs about PAC's views on RTI.

Here:

"The next challenges HMRC faces are the roll-out of the Real Time Information system and the changes to child benefit. HMRC did not convince us that it will manage the potential increase in its workload or that it had fully considered the impact on taxpayers. There are four months to go before the main roll-out of the Real Time Information system. The system is vital for the Department for Work and Pensions’ introduction of Universal Credit, but HMRC has no contingency planning to cope with any delays in implementation."

Also here:

"HMRC is unduly complacent about the rollout of the Real Time Information (RTI) system and the child benefit changes. We are concerned that, with four months to go to the main roll out of RTI, the project has been rated amber by the Major Projects Authority. The Institute of Chartered Accountants in England and Wales (ICAEW) thinks that the Department's current plans will increase the burden on small businesses and therefore on the Department's workload. 

Similarly more individuals will be required to register for self-assessment as a result of the changes to child benefit. HMRC believes that there will be negligible impact from both sets of changes and do not have contingency plans to deal with delay or fluctuations in workload. 

By the end of March 2013, HMRC should provide the Committee with details of its plans to manage the burden on small businesses as a result of RTI; and provide credible contingency arrangements should the main rollout of RTI between April and October 2013 not go according to plan."

In the event HMRC's flagship sinks this will be a major blow to the government, for the success (or otherwise) of RTI is linked to the government's personal flagship of Universal Credit.

In the event that RTI sinks so does Universal Credit, and most likely with it the government.

Oh dear! 

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Phil Pavitt Leaves HMRC's Sinking Ship

In October I wrote about our old chum Phil Pavitt, who apparently had been moved from his role as HMRC's ubiquitous Chief Information Officer:

"I see Pavitt is no longer HMRC CIO. Apparently he has been replaced by his deputy Mark Hall. Pavitt's new title is something like Director General of Security and Information etc. 

Anyone know if this is promotion, demotion or a move sideways. 

Maybe he is just getting off the track before the RTI and Universal Credit express smashes into the buffers killing all on board and letting his underling take all the blame for any train wreck."

One day later I noted that he had in fact been "promoted" to "Director General Change, Security and Information".

Now here's the "funny" thing, that promotion appears to be pointless (unless it was designed to move him away from RTI).

For why?

Pavitt is leaving HMRC.

Quelle surprise!

He is joining Aviva in January.

RTI of course won't be live in January, funny that!

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Whither Pavitt?

My thanks to a loyal reader who posted this update about our old chum Phil Pavitt, who apparently has been moved from his role as HMRC's ubiquitous Chief Information Officer:

"I see Pavitt is no longer HMRC CIO. Apparently he has been replaced by his deputy Mark Hall. Pavitt's new title is something like Director General of Security and Information etc. 

Anyone know if this is promotion, demotion or a move sideways. 

Maybe he is just getting off the track before the RTI and Universal Credit express smashes into the buffers killing all on board and letting his underling take all the blame for any train wreck."

My question is this, is the above true?

I ask because:

1 Pavitt appeared to be a great "success" in his role (eg as I wrote in March: "Pavitt is single handedly turning HMRC into a fit and lean (no pun intended) technologically sophisticated organisation"), and

2 His CV on the HMRC site has not been updated to reflect this move:

"Phil's Executive Committee portfolio is Information Management Services and Change in HM Revenue & Customs (HMRC). He took on the role of Chief Information Officer of HMRC on 2 September 2009.

Phil has over 25 years experience in both private and public sector organisations and was previously CIO of Transport for London, where he led a major overhaul of the IT function. Prior to this he had held positions as CIO at OneTel and NTL.

Alongside his work commitments, Phil is a regular public speaker on a range of topics from leadership to IT delivery. He is also a trustee of Bar 'N' Bus an outreach charity working with young people in South East Essex."

Please can someone advise if he really has been moved, or if this comment is an error?

Thanks.

Tax does have to be taxing.



Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Taxwise.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise



Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Good News Everyone - RTI Is Brilliant!

Following yesterday's HMRC Tweetalong about RTI, I am sure that those who took part will be pleased to know that in the view of HMRC RTI is "going very well".

Hoozah!

This is the view of Stephen Barnyard (or is it Banyard?) Acting Director of Personal Tax set out in an HMRC press release entitled "RTI pilot goes from strength to strength" issued 9 July 2012.

Seemingly, by the end of September, there will be up to 1,300 employer schemes reporting PAYE in real time.

Loyal readers know that I (and indeed many loyal readers) have a somewhat cynical view about the likelihood of RTI working on budget, on time and without cocks ups:

"There are over 4 million employers in the UK. The RTI Pilot is running with just a handful. I gather even by October 2012 the number will have only been increased to a couple of thousand. This is still only about 0.05% of the total. The plans seem to suggest that over 99% of employers are going to be brought into the scheme from April-October 2013. This is a challenging timetable to put it mildly..."

Here is Barnyard's press release in full, as ever comments and views are always welcome:

"Over 1,300 employers will join the Real Time Information (RTI) pilot between now and September 2012 HMRC announced today.

Stephen Banyard, Acting Director General for Personal Tax, said:

“RTI is on track and the pilot is going very well. We started in April with just 10 employers and now we’ve successfully received over 1.7 million individual records from 338 PAYE schemes.

