Corporate report

Summary of HMRC's annual report and accounts 2019 to 2020

Published 5 November 2020

In this summary of HMRC’s Annual Report and Accounts, you can read about how we’re supporting government priorities, our vision for the future, progress since the 2015 Spending Review, and how we performed in financial year 2019 to 2020.

For full details, read the main report: HMRC Annual Report and Accounts 2019 to 2020.

You can also read supporting documents:

• Customer compliance: how HMRC’s compliance yield is split by business area and our approach to tax compliance and large business
• HMRC’s compliance yield: how HMRC reports future revenue benefit - an update for 2018 to 2019
• HMRC’s compliance yield: how HMRC reports upstream yield
• HMRC’s customer segmentation
• statistical tables
• historical data summary

1. We are the UK’s tax, payments and customs authority

1.1 Our vital purpose

Our purpose is to collect the money for the UK’s public services and give financial support to people. Our work touches the lives of almost everyone in the country.

1.2 Our strategic objectives and values

Our strategic objectives from 2019 to 2020:

• collect revenue due and bear down on avoidance and evasion
• transform tax and payments for our customers
• design and deliver a professional, efficient and engaged organisation

Our values:

• we are professional
• we are innovative
• we show respect
• we act with integrity

2. Our vision for a trusted, modern tax and customs department

We want to be a trusted, modern tax and customs department - operating an effective, resilient system that gives the public confidence in our ability to deliver.

This means modernising what we do and how we do it. By increasing the use of Real-Time Information we can, over the coming years, build a system that helps people get their tax right first time, reduces mistakes and makes it harder to bend or break the rules.

3. Our progress since the 2015 Spending Review

At the government’s 2015 Spending Review, we secured £1.3 billion of investment to transform into one of the most digitally advanced tax administrations in the world, and an additional £800 million for additional work to tackle evasion and non-compliance in the tax system.

We faced challenges along the way and we haven’t achieved everything we wanted to yet. Our ambitious plans, and the timeframe we set for them, pushed the limits of our technology and capacity. Preparations for EU exit also placed additional demands on our capacity, and we did not have the resources to do everything we had planned.

Despite these challenges, we have made major achievements as a result of the investment we made, as shown below.

3.1 Bear down on avoidance and evasion

We committed to raise an additional £5 billion a year on financial year 2015 to 2016 by 2019 to 2020, by tackling tax avoidance and aggressive tax planning, evasion and non-compliance, and by addressing imbalances in the tax system.

What we achieved:

• £5 billion additional tax revenues raised this year by tackling non-compliance, compared to 2015 to 2016
• 4,123 people prosecuted
• 3,347 years of custodial sentences secured

3.2 Transform tax and payments for our customers

We committed to provide access to digital tax accounts for all small businesses and individuals by financial year 2016 to 2017, delivering an additional £480 million of tax revenue by financial year 2020 to 2021 and £46 million in sustainable efficiencies.

What we achieved:

• 12.7 million customers accessed their online digital services account for individuals
• 1.4 million businesses signed up to Making Tax Digital for VAT, the biggest VAT change in a generation
• £223.5 million Making Tax Digital additional tax revenues

3.3 Make sustainable resource savings

We committed to make £717 million of sustainable resource savings a year by 2019 to 2020 by digitising tax collection and creating a smaller, more highly skilled workforce - achieving £1.9 billion of cumulative savings, or a 21% reduction in baseline resource costs, over the Spending Review period.

What we achieved:

• £696 million sustainable cost savings per year by end of Spending Review period (97% of our target), £1.9 billion cumulative savings
• £200 million expected annual savings by 2020 to 2021 after successfully exiting our £10 billion IT contract with Aspire
• 13 regional centres: 12 sites secured, 9 being built and fitted out, 3 already open - in Belfast, Bristol and Croydon

4. Rising to new challenges

As we enter a new decade, new and unexpected challenges have emerged. We’re playing a vital role at the heart of the government’s coronavirus response: helping people and businesses get through this difficult time financially, and supporting the economy through measures such as the Coronavirus Job Retention Scheme, the Self-Employment Income Support Scheme and the deferment of VAT bills for up to half a million businesses.

