Tag Archives: NAO

NAO says HMRC is tackling tax evasion but needs to further exploit IT systems’ potential

By David Bicknell

A report by the National Audit Office (NAO) has applauded HM Revenue & Customs’ (HMRC) work in tackling tax evasion to deliver £4.32 billion of additional tax yield between 2006 and 2011. HMRC also reduced staff numbers and introduced a range of improvements in its compliance work.

But, the NAO says, although the Department has introduced new IT capabilities to identify incidences of evasion more effectively, it is not yet exploiting the full potential of the new systems. It has also had to defer and reduce the scope of projects to keep within annual budgetary limits, leading to reductions in benefits.

According to the NAO’s report, the Compliance and Enforcement Programme cost £387 million to 2011-12 and was made up of over 40 projects intended to increase compliance yield – the measure of additional tax arising from compliance work – by £4.56 billion between 2006-2011.

Against that target, the Programme actually reported additional yield of £4.32 billion over the five years to March 2011, with HMRC forecasting that it will generate an additional £8.87 billion of yield between 2011-12 and 2014-15. However, the NAO points out, HMRC will not achieve all of the Programme’s forecast benefits because of changes to scope or slippage in delivering projects, as well as over-optimism in its forecasts.

HMRC reduced staff numbers by the planned amount of 3,374 full time equivalents by the end of 2008-09, two years ahead of schedule. It also generated an improvement in productivity -defined as the level of yield generated by each full time equivalent – of approximately 36 per cent, below its forecast of a 42 per cent improvement. HMRC did not routinely measure the impact of the Programme on customer experience.

Amyas Morse, head of the National Audit Office, said:

“This major programme has helped HMRC to increase tax yield substantially and has introduced ways of working which will strengthen HMRC’s compliance work in future.

“The Department could, though, achieve better value for money from its investment in compliance work by improved understanding of the impact of individual projects and ensuring that its staff have the capacity to exploit new systems to the full.”

On improving HMRC’s compliance work, the NAO report says the following:

 “The Programme has improved HMRC’s ability to undertake compliance work but it has yet to exploit the full potential of the new systems. In particular, the new ICT systems can substantially improve how HMRC assesses evasion risks to identify cases for investigation. HMRC is embedding new systems and approaches into working practices. We assessed the implementation of a sample of projects:

Project design. Overall, HMRC managed design phases well but, particularly on projects to implement new ICT systems, it did not sufficiently consider redesigning business processes or developing the staff capability needed to exploit the full potential of the new technologies.

Implementation. HMRC did not always communicate clearly the rationale for projects and, although it provided training and guidance, these were not always timely or requirements were underestimated.

Assessing the performance of new systems. HMRC has established management information on the use and performance of new systems and, over time, will seek to use this to better understand the impact on business performance.

HMRC – The compliance and enforcement programme

NHS users should require mutuals to deliver more benefits than in-house, says NAO

By David Bicknell

The National Audit Office (NAO) has highlighted risks to value for money associated with the Department of Health’s programme aimed at enabling its staff to take the lead in leaving the NHS – or ‘spinning out’ – to set up health social enterprises or mutuals.

The NAO’s  Report recognises that, at this early stage of the ‘Right to Request Programme’, it is too early to assess its costs and benefits. But it makes the point that the Department of Health has not set measurable objectives specifically for the Right to Request Programme against which to evaluate its success. PCTs expect social enterprises or mutuals to deliver more benefits than other providers, but did not generally contract for them to deliver savings or any other additional benefits.

The NAO’s report points out that many risks and liabilities still reside with the PCTs and will need to be managed if value for money is to be achieved. In the last resort, the trust or its successors will be responsible for ensuring that essential services continue to operate. For a time, social enterprises will be highly dependent on work and cash flow from their respective PCTs. They will also be operating in an ‘increasingly competitive market’ owing to changes in health legislation currently going through Parliament. So PCTs or their successors will need to have a clear idea of how they will react if enterprises run into financial difficult or fail.

Amyas Morse, head of the National Audit Office, said, “There are many risks to be managed if the Department is to get value for money from the £900 million contracts awarded to social enterprises. The Department needs to reassess its approach, when contracting with social enterprises, of not requiring efficiencies over and above what would have been achieved if the services had remained within the Department.”

You can access the full report here