“Following the success of the first pilot stage, more PAYE schemes will join the RTI pilot, as planned, and by the end of September up to 1,300 employer schemes will be reporting PAYE in real time.

“We are also seeing external confidence in the pilot and we’ve responded to that by offering more large employers, payroll bureaux, new employers and software developers the opportunity to join the RTI pilot or to expand existing involvement in advance of the launch date in April 2013.”

Most employers will begin reporting PAYE in real time in April 2013. All employers will be routinely reporting PAYE in real time by October 2013, in time for the introduction of Universal Credit.

Notes to editors
1. RTI was launched in April 2012. It was expanded from 8th May as scheduled, when the first of a further 310 PAYE schemes started reporting PAYE information in real time. HMRC is on track for a further expansion in November.

2. The pilot includes a wide range of employers based on size, industry type, location, software use to ensure the pilot represents a wide employer base.

3. More information can be found here.

4. Two free webinars are also available:

• "Real Time Information – an overview” – a 15 minute look at the RTI timetable, main day-to-day changes employers will see, and help and support available.
• “Accurate Employee Information Matters – it can save time and money” - an 11 minute look at examples and the implications of inaccurate employee information, plus tips on how to avoid this and make sure that employee information is recorded accurately.

5. RTI will support the operation of Universal Credit – the Government’s flagship welfare programme - which brings together means-tested in and out-of-work benefits, Tax Credits and support for housing, and will improve work incentives and make work pay.


6. Follow HMRC on Twitter @HMRCgovuk"

Tax does have to be taxing.



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TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise



Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Get A Grip!

Oh dear Margaret Hodge (Chairman of PAC) continues to be "underwhelmed" by HMRC's less than stellar performance.

She is quoted by the Telegraph, in response to an National Audit Office (NAO) report on HMRC's accounts published yesterday:

"'Sadly it is no surprise that the NAO has found substantial problems with the HMRC's accounts. This year has seen a litany of tax errors and scandals come to light with mistakes made at the most senior level from the permanent secretary for tax downwards. 

The sheer scale of waste and mismanagement at HMRC never ceases to shock me. Without even mentioning the tax gap, in 2011/12 the department wrote off a staggering £5.2 billion of tax owed, overpaid nearly £2.5 billion in tax credits due to fraud and error and underpaid around £290 million. 

In some areas the department is moving in the right direction and has made progress to implement improvement plans. But the department is still plagued by IT problems; limiting, for example, its ability to link together the debts owed by taxpayers across different tax streams. 

With its long history of large scale IT failures, the department needs to get a grip before it introduces its new real-time PAYE information systems and begins the high-risk move from tax credits to the universal credit.'' 

The warning about the oncoming car crash that is RTI was echoed by Amyas Morse (the Comptroller and Auditor General), who said:

''Our high-level recommendations in today's report are that, first, the department should get a better understanding of the costs and benefits of its interventions - such as debt campaigns and initiatives to drive down levels of error and fraud in tax credits.

Secondly, it should prioritise and target its activities on the basis of a better understanding of risks, such as risk-profiling of taxpayers. 

Finally, before implementing significant structural changes, the department needs to be clear about what its future operating model will be: it needs to understand how its business will change following the introduction of real-time information and universal credit. 

There are broad lessons here which reinforce the messages in our recent value-for-money work on tax administration. The department should seek to apply those lessons across the full range of its activities.''

However, HMRC are quite upbeat about things:

"Today's report recognises the new system has bedded in well, and the legacy cases we inherited from the old clerical system are well on the way to being cleared.

We have a long way to go before we are delivering the standards of service to which we aspire, but today's report reflects the real strides forward the department has made, and sets solid foundations for the future.'' 

So that's alright then, nothing to see here move along please!

The key issue, in my humble view, is that both PAC and NAO are "politely" flagging their very real fear that RTI is going to be a clusterfuck. Loyal readers know full well that this site has repeatedly warned of this oncoming clusterfuck that is RTI. Seemingly others are now waking up to the dangers, sadly rather late in the day.
  
Anyhoo, here is the summary of the report, the full version can be read here C&AG report: HM Revenue and Customs 2011-12 accounts:

"The report details progress by the Department in stabilising the PAYE service since the serious problems that emerged when it introduced the new National Insurance and PAYE service (NPS) in 2009. The report also covers HMRC’s performance in managing tax debt; and its progress in tackling fraud and error and in managing debt in respect of tax credits.

In 2011-12, the Department received total revenue of £474.2 billion, an increase of £4.5 billion (0.96 per cent) more than in 2010-11. Tax revenue has continued to recover from the effects of the recession in 2008-09 and 2009-10. VAT revenue has increased by £9.3 billion, largely because of the VAT rate increase and increases in revenue from the oil, gas and business services sectors. Revenue from corporation tax has decreased through turbulence in the financial sector, offset by increased revenue from offshore companies because of higher oil and gas prices.

The Department is part way through its plan to stabilise the administration of PAYE. It has met its target to process 6.7 million end-of-year reconciliations relating to the 2008-09 and 2009-10 tax years. In addition, it is on track to reconcile the 2010-11 and 2011-12 tax years by March 2013; and, by December 2012, to clear outstanding reconciliations predating the introduction of NPS relating to 2003-04 to 2007-08.

