# Hm Revenue & Customs Mid-Year Report To Parliament

## Contents

| Executive summary	             |   2 |
|-------------|-----|
| Performance |   4 |
| Finance     |   6 |
| People      |  8  |

## Executive Summary

HMRC plays a vital role in Government, helping to reduce the budget deficit by collecting taxes to fund the UK's public services. This Mid-Year Report, covering the first half of  
2013-14, shows we are delivering record revenues, while making sustainable cost reductions. We have also delivered major changes to the way we operate, such as using 'real time' ways of working for PAYE, which supports the move to Universal Credit by the Department for Work and Pensions.

## Performance Call Handling Revenues

We collected tax revenues of £237 billion in cash terms, 
which is £11 billion more than at the same point last 
year. Provisional estimates show we collected more than 
£8.8 billion in additional revenues from compliance 
activity during the same period - our best-ever 
performance at this point in the year.

We handled 72.7 per cent of all call attempts. This 
is an improvement on the same period last year, but 
below our 90 per cent target. We did not meet our 
target because of a number of factors, including high 
caller demand in the first half of the year due to the 
introduction of real-time ways of working (Real Time 
Information, or RTI) and a very busy final week 
leading up to the tax credits renewal deadline on  
31 July. There were also technology-related issues, and 
we had to move more staff to our employer helpline to 
support the introduction of RTI.

                                                    We had planned to introduce new, automated speech 
                                                    features on our most popular phone lines during this 
                                                    period, allowing us to answer more calls. We took 
                                                    the decision to delay these changes until later in the 
                                                    year, while we fine-tuned the new service ahead of a 
                                                    wider roll out, which began in November. We are also 
                                                    moving to an increasingly flexible way of operating, 
                                                    where work can be moved between teams according to 
                                                    priority and customer demand.
Additional revenues brought in through compliance work

## Post

We cleared 77 per cent of post within 15 working days, which is below our 80 per cent target, but improved from the first quarter result of 70 per cent. Post-handling performance has been affected by a number of factors in the busy early part of the year, including the deployment of teams from post to phone lines during peak periods of customer demand. More of our operational teams are being trained to deal flexibly with customer enquiries in whatever form they come to us - whether by phone call, a letter or work generated by our IT system. We expect performance in this area to continue improving throughout 2013-14.

## Tax Credits And Child Benefit Claims

We cleared UK tax credits and Child Benefit claims and changes of circumstance in an average of  
15.6 days - well within our target of 22 days. Over the same period, international claims and changes of circumstance were cleared in an average  
of 87.8 days, ahead of the 92-day target.

## Finance

The finance section reflects our dual role in contributing to deficit reduction - reducing expenditure by becoming more efficient, while also collecting additional revenues as outlined in the performance section.

## Major Projects

During the period covered by this report, we introduced 
RTI, the biggest change to PAYE since the system was 
designed 70 years ago. RTI brings PAYE up to date 
with today's employment patterns, where people change 
jobs more frequently than in the past and can have 
more than one job or pension. 

Almost 1.6 million PAYE schemes with employees 
(more than 92.6 per cent) have started reporting in 
real time. We have now aligned more than 47.5 million 
individual live PAYE records (more than 99 per cent), 
making sure that the employee record is matched with 
the correct employer scheme.

Further information on our major projects is available 
here - https://engage.cabinetoffice.gov.uk/major-
projects-authority/

## People

HMRC is one of the biggest government departments, 
with almost 63,000 full-time equivalent (FTE) staff 
across 400 offices, reduced from more than 600 in 
2009-10. We are working rapidly to transform how we 
deliver services to our customers, following the 2013 
Spending Review, which committed HMRC to making 
a further five per cent reduction to our budget, while 
bringing in an extra £1 billion in compliance revenue 
in 2015-16. This means that we are transforming 
HMRC's size and shape, how we work and how we are 
organised. The HMRC of the future will be smaller 
and more highly professional, with fewer people 
working across a smaller number of locations. Table 3.1 
shows that we have fewer staff at administrative grades, 
and more staff at higher and senior officer grades. This 
is a result of automating more routine tasks and moving 
staff onto more complex work in tax compliance roles.

## 1 - Performance Table 1.1 Maximising Revenue Collection

| Q1+Q2                                                                                                      | Q1+Q2    |
|------------------------------------------------------------------------------------------------------------|----------|
| 2013-14                                                                                                    | 2012-13  |
| Cash collected from compliance                                                                             | £3.5bn   |
| Revenue protected                                                                                          | £5.4bn   |
| Total additional revenue raised                                                                            | £8.9bn   |
| 2012-13                                                                                                    | 2011-12  |
| Debt roll rate - proportion of tax debt (CT, SA, Employers' PAYE) by value cleared within 90 calendar days | 96.8%    |
| Payment on time - proportion of businesses and individuals who pay tax on time -                           |          |
| using VAT as lead indicator                                                                                |          |
| 86.9%                                                                                                      | 83.2%    |
| 2011-12                                                                                                    | 2010-11  |
| £34bn                                                                                                      |          |
| Tax gap - difference between all the tax theoretically due and actually collected                          |          |
| £35bn                                                                                                      |          |
| (7%)                                                                                                       | (7.1%)   |
| £2.1bn                                                                                                     | £2.3bn   |
| by people who are not entitled to it                                                                       | (7.3%)   |

