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.

On-line services

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.

Small pensions

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.

Tax credits

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.

VAT 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.