The report shows how HMRC is doing to date, and details HMRC's progress towards meeting its Public Service Agreement (PSA) targets. These are the operational targets set by the Government by which departmental progress is measured.

Key achievements announced in the report include:

• In the last financial year, HMRC accrued receipts of GBP405bn from taxes, duties and other revenue;
• Additional receipts of GBP14.6bn from Income Tax and National Insurance contributions and GBP8.4bn from Corporation Tax reflect an overall increase in earnings in the UK and higher accruals from financial and North Sea companies;
• The introduction of flexible and effective border controls;
• Reducing the administrative burden from taxation on businesses, individual taxpayers and their agents. The recent announcement of the "Varney review" and other measures in the Pre-Budget Report point the way toward a new level of consultation between HMRC and its customers on how services can be improved and made more 'user friendly';
• Expansion of the portfolio of services available online. This year saw the introduction of Stamp Duty Land Tax, Pension Schemes and Excise warehousing among others. The number of users of Self-Assessment online continues to grow apace with many more agents successfully using the system since the withdrawal of the old Electronic Lodgement (ELS) system. Last year almost a quarter of all SA tax returns were submitted online;
• Changes to the VAT strategy to reduce losses and strengthen the operational response to VAT avoidance. HMRC continues to review new controls introduced at VAT registration, in order to minimise impacts on legitimate business; and
• Changes to the tax credit regime that will improve the service to customers, reduce overpayments and make the whole system easier to understand. This includes the development of a new award notice and the provision of caseworkers, who will provide a personal point of contact for complainants, and follow individual cases through to resolution.

According to HMRC, VAT revenue was down by GBP0.4bn from last year, the figure adversely affected by a large-scale criminal assault on the EU VAT system known as MTIC (Missing Trader Intra-Community) or carousel fraud, which has since been brought under control.

Introducing the report, Paul Gray, Acting Chairman of HM Revenue & Customs observed that:

"HM Revenue & Customs is a young Department. It has been in existence for eighteen months and today's report shows that in our first full year we are making real progress in very many directions as evidenced in part by hitting so many of our PSA targets. All this has been achieved during a period of immense change and the credit for this achievement lies squarely with the hard work and professionalism of HMRC staff across the UK."

"We are now entering a period of development for HMRC and our Annual Report sets out our plans for the future. We intend to achieve our aims through consultation with our employees and customers at every key step. "There's a lot to do but I believe we have the talent and determination within the Department to enable us to build on the solid performance detailed in the report and to move forward toward the goal of becoming a top performing organisation."