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Taxation: Tax Collection

Volume 743: debated on Tuesday 5 February 2013


Asked by

To ask Her Majesty’s Government whether they have sufficient resources and staff in place for the full collection of tax.

My Lords, this Government are investing in HMRC so that it will collect £9 billion a year more from its compliance activities by 2014-15 than at the start of this Parliament. The number of HMRC staff in compliance roles fell under the previous Government. Under this Government there will be around 2,500 more staff tackling tax avoidance and evasion.

My Lords, given that the Public Accounts Committee found that £1.1 billion was lost to the Treasury by foolishly cutting 3,300 staff from the compliance and enforcement unit of HMRC, can the Minister give us a greater assurance that that folly will not be repeated, especially with the new comprehensive policy that has been announced on offshore tax evasion? Will the Minister say when that will be published, what its focus will be, and whether that, too, will be properly resourced to do the job that is required of it?

My Lords, it is important to recognise that the big cut in staff in HMRC took place before 2010. The number of staff fell by 25,000, and 10,000 staff working in compliance roles—that is, the very staff about whom the noble Lord is concerned—were cut during that period. We have added 2,500 staff in that area since we came in and they are generating a very significant amount of additional funding. On international tax evasion and avoidance work, a whole raft of initiatives is under way. There is a new unit within HMRC and we are working very closely with the OECD. I am sure that a number of further announcements in this area will be made during this calendar year.

My Lords, the 2010 comprehensive spending review committed HMRC to improving the customer experience. However, in December last year, the National Audit Office concluded that customers were still not getting a good service. For example, last year 20 million calls went unanswered and there was a cost of £33 million in phone charges to customers kept hanging on. Will the Minister say whether HMRC intends to increase staffing and resources to address this problem?

My Lords, HMRC has a target of answering 90% of calls. It was more than achieved in the third quarter and was certainly a better performance than that achieved in some earlier parts of the year. An example of the challenge that HMRC finds itself facing in this respect is that the number of calls that it gets per day ranges from 86,000 to 3.2 million on a peak day. Either a very small number or a very large number of people phone, and it is unsurprising that on a small number of days it is impossible to reach the 90% target. However, HMRC has put more resource in. It has upgraded the equipment and, as I said, the 90% target has been more than met in the last quarter.

My Lords, when he assumed office, the Chancellor of the Exchequer commissioned a study on the creation of a general anti-avoidance regime. The committee that performed that study reported two years ago. When are the Government going to do something about it?

I am surprised that the noble Lord does not know that the Government are committed to introducing a general anti-abuse rule in this year’s Finance Bill.

My Lords, the Government could do with fewer tax inspectors if they simplified the tax system. How are they doing on that?

My Lords, I think everybody agrees that we have a particularly barnacle-encrusted tax system. This Government have set up the Office of Tax Simplification, which has started work in this area. One advantage of the general anti-abuse rule is that once such a rule is in place, it should not be necessary to introduce as much new tax legislation to deal with tax abuse, because the general rule will cover it.

My Lords, will the legislation include a definition of aggressive tax avoidance as compared with ordinary tax avoidance?

My Lords, will the Minister help me? I have heard conflicting figures for staffing at HMRC. Can he tell me the figures for the total staffing complement over the past three years, as well as give me the breakdown between individual areas of work?

My Lords, the staffing level at HMRC fell from about 94,000 to 66,000 under the previous Government. Under the comprehensive spending review, it is due to fall by about another 10,000. While that is happening, there will, as I said, be an increase of about 2,500 for compliance. There will therefore be a shift towards more compliance against a backdrop of a significant change in the way in which people submit tax returns. In 2010 only 42% of corporation tax returns were submitted online, but in 2011-12 that number had increased by 96,000. As I have said before, the number of staff you need to process that kind of activity has fallen considerably because they are no longer dealing with paper returns.

My Lords, will my noble friend think again about the answer that he gave to the noble Lord, Lord Barnett? The noble Lord asked a perfectly simple and straightforward question and it deserves a rather better reply.

My Lords, my reply would be that the Government are cracking down very hard on tax evasion and tax avoidance. We are putting more resources into this area. We are submitting more cases for prosecution and are having more successful prosecutions. The key question is: what is the outcome on the ground? Are more people who avoid and evade tax being taken to court, and are abusive practices being cracked down on? Yes, they are.