Today’s report points out, however, that stabilising PAYE has come at a cost, in terms of the amounts of tax the Department has decided to forgo to keep workloads manageable. In 2011-12, it remitted an additional £12.7 million relating to claims from taxpayers, bringing the total of those claims to £53.7 million.

The NAO recommends that, as a step towards forecasting its overall work load and the operational resources required, the Department complete its review of its PAYE operating model, taking account of the findings from the pilot for testing its new ‘real time information’ (RTI) system.

The value of tax debt at 31 March 2012 under active management stood at £13.3 billion, compared with £15 billion in the previous year. The Department has made progress in implementing its debt strategy through tailoring its approach based on the characteristics of the debt. The Department’s records show a large increase over the last two years in the amount of tax which the Department has decided not to pursue, especially for income tax which was £756 million in 2011-12. This is in part owing to PAYE stabilisation work but also as a result of improvements in the recording of remissions.

The NAO recommends that the Department identify the full cost and evaluate the cost-effectiveness of each of its debt collection activities. It should also accelerate its work to undertake full risk profiling and customer segmentation of its debt balance, as recommended by the Public Accounts Committee in 2004 and 2008.

In 2010-11 (the latest year for which figures are available), the Department overpaid between £2.08 billion and £2.46 billion to claimants as a result of error and fraud and underpaid between £0.17 billion and £0.29 billion to claimants because of error. The Department has not met its target to reduce the level of tax credits error and fraud to no more than 5 per cent of entitlements.

The Department met its target to reduce tax credit debt to £4 billion at 31 March 2012 (down from £4.7 billion a year earlier), but only after writing off old debts of £1.7 billion during 2011-12. It estimates that £2.3 billion of the £4 billion is unlikely to be recovered. The Department’s campaign approach, aimed at collecting tax credits debts more promptly, has had limited success."

Tax does have to be taxing.






Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise



Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Phil Pavitt - HMRC's Human Shield

Well you could have knocked me down with a feather, when I read in the Guardian the other day yet another article about how Phil Pavitt (HMRC's CIO extraordinaire) is single handedly turning HMRC into a fit and lean (no pun intended) technologically sophisticated organisation.

Are their no limits to this man's talents and skills?

I am wondering if the recent media deluge of stories about the ubiquitous Mr Pavitt is more to do with a diversionary media strategy being employed by HMRC (to deflect attention away from..what's her name..oh yes, Lin Homer), rather than anything specific relating to Pavitt's skills and abilities (with which he seems to be remarkably "well endowed").

Anyhoo, here is the article in full (please feel free to comment and highlight the reality from the coalface):

"The Real Time Information (RTI) programme may be HM Revenue and Customs' most high-profile IT project of the moment, but the department has a whole swathe of significant technology projects under way.

"RTI is definitely the single biggest programme and the most high profile because of its intercept with universal credits, but it can't be the only thing we do in the next two to three years," says its CIO (chief information officer) Phil Pavitt. "We have 40-odd projects that are IT related. They're nowhere near as huge as RTI in terms of expenditure and what they will deliver, but some of them will have an enormous impact.

"For example, one of the programmes we have is about closing the tax gap, which is one of the big spending review targets for us, and will probably bring in £1bn to £2bn of income. We have to balance the resources, but RTI is not overbearing against all the others."

The roots of much of the work are in the department's Change Plan for 2011-15 which has set the stage for a planned reduction in headcount from about 70,000 to 56,000, and an effort to increase the proportion of staff working on compliance and enforcement to more than 50%.

"The mix of what the 56,000 do is that a lot did back office jobs that we are automating, and maybe 7,000 or 8,000 will change their role, the bulk of them working on enforcement and compliance," he says. "It's a big cultural transition and an effort to make us more efficient."

While there is no one big IT programme that will facilitate the transition, around half of the 85 projects that will contribute to the change have a significant IT element.

"Some of the projects are very IT related," he says. "For example, extending our caseload system that enables us to move cases in our enforcement and compliance area rather than shifting big lumps of paper in cases; that's a significant investment for us.

"We have a Connect system to take on all the data we get from government departments, and are able to build pictures of people so we can see where there may be fraud. These are large IT investments.

"Then there are others just to speed up the system and give us more capacity - we've just invested in 25,000 new desktops under the Aurora programme. Just having desktops that work better gives us more uptime: for example, the call centres are now handling twice the number of calls they handled two years ago, with very little downtime."

Sunset for Aurora

Under Aurora, HMRC also retired 66 of its core applications to bring the number below 750. It's a move that Pavitt believes will probably see Aurora's exceed its targeted savings of £160m a year, and one that has involved something of a culture shift in its attitude to IT.
"We've moved from a very risk averse position in retaining all of our applications, even if we never use them, to taking away from the estate all the areas that are overly complex or that we no longer need," he says.

Aurora however is in its closing stages, and will be replaced by Pavitt's 13 Machines strategy. Under 13 Machines, HMRC is aiming to reduce the number of business critical applications still further, to 200 running on 13 platforms by 2015-16.

13 Machines is not expected to produce savings on the scale of Aurora, as the earlier programme has taken the low hanging fruit, and its business case is currently being kept confidential. It is, however, expected to make a big difference, according to Pavitt..

