The NAO report says that the department maintained its performance in key strategic areas, such as improved cost effectiveness and value for money at the same time as reducing its staff and spending.
However, the public spending watchdog has warned that it is too early to tell what the long-term impact of cost reduction will be on HMRC’s performance, as it faces major challenges, such as making more and deeper reductions over the spending review period while increasing tax revenues, improving customer service and introducing its ‘real time information’ project and changes to benefits and credits.
HMRC made £296 million of savings in the year 2011-12, exceeding its target by 19 per cent. This is about a third of the total savings it is required to make over the four years of the spending review period.
The department exceeded its overall 2011-12 target for collecting additional tax revenues, maintained tax collection and reduced the level of tax debt. It also restored customer service performance from a low point in 2010-11, but did not meet all of its customer service targets.
In total, HMRC is targeting a £955m annual reduction in running costs, as well as bringing in an extra £7bn in tax. This will include cutting the equivalent of 10,000 full-time staff, with 2,400 of these having already gone, while other savings plans include cutting computer costs, moving out of scores of buildings, and improving staff efficiency.
The UK's head of tax, Lin Homer, admitted to the Commons Public Accounts Committee recently that around 20 per cent of people faced waits of more than 10 minutes to get through. However, from April, the department will have a target of making 80 per cent of people wait no longer than five minutes to speak to a member of staff.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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