Kevin Reed, Accountancy Age, Wednesday 20 October 2010 at 16:53:00

Huge cost-cutting and efficiency savings outlined for HMRC

The taxman faces a raft of cost-cutting and efficiency savings during thenext four years.

HM Revenue & Customs must reduce its resource spending by 15% in realterms by 2014/2015 to £3.2bn, and capital spending by 44% (to circa £100m from£200m).

Its administration budget will also be reduced by 33%.

The reductions will be achieved by restructuring HMRC's enquiry centrenetwork so face to face service is "provided to those that need it most",according to the government. It will have to improve online support to reducethe need for manual processing, and apply benchmarks to reduce itsadministration costs.

It will adopt National Insurance number cards with replacement letters,saving up to £1m a year. Increased use of magistrate courts for recovering debtwill also be explored.

A re-allocation of £900m HMRC funds will be invested on transforming HMRC'swork against avoidance, evasion and criminal attack to haul an extra £7bn inrevenues a year by 2014/2015. The number of criminal prosecutions will increasefivefold, and a crackdown on offshoring evasion with the creation of a newdedicated team of investigators to catch those hiding money offshore.

A joint HMRC and the Department for Work and Pensions strategy will be setout to reduce fraud and error in the tax credit system by £2bn a year by2014/2015.

Skills and capacity will be increase in key areas to offer a better serviceto customers, and redesigning education projects and processes that cause themost error and rework, such as VAT registrations.

It will attempt to clear the backlog of PAYE cases by 2012 and stabilise thePAYE service in order to recover and improve customer service.

The next stage of consultation on improving PAYE will begin, focusing on theuse of real time information.

"HMRC will play a vital role in reducing the deficit, refocusing itsresources to maximize revenues," said Exchequer secretary to the Treasury DavidGauke.

"It will become a lot harder for both individuals and companies to evade oravoid tax as HMRC refocuses to prevent this before it happens, and to deal withit more effectively when it does."