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UK Government's Tax Take On The Rise

by Robert Lee, Tax-News.com, London

22 May 2007


The UK Treasury has increased its revenue collection for the second consecutive year according to HM Revenue and Customs's Departmental Report for the year 2006/2007, published last week.

The report, which was laid before Parliament last Thursday, details HMRC's business and operations and how the Department is currently performing against its Public Service Agreement (PSA) targets - operational targets set by the government by which departmental progress is measured. It showed that HMRC collected net receipts of GBP423bn from taxes, duties and other revenue, an increase of GBP25bn on the previous year.

Increased earnings saw the monies collected through Income Taxes and National Insurance rise by GBP14bn, nominal spending growth led to a rise of GBP4.5bn in VAT receipts and an increase in receipts from onshore companies saw the Corporation Tax yield rise by GBP2.5bn.

The report shows a marked progress in detecting and disrupting organised VAT fraud, with 14 criminal prosecutions concluded in 2006-07, resulting in 45 convictions and jail sentences totalling 149 years. HMRC has further strengthened operational activity in this area following an alarming increase in 'carousel fraud,' which has led to the government's new Reverse Charge arrangements.

The report claims that there have been further reductions in the administrative burden for business. At April 2007 HMRC says that it had delivered a reduction in the administrative burden from forms and returns estimated at GBP130mn (net) and an estimated reduction of GBP43mn in the burden from audits and inspections.

As part of the drive to reduce the administrative burden, HMRC has increased the number of facilities and services available online. Pension schemes, Stamp Duty Land Tax and the New Construction Industry Scheme can all now be managed online and HMRC's self assessment online service, which saw a significant rise in use (2.9mn returns online - representing almost one third of all returns).

Internally, HMRC said that the integration of the two former departments, the Inland Revenue and HM Customs, has led to further efficiencies being achieved. This year has seen the introduction of a merged financial accounting system and the desktop IT systems have now been integrated.

Introducing his first Departmental report since being confirmed as Executive Chairman of HM Revenue & Customs, Paul Gray said:

"It is barely two years since we merged the Inland Revenue and Customs and Excise and the received wisdom is that performance drops when major restructuring takes place. It hasn't. I am very proud of that achievement, both because of what it says about the huge and successful efforts of my committed and capable workforce and because we are delivering good value for money for the taxpayer."

Gray concluded:

"There is a great deal still to do and I am not complacent. A particular priority will be around developing further the management and leadership capability we need to deliver our transformation ambition. I am confident we shall continue to build on our early successes as we take the Department forward."


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