We’ve also made temporary changes in policy and the way we operate - with thousands of colleagues delivering vital additional support through helplines and webchat. All this while keeping our usual services running and providing safe working environments for our people.

How we’re supporting customers through coronavirus (COVID-19)

By 30 September 2020 there had been:

£39.2 billion in grants claimed under the Coronavirus Job Retention Scheme (in support of staff furloughed to the end of August) and 9.6m jobs furloughed

This is calculated as the sum of the maximum number of employees furloughed by each Pay As You Earn (PAYE) scheme that has made a claim.

By 31 July 2020, there were:

£7.6 billion in grants claimed under the first phase of the Self Employment Income Support Scheme, with £5.7 billion in grants claimed under the second phase by 30 September

By 27 August 2020, there were:

more than 84,000 restaurants registered to the Eat Out to Help Out scheme, with £522 million in claims as at 31 August 2020

This is calculated by the number of individual restaurant premises that are registered to take part in the scheme across the UK.

Between 11 March and 30 September 2020 there were:

more than one million calls answered by call handlers and more than 366,000 webchats handled

We’ve become more than a tax authority, forming a vital part of the UK’s national resilience and crisis response - with all the difficult choices and challenges this involves as we balance customer support with our core purpose.

At the same time, we’re preparing for the end of the UK’s transition period with the EU and building the border systems and infrastructure that traders need for the future.

In rapidly changing times, we want to continue moving in step with the society we serve: keeping pace with rapidly changing economic circumstances, new technologies and shifting social and employment trends to improve the customer experience, as well as learning from other high-performing tax authorities.

There’s also work to do within HMRC itself: we need to take more steps to improve our employee engagement through the respect we show to each other, the pride in what we do and the skills we develop.

We also need to update IT systems where they’re in need of modernisation, and build on what we’re already doing to protect customer data by ensuring all our systems and processes are compliant with General Data Protection Regulation. All this helps us to do the best possible job for our customers.

5. Our performance in financial year 2019 to 2020

5.1 Strategic objectives

5.1.1 Collecting revenues due and bearing down on avoidance and evasion

In the financial year 2019 to 2020, we generated total tax revenues of £636.7 billion, an £8.8 billion increase on last year, and exceeded our target for protecting revenue that would otherwise have been lost through non-compliance.

The COVID-19 pandemic did not greatly affect our ability to achieve our targets for 2019 to 2020 because it began in the last few weeks of the financial year. Its impact will be much more visible during financial year 2020 to 2021.

It has created challenges to the operational collection of tax, and a financial climate in which tax receipts are likely to be lower than previously estimated. As the UK rebuilds its economy, we will seek to carry out our vital work in a way that is sensitive to customers’ altered needs and capabilities.

Key performance indicators

1.4% increase in total tax revenues

Tax year	Tax revenues
2019 to 2020	£636.7 bn
2018 to 2019	£627.9 bn

36.9 billion additional tax generated by tackling evasion, avoidance and non-compliance

Tax year	Tax revenues	Target
2019 to 2020	£36.9 bn	£34.5 bn
2018 to 2019	£34.1 bn	£30 bn

We have improved our compliance yield, and how we have done this is set out in our technical note published with the 2018 to 2019 annual report.

4.9% the level of fraud and error within the tax credits system

Tax year	Tax revenues	Target
2018 to 2019	4.9%	5%
2017 to 2018	5.5%	5%

4.7% UK tax gap in 2018 to 2019 -

This is the difference between what is paid and what should be paid. This was a 0.3% decrease, from 5%, in 2017 to 2018.

3.6 billion Protected or generated by tackling organised crime

608 fraudsters and other criminals successfully convicted

You can also see our historical data series

Read about how we performed against our public commitments for this objective in HMRC’s Annual Report and Accounts 2019 to 2020 on p21.

5.1.2 Transforming tax and payments for our customers

Our aim is to create a better customer experience for everyone so that compliance increases and we raise revenue more effectively for vital public services.

In the first half of this financial year, we didn’t deliver the customer service we would have liked, due to resourcing challenges carried forward from financial year 2018 to 2019, plus higher than expected customer demand.

