Policy paper

2010 to 2015 government policy: making it easier for HMRC customers to deal with their taxes

Updated 8 May 2015

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

This is a copy of a document that stated a policy of the 2010 to 2015 Conservative and Liberal Democrat coalition government. The previous URL of this page was https://www.gov.uk/government/policies/making-it-easier-for-hmrc-customers-to-deal-with-their-taxes. Current policies can be found at the GOV.UK policies list.

The issue

HMRC wants to make it easy for customers to deal with their taxes and get things right, by making our products and processes more simple and straightforward, and by improving our customer service.

This will reduce the costs for HMRC customers, including businesses, and help make sure that the right taxes and revenues are collected and paid.

Actions

Improving HMRC’s customer services

HMRC is stabilising and improving services for individuals in Pay As You Earn (PAYE). HMRC is now more than 98% accurate when notifying people of their tax code, and by the end of October 2012 we had worked all 17.9 million ‘legacy’ PAYE open cases left over from the old PAYE computer system

We are working to improve HMRC’s performance in responding to calls and post. By March 2015, HMRC customers can expect that we will be answering 90% of the telephone calls made, we will deal with 80% of letters within 15 working days, and we will deal with new UK claims for benefits and credits on average within 22 calendar days.

We will make it cheaper for customers to phone HMRC by moving from 0845 numbers to 03-prefix numbers by summer 2013 and by introducing customer call-back services by the end of 2015.

Introducing a new real time information system for PAYE

HMRC is improving the system that employers use to provide information to HMRC. We are introducing a new Real-Time Information (RTI) system for PAYE, employers and pension providers so they will be able to tell HMRC about tax and other deductions at the time payments are made – as opposed to reporting them all at the end of the year.

This will enable us to obtain more up-to-date, accurate data from employers rather than waiting until the end of the financial year to update our records. It will also mean that employees will pay the right amount of tax every month and their records will be updated whenever there is a change in their pay and work benefits.

Introducing more digital services

HMRC will significantly expand the range of digital services that customers can use.

• by 2015, the UK’s 4.6 million small and medium enterprises will be able to access everything they need online from a personalised homepage with secure digital messaging - this will save businesses time and money in dealing with their tax
• by 2015, the 39 million individual taxpayers in PAYE will be able to alert HMRC to certain changes which affect their tax
• by 2015, the 10 million taxpayers in self-assessment will be able to conduct all their tax transactions online
• by 2017, individuals (with a tax liability at year-end) will also be able to view a personal tax statement online, giving them greater understanding of their tax affairs

Supporting customers who need extra help

Some HMRC customers need extra help to get their taxes and entitlements right. We want to provide this support in a way that suits them. It needs to be easy to access and affordable, both for customers and for the taxpayers who fund our services. We know the current system does not meet the needs of the people it was designed to serve, so HMRC has published plans to introduce a new service that is more accessible and tailored for customers who need it.

Reducing administrative costs for businesses

The government is committed to making tax easier, quicker and simpler for small business.

Budget 2012 committed HMRC to go further and faster in making improvements to business. HMRC aims to reduce the annual cost to business of tax administration by £250 million by 2015.

Background

HMRC’s Business plan 2012 to 2015, published in 2011, sets out the changes that HMRC is making to our products and services and why.

HMRC’s Digital strategy explains the changes HMRC is making to our online services.

HMRC’s strategy for improving customer services is based on researching and understanding our customers, so we can provide services based on their needs and positively influence their behaviours. HMRC aims to make it as simple as possible for those who are willing and able to pay the tax that is due, and support those in need of help.

HMRC knows that the great majority of people want to get things right. The ‘HMRC charter’ explains what customers can expect from HMRC and what HMRC expects from our customers.

Appendix 1: Real Time Information (RTI) for PAYE

This was a supporting detail page of the main policy document.

Real Time Information (RTI) will improve the operation of the PAYE system by creating more up-to-date taxpayer records and making the system easier for employers and HMRC to administer.

Why we are changing PAYE

When PAYE was introduced almost 70 years ago, most people held just one job for most of their life and employers sent us pay and tax information annually. Today, employers still send us information annually, but many people change jobs more frequently, or have multiple employments or pensions, making it more difficult for us to keep our data up-to-date.