"Some systems are of an age or complexity, or we struggle to find the right level of support, so that they require immediate attention. Some are used in an area where the policy has changed, and it has such a dramatic impact that as we adapt to the policy we might as well change the core systems. In some cases we may have 20 similar platforms that we can take down to one.

"We have a complex calculation to help us do all this, but we've agreed with the business a roll out schedule to do those in some sort of order.

"RTI is a classic case that will retire and replace some of the classic applications."

HMRC is also working to improve the quality of its data. Pavitt describes it as a "data monster", processing more than any other government department, dealing with 35 million people and up to 12 million businesses, and managing more than 400 tax regimes. Consequently, preserving the quality of the data takes a massive effort.

"Data has been a real challenge for us, and we're piloting within RTI a data cleansing mechanism," Pavitt says. "Everybody can run a data cleansing project, and within a minute the data begins to degenerate because old behaviours come along.

"We've begun to standardise the data inputs to us as an organisation. We don't have the ability to mandate what you have to give, but we do have the ability to show what it could be, and if you provide data like this how much easier it could be on you as the employer and on us as the processor."

RTI is being used to introduce data frameworks, and the master and slave data concept, a metadata concept that involves a set of core data, such as someone's address, and more variable data that cannot override the core.

"If that works well in the personal tax area we'll take all of those principles and begin to slowly move them across HMRC," Pavitt says."

Tax does have to be taxing.

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To find out more, please use this link Taxwise



Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

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Not The Bleeding Edge of Technology

In September 2011 I wrote the following about HMRC's Real Time Information (RTI) system:

"HMRC have fessed up privately to ministers that the deadline will be missed.

Universal Credit is now being assessed by the Major Projects Authority, a group of officials and commercial experts from the Treasury and Cabinet Office. Their key concern being that the “real time” information system, to be provided by HMRC, will not be ready by April 2013."

RTI will involve employers and pension providers telling HMRC about tax, national insurance contributions and other deductions at the time, or before, payments are made, instead of waiting until the end of the tax year. The move is intended to help DWP provide claimants with universal credit without demanding information on their incomes, and with more confidence that it is getting the payments right.

Some six months on, and I see that Mark Holden (the RTI Programme Director) is happily telling the Guardian that it is on schedule for full "delivery by October 2013".

In fact several hundred thousand employers will take part in a pilot this April.

Holden is quoted:

"All the IT is tracking, we're in final phases of testing, and it's looking very good."

Whilst he is confident that the technology is solid, seemingly implementation may cause a few problems:

"Probably it's more around the implementation. 

 Although this is very big IT, it's not bleeding edge technology. 

The biggest change is around any changes the employers have to make, so the real thing for us is making sure the communications are clear, making sure the guidance we are publishing is in plain English and the employers understand it first time around.

That's why we're really pleased to be able to run a pilot, which is not a luxury we've had many times before."

A will allow myself a small chuckle wrt his optimism about HMRC communicating in "plain English".

Now here's the "rub", most of the programme is built on platforms already used by HMRC.

As loyal readers are already aware, Caseflow et al are not exactly "flavour" of the month with staff (or the NAO) wrt functionality, user friendliness etc.

Is it not therefore a tad "dangerous" to build RTI on top of a shaky set of poorly functioning systems?

Holden, to his credit, takes full ownership of the project:

"Although we're really clear in governance terms that [RTI is] an HMRC programme.."


I note that governments (of all political hues) have not exactly covered themselves in glory when it comes to IT implementations (aside from HMRC debacles of the past), I would refer you to the disgrace of the Computer Sciences Corporation failed and scrapped £1.9BN contract for the national NHS system.

So folks, is it really on target and on budget?

Will it really live up to the hype?

Tax does have to be taxing.

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To find out more, please use this link Taxwise



Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Caseflow - Spectrum Isn't Green

In September 2011 I wrote the following:

"Despite all the public pronouncements by HMRC that improvements are on schedule, and that targets etc will be met, it appears that one particular target will not be met.

Anything important?

Errrmm, yes actually...Universal Credit, the flagship of the government's plans to simplify the benefits system ."

That prompted a discussion amongst loyal readers (LR's) about the failure of Caseflow.

LR1:

"and get shot of PaceSetter and Caseflow. These systems cost a colossal amount of taxpayers' money, yet there is not a shred of evidence that HMRC have improved their performance as a consequence of their implementation.

Does anyone know where to find a verifiable figure for the costs to date of PaceSetter and Caseflow?

It's only taxpayers' money that is being wasted, so the management don't care, but I imagine Joe Public and the Public Accounts Committee might be interested how many £millions are being flushed down the loo."

LR2

"Re Pacesetter and Caseflow. They will never be ditched as they have never been continuously " reviewed". You will find numbers bandied about hundreds of millions in efficiency savings which conflate increases in productivity with greater tax take all because of the new systems.

UC will have to be delivered, maybe on time, maybe late, because it must. Tax Credits need to be sorted out. Pacesetter will continue as it believed to be the cure to all that ails HMRC ( as well as the rest of the Civil Service).

Case flow is getting regular mentions on the Hotseat. The answers are emphatic. Nothing is wrong, this is simply continuous improvement!"

