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HMRC Annual Report Highlights Progress in Digital Services

Posted on Nov. 8, 2021

“I feel immense pride at the way my colleagues responded to the unprecedented circumstances caused by COVID-19,” HM Revenue & Customs Chief Executive Jim Harra said in a foreword to the tax authority’s annual report.

“The pandemic showed how a trusted, modern tax administration system is crucial to the U.K.’s national resilience and crisis management capability. It also showed HMRC values at their best — more than 60,000 public servants pulling together with confidence and capability to support the economy and look after our customers and each other,” Harra added.

HMRC published on November 4 its report and accounts for the year that ended on March 31; an overview of its performance during the year; reports setting out HMRC’s approach to tax compliance, how it measures compliance yield, and its approach to error and fraud in COVID-19 support schemes; and the HMRC charter annual report.

HMRC also published performance updates for the quarter that ended on September 30 and the month of September.

The National Audit Office noted that HMRC reported tax revenue of £608.8 billion in 2020-2021, down by £27.9 billion compared with 2019-2020. “Inevitably, the scale of the economic impact caused by COVID-19 had some effect on tax revenue, and we saw customer debt levels rise significantly during the year,” Harra said.

“We took a sympathetic approach to those struggling to pay their tax or file their returns on time while continuing to collect revenue from those customers who were in a position to pay and to take action against avoidance and evasion in all its forms,” Harra added.

Making Tax Digital is at the heart of HMRC’s plans to build a trusted, modern tax system, Harra said. “It is helping to drive development of new software products that support good tax compliance and deliver wider benefits for businesses beyond managing their tax affairs,” he noted.

HMRC updated its strategic objectives in the spring. Its stated aims are to “collect the right tax and pay out the right financial support; make it easy to get tax right and hard to bend or break the rules; maintain taxpayers’ consent through fair treatment and protect society from harm; make HMRC a great place to work; and support wider government economic aims through a resilient, agile tax administration system.”

HMRC said it recorded some of its “highest ever customer satisfaction levels” with digital services during 2020-2021, with particularly high scores on the COVID-19 support schemes. “We also saw an increase in positive ratings from individuals, small businesses, and agents for all measures of customer experience,” it added.

“We introduced a range of digital services over the course of the pandemic — for example, holding more than 3 million webchats with customers, using digital stamps to avoid paper handling, and introducing a virtual assistant to help customers find answers to common questions more easily,” HMRC reported.

The tax agency said it improved on positivity ratings for tax agents but “did not always provide the level of service that we would like.” It seeks to address this in 2021-2022.

The charter annual report is prepared by HMRC’s customer experience committee, which comprises nonexecutive directors of HMRC and independent advisers.

HMRC made good progress in embedding the charter standards, including “building the charter into standard ways of working, from policy design through to delivery and operations,” the report said. “HMRC has mapped existing staff learning materials against the charter standards to ensure that charter knowledge and skills form part of the capability priorities for each HMRC business area. HMRC has also remained focused on ensuring its workforce have the right skills, including developing empathy training to ensure front-line customer-facing colleagues can understand a customer’s position, point of view, and any anxieties that they may have in dealing with their tax or benefit affairs.”

“We welcome HMRC’s announcements of the ‘cautious approach’ to debt collection and measured strategy for compliance (outside of pursuing those deliberately seeking to benefit inappropriately)," the Administrative Burdens Advisory Board said in its annual report for 2021, published on October 29.

“However, we equally recognize the anxieties facing many small businesses, coming to terms with accumulated debts, including tax debts at unprecedented levels, in a trading environment which is complex, fragile, and uncertain for many. We will want to continue to work with HMRC to ensure they take full account of issues confronting small businesses starting to trade again, from delays and interruptions to supply chains, increased costs, and other elements of uncertainty and complexity,” the board added.

The board is "a group of small and [medium-size] business operators and advisers who meet regularly with HMRC and report annually, as an independent body, to the financial secretary to the Treasury.”

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