Customer compliance: how HMRC’s compliance yield is split by business area
Updated 24 November 2021
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Compliance yield breakdown in financial year 2020 to 2021
HMRC has previously reported its compliance results under the headings of cash expected, revenue losses prevented, future revenue benefit, upstream operational, upstream product and process, and Accelerated Payments. We still report these in HMRC’s Annual Report and Accounts 2020 to 2021, but we also report, below, from which specific directorate the compliance results were delivered, and the head of duty under which the risks tackled were identified.
In its 2014 to 2015 Standard Report, the National Audit Office (NAO) said that there were inconsistencies between how we recorded future revenue benefit (FRB) and product and process yield (These classifications are explained further in HMRC’s Annual Report and Accounts 2020 to 2021 ). FRB was reported in the year the compliance intervention concluded, whereas product and process yield is reported when the product or process change has an impact on Exchequer receipts.
At the beginning of the Spending Review 2015 period (financial years 2016 to 2017 to 2019 to 2020), and responding to the NAO’s recommendation, we started recording FRB for the future year or years in which the FRB has an impact on Exchequer receipts. The technical note published provides more background to this methodology.
The following tables show the compliance yield generated by HMRC during 2020 to 2021, broken down by directorate. Head of duty and directorate splits of compliance yield are reported on the same basis as the Annual Report and Accounts. Based on this methodology, this results in the total yield generated of £30,450million.
This improvement to our data has previously had no impact on the total FRB that we score, only the timing of the year in which we score it. This year, the improved methodology has enabled us to adjust FRB to reflect the economic effect of COVID-19 on the FRB scored from compliance checks in previous years that we expected to impact the Exchequer in 2020 to 2021.
Adjustment to FRB impacting in 2020 to 2021 to reflect the economic effect of coronavirus (COVID-19)
The unprecedented economic shock caused by COVID-19 has resulted in a fall in tax receipts in 2020 to 2021. There is a risk that FRB we assessed in past years, which we had expected to impact the Exchequer in 2020 to 2021, will therefore have been overestimated.
For this reason, we have made a one-off adjustment to the FRB brought forward from previous years to 2020 to 2021, in line with the reduction in tax receipts compared to our pre-COVID-19 forecasts. In our Quarter 1 2020 to 2021 performance publication we estimated the impact to be at 15%, in line with the Office for Budget Responsibility expectation for tax receipts. At the end of the year, based on the latest analysis of receipts, we have revised the impact to 9%.
This means that in our 2020 to 2021 annual report and accounts we will only score a proportion of the £5,534 million FRB brought forward from previous years to 2020 to 2021. We have not made any adjustment to 2019 to 2020 FRB as COVID-19 will not have had a major impact on tax receipts during 2019 to 2020.
Large Business Directorate
| Tax regime | 2020-21 (£m) |
|---|---|
| Corporation Tax | 2,839 |
| Excise | 916 |
| Income Tax | 64 |
| VAT | 3,952 |
| Other compliance interventions | 824 |
| Total | 8,595 |
Wealthy and Mid-Sized Business Compliance Directorate
The Wealthy and Mid-Sized Business Compliance (WMBC) Directorate deals with wealthy individuals (both high net worth and affluent), mid-sized businesses as well as public bodies and specialist employer compliance.
| Tax regime | 2020-21(£m) |
|---|---|
| Corporation Tax | 547 |
| Excise | - |
| Income Tax | 2,047 |
| VAT | 1,863 |
| Other compliance interventions | 697 |
| Total | 5,154 |
Individuals and Small Business Compliance Directorate
| Tax regime | 2020-21 (£m) |
|---|---|
| Corporation Tax | 144 |
| Excise | 378 |
| Income Tax | 2,061 |
| VAT | 773 |
| Other compliance interventions | 384 |
| Total | 3,741 |
Counter-Avoidance Directorate
| Tax regime | 2020-21 (£m) |
|---|---|
| Accelerated Payments | 8 |
| Corporation Tax | 82 |
| Income tax | 1,099 |
| Other compliance interventions | 469 |
| Total | 1,658 |
Fraud Investigation Service
| Tax regime | 2020-21 (£m) |
|---|---|
| Corporation Tax | 169 |
| Excise | 2,000 |
| Income Tax | 311 |
| VAT | 495 |
| Other compliance interventions | 631 |
| Total | 3,605 |
Other Customer Group activities
| 2020-21 (£m) | |
|---|---|
| Other compliance activities | 7,696 |
| Total | 30,450 |
Note: ‘Other compliance activities’ includes other activities in relation to Risk and Intelligence Service activities, debt collection work and other personal tax compliance activity.