Well now, here we are almost six months later and Sky reports that taxpayers have spent £98M on two tax collection projects that failed to bring in any extra money.

Can you guess what one of them was children?

Yes, that's right, Caseflow (the other being Spectrum - is Captain Scarlet involved now?).

These new systems were meant to bring in £743M last year. However, the National Audit Office (NAO) has stated that they have not delivered "any additional benefits".

The NAO have warned that HMRC will not meet its future forecasts to collect an additional £8.9BN by 2014/15, thanks to the failure of Caseflow and Spectrum.

Why then when issues are raised at Hotseat about Caseflow failing, are they swept under the carpet with the answer that "Nothing is wrong, this is simply continuous improvement."?

Is a Mysteron agent within HMRC?

Tax does have to be taxing.

UK EXPATS: Reduce tax on UK Pensions
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What is TAXWISE?

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To find out more, please use this link Taxwise



Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Homer Speaks - HMRC The Three Pillared Triangle

My thanks to a loyal reader who sent me the transcript of Lin Homer's (CEO of HMRC) recent introductory video chat with Stephen Hardwick (HMRC Communications Director).

Homer is pushing the point that she wants managers to listen, and for staff to tell her "how it is":

"..lots of staff also come to 100 Parliament street, and along with EXCOM colleagues, I’m on the forth floor, I’m there. And I think unless people are prepared to tell me what they think is stopping us from advancing then I don’t think we can make the best plans as senior leadership. 

What I do need them to be prepared to do is to give me ideas about solutions, as well as problems, so any time, they can get me on the email as well, share your thoughts and share your ideas."

The proof of the pudding is in the eating, take her at her word and tell her how it is; then let me know how you get on and whether management really do become more accessible.

Oh, and by the way, could someone please tell me what a three pillared triangle is?

"Transcript for Lin Homer introduction video with Stephen Hardwick

Stephen Hardwick

Hello I’m Stephen Hardwick, Communications Director, and I’m in St Mary’s House, Preston today to interview Lin Homer our new Chief Executive. Lin you’ve been in HMRC for about 3 weeks now, so how’s it going?

Well I’m really enjoying it. You’re going to have to ask everyone else what they think. But it’s given me a fantastic opportunity to get involved in the forward planning of the corporate plan but also to look at what we’ve achieved over the last year and to plan for the future. I’ve had a great chance to learn about what we do. 

I knew quite a lot about that anyway. I’d been involved in the capability review 2 years ago. 

In UKBA I’d been involved in taking some of the customs work on as responsibilities and of course I knew that we had 67,000 staff, but the scale of the organisation is still something really astonishing. 

Collecting in 1.2 billion of tax every day, paying out 109 million of benefits and credits, this is a complex and significant organisation and one of the things I’d like to do is not only to learn about it but to get people to talk more about this important job they do.

Stephen Hardwick

From your first impressions, what do you think we’re doing well and what do you think we could do better?

Well I think there are loads of things that are done really well, I think we have set ourselves very clear targets. With the introduction of pacesetter we’ve learnt to focus on performance delivery, but also to involve everyone in the organisation in that. And we’ve increasingly narrowed the gap on the tax yield, reduced our errors, so that less money is paid out that then has to be clawed back. So it’s just significant areas where I think we’re leading the way and where others have much to learn from us. 

But any good organisation wants to be better and I think what our front line would say is they want to deliver the very best for the public. So what I think we’ve got to do is really focus on how we can continue producing good customer service, how we can continue improving the tax that we get in, which after all is what all public services are based on, and how we can continue ensuring that we can be as cost effective and as efficient as possible. And those three pillars of our triangle are really important.

Stephen Hardwick

HMRC doesn’t currently get a very good press, do you think that’s deserved?

Well I think it’s almost inevitable that the department that collects taxes isn’t going to be universally loved all of the time. But I have to say I think we get a lot more of the negative and probably less of the positive than we should. And as I say I think one of the answers there is that we’ve got to be more prepared to talk about what we do well, hold out our improvements well, whilst being non defensive about the areas we still want to be better in. 

And I think that requires all of us as senior managers to get out there and talk about the business, including rebutting things that need rebutting. But I really think it also needs every member of staff to be a little bit less modest, a little bit prepared to talk about the things that they do well and for all of us to remind people that public services are founded on us getting the tax in.

Stephen Hardwick

HMRC has been going through a period of upheaval since we were formed and re structuring and we’ve got the lowest staff engagement scores in the civil service, so what are your internal priorities Lin?

Well I think we’ve got a big responsibility to continue driving improvements forwards. Obviously for me very sad to arrive just as Lesley died but I’m determined that we’re going to build on the improvements that she started and follow those through. That’s what she would want, that’s what lots of staff have said to me and we’ve got a great base of operational efficiency already promised, begun to deliver, that ministers have great confidence in us so we’re going to take that forward. If we can get that cost base right then what that means is that we can deliver more for the country in these difficult times. 

In addition I think we’ve got to keep pushing up the tax yield. Every public service needs us to do that and we are doing extremely well in a number of areas but the more we can ensure that the tax comes in at the right level and at the right time, then all public services are safer. And not withstanding those pressures of course we’ve got to continue to build on the customer service work we’re doing. Fantastic that the call centres are answering twice as many calls as they did two or three years ago but I know that the call centre people want to go further, they want to answer more calls and they want to answer them more quickly so those are good examples of where we can give ourselves some aspirations to do better on customer service.

