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HMRC Debt Recovery Tackling Tax Evasion

Her Majesty’s Revenue & Customs (HMRC) has significantly improved it’s level of debt recovery and the way it tackles tax evasion, delivering £4.32bn of extra tax yield between 2006 and 2011, a report from the National Audit Office has said. 

At the same time, it has cut staff numbers and introduced a range of improvements in its compliance work – but it could still do more.

The NAO said the HMRC had introduced information technology (IT) to identify evasion more effectively but it wasn’t yet exploiting the full potential of the new systems. HMRC had also been forced to defer and reduce the scope of projects to keep within budget limits, so the benefits were not as great as they could have been.

The ‘Compliance and Enforcement Programme’ cost £387m to 2011/12 and was made up of over 40 projects. It aimed to increase compliance yield, ie the measure of extra tax coming from compliance work, by £4.56bn between 2006 and 2011. It managed £4.32bn and forecast that it would generate another £8.87bn between now and 2014/15. However, the NAO said the HMRC won’t meet all of its targets because some of its forecasts were over-optimistic.

NAO head Amyas Morse 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.”