We also need up-to-date information about employment and pension income so the Department for Work and Pensions can adjust claimants’ Universal Credits awards, which will start from 2013 for some people.

Under RTI, employers and pension providers will send us information each time they pay their employees; we will be able to keep more accurate records and, over time, more people will pay the correct tax.

How it will affect businesses

RTI will reduce administrative burdens on business by about £300 million a year from 2014 to 2015. Employers will no longer need to send a separate end-of-year return.

We have consulted extensively among our customers to ensure that as far as possible, RTI is designed around how they operate. We have also been working with employers and pension providers in an RTI pilot to get the best learning and ensure the process is as user friendly as possible.

RTI timetable

We are on schedule for most employers and pension providers to join RTI from April 2013 and for all employers to be routinely reporting in real time by October 2013, as planned.

Following consultation, the timetable has incorporated a lengthy pilot and was designed to allow a significant period of time to test RTI processes and to optimise support products for businesses.

The pilot started on time on 11 April 2012 with 10 volunteer employers and runs until 5 April 2013. Employers will join RTI progressively, subject to successful reviews at each stage. We aim to have around 100,000 pilot employers reporting in real time by March 2013, covering 6 million employees.

For more detail and how to prepare for RTI, see the HMRC issue briefing ‘Real Time Information (RTI) for PAYE’

Appendix 2: new HMRC digital services

This was a supporting detail page of the main policy document.

HMRC is committed to delivering digital services that are so good that they will be our customers’ first choice for interacting with the department.

The HMRC ‘Digital strategy’ identified 4 significant exemplar services which will transform the way we interact with our customers online, and open up digital services to new customer groups.

PAYE online

A new online service for taxpayers who use PAYE to pay tax via their employer. The service will allow individuals to get guidance and information on their tax code and to inform HMRC when they make a change that affects the amount of tax they pay.

The service will also give individuals the ability to see an online tax statement that gives a breakdown of how their tax was calculated and how it might have been spent.

Paperless self assessment

We will introduce a service that completes the online journey for our self assessment customers by making the whole of the self assessment process a digital one.

More than 80% of self assessment customers already use the digital channel. HMRC will enable these customers to have an end-to-end digital service, with guidance and messaging online to help them complete their returns in as efficient a way as possible.

Tax for my business

We’re expanding on HMRC’s current offering for businesses. We’re providing a joined-up way for small and medium enterprises to access tailored guidance, links to their online transactions (registering, filing and paying), a facility for accessing help and asking HMRC questions, and increasingly tailored education and support.

The service will aim to make it easy for small and medium enterprises to find prompt, clear and simple answers that they can rely on.

Agent online self-serve

This service will enhance agents’ ability to self-serve; we will provide a secure way to apply for a ‘unique agent reference’, allow agents to see their clients’ payments and liabilities across the main business taxes and enable them to notify HMRC about new clients.

The service will build on the ‘business tax dashboard’ and while increasing self-serve capability, it will also reduce opportunities for online fraud and enable HMRC to differentiate between paid professional agents, those from the voluntary and community sector and those acting in an unpaid capacity on behalf of friends and family members.

For more information see the HMRC Digital Strategy.

Appendix 3: supporting HMRC customers who need extra help

This was a supporting detail page of the main policy document.

HMRC is looking to introduce a new way to support people who need extra help to get their taxes and entitlements right.

Recent research shows that HMRC’s network of Enquiry Centres does not meet the needs of the people it was designed to serve.

We plan to introduce a new service of specialist help over the phone for those who need it, supported by a mobile team of face-to-face advisers. This new service will be accessed through our normal phone lines.

HMRC ran a public consultation on plans to support customers who need extra help from 14 March 2013 to 24 May 2013 and has published an initial summary of the responses.

A final decision on the operation of the new service will be made in January 2014, when the results of this pilot and the consultation have been fully assessed.

HMRC is now considering the issues raised by the consultation in more detail. We are also planning a series of workshops and events with customers known to need extra support to get further views, and to make sure the proposed service meets their needs.

A pilot to test the new service

A five-month pilot to test the new service is running in the north east of England, from 3 June 2013 to 31 October 2013.