I think all of us want to come to work with a bounce in our step, we want to work for an organisation that’s valued and we want to feel valued as part of that organisation. Again I think there’s been some fantastic work since I last looked at the organisation two years ago, and although we started from a low base our engagement scores are going up so I want us to build on that. That really requires us as senior managers to listen to what people are saying to us and it requires staff to have confidence in us that we want to be better and to work with us on that journey. 

I’d like people to be thinking about their answers to the survey last year, and the answers that we got from that survey as well as the information we’ve got from our self assessment on the capability review, will give us an agenda for improvement as we go forwards. And bit by bit, year by year, we’re going to turn this into the organisation that the public want from us but that we want to work in.

Stephen Hardwick

While you’ve been out and about, you’ve asked people to come up and talk to you and tell you what they think about HMRC. Do you really want people to tell you how it is?

Yes I do. 

There’s no point me sitting in an ivory tower, and I’m going to be trying to get out regularly. At the moment I’m out on a visit once a week but lots of staff also come to 100 Parliament street, and along with EXCOM colleagues, I’m on the fourth floor, I’m there. And I think unless people are prepared to tell me what they think is stopping us from advancing then I don’t think we can make the best plans as senior leadership. 

What I do need them to be prepared to do is to give me ideas about solutions, as well as problems, so any time, they can get me on the email as well, share your thoughts and share your ideas. And again today in Preston Paul’s already given me a number or real, recent examples of front line staff coming up with things that have made the business here better and that’s what we need more of, and that’s what we as senior managers need to encourage.

Stephen Hardwick

You seem to have a really approachable and personable style, is that the sort of style you’d like for HMRC as an organisation?

Yes but I think it’s important that we’re professional and credible as well and I think what we’ve got to do is show people that they are right to place their trust in us. And I think what we’ve got to show our staff is that we mean to continue investing in them so of course we should be personable and accessible but we should be highly professional and highly trustworthy as well. If we get that right we can all hold our heads up high.

Stephen Hardwick

Being chief executive of HMRC is a really demanding job so how do you relax Lin?

I find work enjoyable most of the time I mean I’ve been lucky enough to do some great jobs, in demanding organisations, but you know doing things that matter to the public is quite a lot of reward in its own right and I do enjoy my work, so first of all I don’t go home heavily stressed. My family would say I’m a bit of a workaholic so don’t ask them for any advice, but I love family time, I’ve got three grown up daughters I still see a lot of, but then the boring lovely things of gardening and reading, they’re also great pleasures for me.

Stephen Hardwick

Lin, thank you very much."

Tax does have to be taxing.

UK EXPATS: Reduce tax on UK Pensions
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What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise



Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Gauke Speaks - Don't Believe The Hype

HMRC's much hyped Real Time Information (RTI) system, that is "allegedly" going to be up and running on time and on budget in 2013 (April "apparently"), is going to add to the cost burdens of business.


David Gauke, the exchequer secretary to the Treasury, let the cat of the bag at the All Party Parliamentary Group on Taxation's (APPG) event to mark the beginning of its work on a report on RTI.

Guake is quoited in the Guardian as saying:

"Businesses are going to have to update software to comply with RTI, but the overall impact for employers will be to reduce costs."

Allegedly the "savings" will come from reduced costs of operating PAYE, and careful implementation should reduce the costs of software upgrades. Helpfully, he also added that the government is looking at ways of helping small businesses to make the changes.

Gauke claims that the RTI project is on schedule.

Is it?

Please feel free to drop me a note if you have knowledge of the reality of the progress of this project.

I ask, because in September I wrote the following:

"HMRC have fessed up privately to ministers that the deadline will be missed.
Universal Credit is now being assessed by the Major Projects Authority, a group of officials and commercial experts from the Treasury and Cabinet Office. Their key concern being that the “real time” information system, to be provided by HMRC, will not be ready by April 2013."

In the space of less than 3 months is everything now really back on schedule?

Major IT projects (both public and private sector ones) very rarely come in on schedule or on budget, does anyone (aside from Gauke) seriously believe that this one will?


Wrt business saving money, if RTI gets up and running on time, if there are any business owners out there with a view on this please feel free to share it with us.

Tax does have to be taxing.

UK EXPATS: Reduce tax on UK Pensions
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Quote ID code "ABC" when contacting a QROPS specialist.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

The Government Responds

The House of Commons Treasury Committee recently published this paper on HMRC "Administration and effectiveness of HMRC: Government Response to the Sixteenth Report from the Committee"

The committee's recommendations are in BOLD and the government responses (it is the government that ultimately is in charge and is responsible for HMRC, as noted in an earlier article about Jack, when MP's have a go at HMRC, they should in fact be directing their ire at the government/themselves) are in normal font.

Unsurprisingly there is a large section dealing with staff morale etc, eg "The evidence we have received about the management culture within HMRC, supported by the staff survey results, is very disturbing".

HMRC's handling of post and phones also receives some "comment".

Additionally, according to the government, it seems that the real time information system WILL be implemented on time!

ROFLOL!!

I look forward to writing some pithy articles in 2013 referring back to this government statement.