In the second half of the year our performance improved steadily and was close to where we wanted it to be, but we couldn’t meet all of our targets. From March 2020, COVID-19 resulted in changes to customer behaviour and the introduction of new support schemes, which affected our ability to maintain performance.

Key performance indicators

12.7 million customers accessed their online digital services account for individuals

Tax year	Customers
2019 to 2020	12.7m
2018 to 2019	11.7m

81.6% customers satisfied or very satisfied with our digital services

Tax year	Tax revenues	Target
2019 to 2020	81.6%	80%
2018 to 2019	80.4%	80%

6 minutes 39 seconds average speed of answering calls

Tax year	Average speed of answer	Target
2019 to 2020	6 minutes 39 seconds	5 minutes
2018 to 2019	5 minutes 14 seconds	5 minutes

87.6% online iForms processed within 7 days

Tax year	iForms processed within 7 days	Target
2019 to 2020	87.6%	95%
2018 to 2019	94.1%	95%

29.9% callers waiting more than 10 minutes to speak to an adviser

Tax year	Callers waiting more than 10 minutes	Target
2019 to 2020	29.9%	15%
2018 to 2019	19.7%	15%

70.3% customer post needing a response cleared within 15 days of receipt

Tax year	Post cleared within 15 days	Target
2019 to 2020	70.3%	80%
2018 to 2019	76.6%	80%

You can also see our historical data series

Read about how we performed against our public commitments for this objective in HMRC’s Annual Report and Accounts 2019 to 2020 on page 41.

5.1.3 Designing and delivering a professional, efficient and engaged organisation

We have a strong track record in modernising our workplaces and IT. In financial year 2019 to 2020, we met our cumulative savings target of £1.9 billion (including sustainable and one-off savings). We reduced greenhouse gas emissions by 69% and opened 2 new regional centres.

We’re working hard to make HMRC a great place to work where we feel trusted, respected and confident in our roles. It’s crucial to address issues we know exist in the way we live our values, so we’ve created new expectations of behaviour and strengthened our policies and support to help everyone in HMRC have a good working life.

In the wake of the COVID-19 pandemic, we focused our Respect at Work programme on supporting all our people - whether working at home or in offices - through this difficult time. The extensive changes we have made to our IT systems put us in a strong position to move most of our people to home working.

Our IT colleagues worked at tremendous pace to expand our virtual private network within a matter of days, enabling around 90% of our colleagues to work remotely when the national lockdown began in Spring 2020.

A number of colleagues are continuing to work in the office, following government guidance and under strict social distancing and cleaning practices, to complete critical work not possible to do in a home working environment.

Key performance indicators

Nearly 6,000 full-time equivalent employees recruited, including Valuation Office Agency staff

49% our employee engagement index score

4,110 employees promoted

£696 million total sustainable cost savings

Tax year	Sustainable cost savings
2019 to 2020	£696m	£717m
2018 to 2019	£576m	£566m

2 new regional centres opened, in Belfast and Bristol, as planned - part of our eventual network of 13 regional centres

0.54 pence how much it cost to collect each pound of tax revenue

In 2018 to 2019 this was 0.52 pence.

You can also see our historical data series

Read about how we performed against our public commitments for this objective in HMRC’s Annual Report and Accounts 2019 to 2020 on page 55.

5.2 Supporting the UK border and future trade

We have played a central role in preparing for UK transition following our exit from the EU, and in building the systems and infrastructure that our UK traders and border need for the future.

We were allocated £557.6 million to support preparations for UK transition in financial year 2019 to 2020. We spent this predominantly on staffing and IT costs to make sure HMRC could respond to a number of scenarios, while continuing to perform our core functions. By the end of 2019 to 2020, we had spent £516.9 million. These figures include HMRC and the cross government Border and Protocol Delivery Group (BPDG).

We continued to prepare for a no-deal EU exit, from April to December. Following the December 2019 general election, preparations have focused on a negotiated EU exit and being ready for 31 December 2020 - the end of the UK transition period.

6. Further information

• the HMRC Charter, and the HMRC Charter annual reports

• HMRC’s monthly performance reports and quarterly performance updates

• the Measuring tax gaps report

• HMRC’s statistics

• HMRC’s research programme

• HMRC’s governance

• HMRC’s corporate reports

• the tax administration strategy