The following Enquiry Centres are included in this pilot and are currently closed: Alnwick, Bishop Auckland, Bridlington, Hexham, Darlington, Durham, Middlesbrough, Morpeth, Newcastle, Scarborough, Stockton, Sunderland, York.

Customers based in the north east pilot locations and in need of extra support will be transferred to the new service by our contact centre advisers, through our normal phone lines.

Find details on how to contact HMRC.

A final decision on the operation of the new service will be made in January 2014, when the results of this pilot and the consultation have been fully assessed.

Appendix 4: improving HMRC’s performance in handling phone calls and post

This was a supporting detail page of the main policy document.

We are working to improve HMRC’s performance in responding to calls and post.

By March 2015, HMRC customers can expect that we will answer 90% of telephone calls made; we will deal with 80% of letters within 15 working days, and we will deal with new UK claims for benefits and credits on average within 22 calendar days.

The figures that follow are from HMRC’s review of performance for the financial year ending March 2013. These performance figures are provisional and will be confirmed in our annual report and accounts, which are published in June.

Responding to calls

In 2012 we announced plans to recruit up to 1,000 additional staff into HMRC contact centres to enable us to meet our target of answering 90% of calls by the end of March 2013, much earlier than previously planned. New staff joined the department from November, and we expect to see sustained improvements in our contact centre service levels as a result.

From October 2012 to March 2013 we handled more than 90% of call attempts, achieving the best monthly performance since December 2009.

Performance for the full year was 75.2% of call attempts handled, achieving our target for the year.

PAYE

At the end of October 2012, we finished the programme to work through the 17.9 million legacy open cases, which remained from our old PAYE computer system. This means that we have met the deadline agreed in 2010 with the Public Accounts Committee.

We have also met our commitments to bring PAYE completely up to date by the end of March 2013.

Post

In 2012-13, we cleared 85% of post within 15 working days, exceeding our target of 80%. This is the best performance ever recorded by HMRC.

We are also on track to clear 97% of post in 40 days, exceeding our 95% target.

Tax credits and child benefit claims

From April 2012 to February 2013 we dealt with UK tax credits and child benefit claims and changes of circumstance in an average of 15.5 days, well ahead of the target of 22 days.

Over the same period, international claims and changes of circumstance were cleared in an average of 119.4 days, against a 92-day target. This is largely as a result of clearing backlogs of international child benefit cases, where our processing speeds can be affected by how quickly we can obtain information from other countries.

Appendix 5: Alternative Dispute Resolution

This was a supporting detail page of the main policy document.

If businesses or individuals disagree with a tax decision made by HM Revenue & Customs they usually have a right to appeal or ask for a statutory review.

We have now introduced a new service to help resolve disputes, or at least get agreement on which issues need a legal ruling.

We launched Alternative Dispute Resolution (ADR) in September 2013 because we wanted to provide small and medium-sized enterprises and individual customers with a way of settling tax disputes, when there is deadlock in a case, more quickly than in a tribunal or court hearing.

It follows a two-year trial and consultation with professional bodies and the voluntary sector. Our customers have already told us they liked the speed and flexibility of the new service.

We have also made ADR available to larger and more complex businesses following a successful pilot scheme. They are able to discuss it with their Customer Relationship Manager or caseworker, as well as using our online services.

See the guidance and information on Alternative Dispute Resolution for all types businesses and individuals.

What we are doing

Resolution is an informal process where we bring in an impartial third-party adviser, referred to as a facilitator. We have created a new national team of trained people for this role. The decision to settle a case is still made by the customer and our officer, but the facilitator will try to broker an agreement with meetings and telephone conversations.

ADR covers VAT and direct taxes disputes, and entering into the process does not affect any customer’s existing review and appeal rights. We can not guarantee resolution will settle a dispute, but by the end of the process both sides will have a clearer understanding of the issues if they need to go to the next stage in dispute handling.

Resolution is not designed to replace our statutory internal review, which is an established way of resolving disputes without a tribunal hearing. The review looks at legal challenges to decisions, but ADR is suitable for disputes where there might be more than one legal outcome.

We have a set of principles that our officers have to abide by when they are dealing with dispute resolution. It is set out in our Litigation and Settlement Strategy and calls on them to be non-confrontational and to work with customers to find a solution to a dispute. It also makes clear we do not do deals or ‘split the difference’ on tax due where we believe the law points to a different outcome.