Anyhoo, here are a few extracts:

"We welcome the fact that HMRC is updating the 2006 KPMG study on the burdens imposed by the tax system to take account of changes over time and urge it to broaden the study to examine the wider “hassle” costs imposed by complying with tax law. This work may be costly. We seek assurances from Government that the findings of the updated study will be acted upon....


HMRC is adopting a new and enhanced customer cost reduction measure. This measure is extended in scope in two regards: it includes individual customers (as well as business customers), and it includes wider customer compliance costs such as where processes do not run as smoothly as they
should or where there is error....


The possible displacing of costs from HMRC onto taxpayers has been a long-running concern for tax agents, businesses and individuals. Not enough is known about the impact of resource reductions at HMRC on the administrative burdens faced by businesses and individuals. It would be counterproductive if ‘efficiencies’ achieved at HMRC resulted in greater costs being placed on the wider economy. Such a result would impede growth. Government will be reluctant to take effective measures to address this issue in the absence of robust evidence about its extent. We urge the representative bodies who made these claims to us to come forward with quantitative evidence about the extent of this problem....


It is important that HMRC staff who are planning or implementing process changes have some personal understanding of the possible impact on the wider public. We recommend that HMRC staff, particularly senior staff, spend time visiting businesses, tax charities and tax practices to see the impact of process changes on the ground....


The Government accepts the Committee’s conclusion....HMRC staff do engage directly with its customers to get first-hand experience of the impact of changes it is making....


We recommend that the Government look again at the profiling of the savings HMRC is expected to make alongside the efficiencies that are expected to deliver them to ensure the two are commensurate and allow a degree of contingency in the case of unexpected problems with implementation. Technological improvements and process changes within HMRC have and will continue to deliver genuine efficiency savings. However, there have been credible suggestions that HMRC has in the past made savings by reducing staff numbers before the enabling efficiencies have been fully realised – with resulting impacts on performance and costs.
(Paragraph 22)


The Government partially accepts the Committee’s recommendation. HMRC keeps profiling of cash and benefits under systematic review and adjusts as necessary to ensure efficiencies and savings remain in step.....HMRC’s Workforce Management Plan is designed to manage the overall reduction in staff numbers and ensure the Department has the right people in the right place with the right skills to deliver core HMRC business, to maximise redeployment opportunities for those staff whose roles may be coming to an end at their current locations and to take advantage of estate reduction opportunities. Wherever possible the Department tries to ensure that staff numbers are reduced in line with enabled changes to work processes and systems, in order to maintain performance...


There is some evidence that the workforce change programme may have led to a disproportionate loss of experienced people at HMRC. We recommend that HMRC examine how it implements job cuts, with the aim of preserving the professional expertise in tax it needs to deliver an effective service, and report back on the changes that have been made as a result of this process. (Paragraph 27)


The Government accepts the Committee’s recommendation. HMRC’s Workforce Management Programme is working to take advantage of estate reduction opportunities as they arise and to maximise redeployment opportunities for those people whose roles may be coming to an end at their current locations. The work to get the right number of people with the right skills in the right place supports HMRC’s role in tackling the UK deficit by both contributing to the reduction in Government spending and by maximising the collection of revenue.


HMRC does not anticipate using large-scale severance schemes during the Spending Review period. Any schemes that are offered will be small-scale and closely targeted at people for whom there is really no other option. HMRC’s main tool for meeting staff reductions is the redeployment of those in need of new roles into other essential departmental operations....



HMRC’s task is made harder by the increasing complexity of the tax system and deficiencies in the underlying legislation. The Government has already announced a package of reforms to the way tax policy is made. Following the O’Donnell Review of 2004 HM Treasury has had lead responsibility for making tax policy, whilst HMRC is responsible for “policy maintenance”. The time has come to review how those arrangements are operating with a view to ensuring the practical impact of new tax legislation is adequately considered even before the consultation stage begins. (Paragraph 29)


The Government does not accept this recommendation....



Staff engagement at HMRC was a major concern of our predecessors throughout the last Parliament. The management team have achieved some small improvements in relation to organisational purpose whilst staff remain dedicated to their work despite the considerable pressures on them and the organisation, some of which originates from outside the Department. However, this cannot conceal the overall picture. Relatively positive staff attitudes towards immediate colleagues and superiors stand in stark contrast with overwhelmingly negative attitudes towards organisational change and the management of the Department. It appears likely that the poor handling of the recent PAYE reconciliations and relentless negative publicity has further harmed engagement and morale. This widespread disengagement is a serious problem for a Department about to undergo further restructuring, and which was described by one witness as “stretched almost to breaking point”. (Paragraph 50)


The Government notes the conclusion. HMRC’s Executive Committee (ExCom) accepts that action is required to improve leadership across the Department and acknowledges the need to strengthen trust in and across the Departments’ leadership. Working with the whole leadership community, ExCom will lead, direct and drive work to address this need. This provides opportunity to deliver improvement across every aspect of leadership and across the entire leadership cadre from ExCom downwards. The way in which this work will be carried out will be intended to build trust through a high degree of involvement and collaboration with people at all levels in HMRC.


The People Function at HMRC will have a clear role in proactively ensuring compliance with standards of delivery and behaviour on HMRC-wide issues and ExCom will hold all leaders to account in respect of these standards.