Resolving a stalemate

Our resolution process:

• most applications are made online, but we do arrange other ways for customers to apply in exceptional circumstances
• we contact the case officer and manager to tell them a request for resolution has been made
• customers fill in an agreement, called the Memorandum of Understanding, to confirm they want to take part in the meetings with the facilitator
• we let customers know within 30 days if they can use ADR

Suitable cases for ADR

Issues may involve:

• facts requiring more clarification
• a need for more evidence
• a desire for better understanding of the arguments on technical matters or facts
• issues capable of further mediation and settlement

Disputes not suitable for ADR

These issues may involve:

• payments
• fixed penalties on the grounds of reasonable excuse
• tax credits
• PAYE coding
• claims for tax not to be collected because of a delay caused by HMRC (under Extra Statutory Concession ESC A19)
• cases being dealt with by our criminal investigators

Appendix 6: improving our services

This was a supporting detail page of the main policy document.

We are working hard at HM Revenue & Customs to improve our service to customers, to close the tax gap, and to be as efficient as we can be.

Our vision focuses on three aims:

1. maximising the revenue we collect in tax and duties — money that pays for the UK’s essential public services
2. improving customer service so it is easy for individuals and businesses to pay us what they owe, and to claim what they are entitled to
3. reducing our operating costs even further, to make sure we deliver value for money for the taxpayer

What we are doing

We are collecting more money than ever before, and investing in our services. This means we can:

• continue to bring down tax credit error and fraud, and increase the recovery of tax and tax credit debt
• improve our IT systems and data so we better identify areas of risk for more targeted enforcement action
• close any loopholes and reduce the opportunity for avoidance, evasion, error and fraud

We are supporting businesses - encouraging them to thrive by reducing their administrative burdens, and administering the Government’s tax measures that are focused on growth.

We are also making further improvements to help make paying tax and claiming payments and credits straightforward:

• developing more online services, making it easier for customers to sort out their tax themselves, which is cheaper, quicker and more convenient and gives them more control over their affairs
• improving the way Pay-As-You-Earn works through Real Time Information by reducing costs and administration for customers, as well as helping the Department for Work & Pensions with the introduction of Universal Credit
• giving more help to customers who need it most, when their lives or circumstances change, such as at retirement or becoming self-employed

The money

• we have been given more than £150 million additional investment over the next three years by the Government in the December 2013 Autumn Statement to reduce fraud, error and debt in the tax credits system and to continue to tackle tax avoidance and evasion. In return we have to:
  • bring in an extra £3.7 billion in compliance yield between now and the tax year 2015 to 2016 by clamping down further on tax avoidance and evasion
  • bring in benefits of £1.9 billion from our work on fraud, error and debt in tax credits by the tax year 2018 to 2019
• we brought in £475.6 billion revenue in the tax year 2012 to 2013
• we collect on average £1.3 billion revenue each day
• we delivered record compliance revenues of £20.7 billion in the tax year 2012 to 2013 - £2 billion above our target
• we paid out £43 billion in payments and credits in the tax year 2012 to 2013
• we paid £109 million a day in tax credits and Child Benefit
• we are continuing to cut our running costs by consolidating our IT and estate - we have:
  • cut IT costs by £87 million
  • reduced our estate by 300,000m2 - that’s just over four times the total floor space at Buckingham Palace

People and places

• we currently employ 62,900 FTE people
• we will have reduced our staff by about 44% to 52,000 by April 2016, from 97,000 in the tax year 2005 to 2006
• we are running our department with a budget that will be 27% lower by the tax year 2015 to 2016 compared with the tax year 2005 to 2006
• we serve 45 million people and 4.8 million businesses
• we handled 70 million phone calls in the tax year 2012 to 2013, and received 41.6 million call attempts during April to September
• we answered 90% of calls in the second half of the tax year 2012 to 2013, and more than 90% of calls in November 2013
• we have been using about 1,000 extra temporary staff in our contact centres to answer calls from customers
• we get 25 million items of post a year - including 9.5 million letters from PAYE and Self Assessment customers
• between April and November 2013 we met our target to clear 80% of post within 15 working days, and cleared 96.5% in 40 working days
• our current accuracy rate for PAYE tax codes is 96.7%