The Executive Committee will also ensure all leaders, from top to bottom in HMRC, visibly adopt and promote the Leadership Behaviours. ExCom members have also personally signed up to specific leadership behaviours that they will improve. ExCom recognised that it must be seen to be leading from the front in order to rebuild trust across the organisation and address engagement concerns. ExCom members are regularly visiting offices across the UK and proactively seeking views, listening to and acting upon feedback. They will be communicating frequently through intranet messages, video, blogs, staff dial-ins and hot seat forums so everyone knows how they are progressing in addressing concerns to improve engagement and morale.


Any organisation facing the constant job losses that HMRC has faced over the last five years would experience problems with staff engagement. The Spending Review settlement means that some areas are likely to experience greater stability, even expansion, whilst other parts of the Department continue to be reduced in size. Ensuring that engagement does not fall still further in these latter areas will be an enormous challenge for HMRC managers. (Paragraph 55)
The Government notes the Committee’s point.


The evidence we have received about the management culture within HMRC, supported by the staff survey results, is very disturbing. There is a perception that the Department is run on the principles of close control and management scrutiny, with little opportunity for individuals to develop autonomy and exercise their skills. Whilst there is a need for consistency in dealing with people’s tax affairs and appropriate performance management, a culture such as the one described to us is likely to harm staff morale and lead to disengagement and poor performance. (Paragraph 64)


The Government notes the Committee’s conclusion and HMRC is taking steps to build more productive relationships with its people as well as improve the leadership skills, in order to address the perception described.


HMRC is also committed to supporting its leaders in this challenging environment. HMRC is confident that, at the most senior levels, the recent selection processes have enabled the appointment of the right people into the right roles. New leadership behaviours have been introduced and used within the selection processes and as part of the overall development of the organisation. As such, managers at all levels will continue to be assessed against these behaviours as part of the regular appraisal process and used as a foundation to individual leadership development plans....


The National Insurance and PAYE Service should ultimately make PAYE work more effectively and ensure efficiencies across the Department. However, the problems resulting from its flawed implementation have done significant damage to the public perception of HMRC and the tax system more generally. It is crucially important for the credibility of the management team that the 2012 target for clearing open cases is met and that improvements in overall performance follow soon afterwards.(Paragraph 83)


The Government accepts this recommendation and HMRC is on track to hit its 2012 target to clear all old open cases.....


We welcome the move to introduce Real-time Information (RTI). We agree with the professional bodies that the system must be tested thoroughly before full implementation, with full consultation with users and close co-operation with the Department for Work and Pensions at all stages. We note that large employers will Administration and effectiveness of HMRC: Government Response 11 be required to use the new system in January 2013, which is before the system has been tested through one complete tax year. (Paragraph 91)
The Government agrees the Committee’s conclusion that the system should be thoroughly tested for a year....


HMRC has committed to an ambitious timescale to deliver Real-time Information, driven in part by the importance of the project in delivering the Universal Credit. The history of large IT projects subject to policy-driven timescales has been littered with failure. The timetable is made more ambitious by the fact HMRC will still be resolving the legacy of open cases and stabilising the National Insurance and PAYE Service during the project’s early stages. Introducing Real-time Information before HMRC and the Government can be sure it will work correctly would run 12 Administration and effectiveness of HMRC: Government Response unacceptable risks for the reputation of the Department and the tax system. We recommend that HMRC and DWP have contingency plans in place in case a delay becomes necessary. Given the importance of the project we further recommend that the preparations for Real-time Information in both HMRC and DWP are subject to external audit as implementation proceeds, for example through the National Audit Office, to ensure that they are as robust as possible. We expect arrangements to be put in place for the National Audit Office to report quarterly to Ministers, this Committee, the Public Accounts Committee and other relevant Committees to ensure Ministers in both Departments can be held properly accountable for the progress of the project. (Paragraph 93)


The Government partially agrees this recommendation...


We welcome HMRC senior management’s acknowledgement that the Department’s customer service performance has been unacceptable. We are not convinced, however, that the problems can solely be accounted for by the problems with PAYE in 2009–10. The evidence received by us and our predecessors suggest that poor service standards have been an issue for many years and have not been fully reflected in HMRC’s customer service measures....


The evidence we have received, correspondence from the public and the coverage in the professional press suggest that long delays in responding to post at HMRC are endemic. This is unacceptable...


The Government partially accepts this recommendation although it prefers to wait....


It is inevitable that HMRC will have to pursue some taxpayers for outstanding debts and it may have to be forceful in doing so. However, the tone of some of the letters being sent out suggest the “potential consequences” are inevitable unless payment is immediately forthcoming. These letters appear to have been widely used without sufficient thought to whom they were sent to, even being sent to people who did not 24 Administration and effectiveness of HMRC: Government Response actually owe money. Such language is appropriate only where there is strong evidence of persistent and deliberate non-payment; it is completely inappropriate where the amount owed is in dispute, where the amount may be zero, or where the recipient is vulnerable. We recommend HMRC take steps to ensure such hardhitting correspondence is used in a more proportionate way, is better tailored to individual case histories and contains information on the specific debt in question. (Paragraph 168)


The Government accepts the Committee’s recommendation."





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