## Table 1.2 Stabilising And Improving Customer Service

| Q1+Q2                                                                                         | Q1+Q2    |
|-----------------------------------------------------------------------------------------------|----------|
| 2013-14                                                                                       | 2012-13  |
| % of post cleared within 15 working days of receipt                                           | 77%      |
| % of post cleared within 40 working days of receipt                                           | 96%      |
| % of post cleared within 15 working days of receipt passing HMRC quality standards            | 90.9%    |
| % of post cleared within 40 working days of receipt passing HMRC quality standards            | 91%      |
| % of call attempts handled by our Contact Centres                                             | 72.7%    |
| % of return transactions carried out online                                                   |          |
| (12 months to quarter-end e-Returns, SA, PAYE, VAT, CT and Stamp Duty Land Tax)               |          |
| 94.1%                                                                                         | 91.6%    |
| Q2                                                                                            | Q2       |
| 2013-14                                                                                       | 2012-13  |
| * The increase/decrease (–) in cost for customers dealing with us (since April 2011)          | +£14.6m  |
| * The increase/decrease (–) in cost for business customers dealing with us (since April 2011) | +£43.59m |
| 73.4                                                                                          | 72.9     |
| (margin for error in brackets)                                                                | (± 2.6)  |

*	The net increase to customer costs since April 2011 arises mainly from key policy measures announced by the Government at the Budget and Autumn Statement. For example, Restrictions to Pensions Tax Relief (£80 million cost increase) and the Bank Levy (£20 million cost increase) have increased customer costs, but directly support measures to reduce the budget deficit. The Patent Box (£26 million cost increase) tax relief is a measure that has  
been welcomed by business and contributes to economic growth.

## Creating Sustainable Cost Reductions

12 months to end
Q2 
Unit costs (pence per £ collected/paid out)
Q2 
2013-14
2012-13
Collecting income tax (Self Assessment and Pay As You Earn)
0.96
1.04
Collecting Corporation Tax
0.78
0.78
Collecting National Insurance Contributions
0.26
0.27
Collecting VAT
0.64
0.59
Administering personal tax credits
1.38
1.44
Administering Child Benefit
0.56
0.57

We regularly publish more detailed information on our performance on our website -  
www.gov.uk/government publications/business-plan-indicators
 

## 2 - Finance

|                            |              |            |                 | 2013-14      | 2012-13    |
|----------------------------|--------------|------------|-----------------|--------------|------------|
| FY budget                  | Actual spend | % spend    | FY budget       | Actual spend | % spend    |
| (main estimate)            | Apr-Sept     | to budget  | (main estimate) | Apr-Sept     | to budget  |
| £,000s                     |              |            |                 |              |            |
| DEL Voted                  | 3,396,571    | 1,629,317  | 47.97%          | 3,357,983    | 1,602,958  |
| DEL Non Voted              | 313,613      | 152,028    | 48.48%          | 332,949      | 162,701    |
| Total Resource DEL         | 3,710,184    | 1,781,345  | 48.01%          | 3,690,932    | 1,765,659  |
| AME Voted                  | 11,966,224   | 5,798,159  | 48.45%          | 12,392,097   | 6,221,340  |
| AME Non Voted              | 31,687,984   | 16,000,429 | 50.49%          | 31,116,008   | 15,689,852 |
| Total Resource AME         | 43,654,208   | 21,798,588 | 49.93%          | 43,508,105   | 21,911,192 |
| DEL Capital                | 185,570      | 92,259     | 49.72%          | 203,939      | 101,999    |
| AME Captial                | 2,000        | 117        | 5.85%           | 5,500        | 491        |
| Total Capital              | 187,570      | 92,376     | 49.25%          | 209,439      | 102,490    |
| Total DEL, AME and Capital | 47,551,962   | 23,672,309 | 49.78%          | 47,408,476   | 23,779,341 |

## Changes In The Supplementary Estimate

We plan to request a budget cover switch from Resource DEL to Capital DEL to meet our capital investment plans.

## Trend Analysis By Graphs Table 3.1

| September                                                      | September                                             |
|----------------------------------------------------------------|-------------------------------------------------------|
| HMRC and Valuation Office Agency (VOA) (full-time equivalents) |                                                       |
| 2013                                                           | 2012                                                  |
| Payroll staff                                                  | HMRC and VOA                                          |
| Average payroll staff costs                                    | £32,717                                               |
| Contingent labour                                              | HMRC and VOA                                          |
| Average contingent labour staff costs                          | £32,379                                               |
| Administrative Assistants and Officers                         | 31,853                                                |
| Officers                                                       | 14,228                                                |
| Higher and Senior Officers                                     | 12,150                                                |
| Grade 7/6                                                      | 3,698                                                 |
| Workforce shape                                                |                                                       |
| Senior Civil Servants                                          | 312                                                   |
| Other grades                                                   | 780                                                   |
| Part-time                                                      | 17,035                                                |
| Exceptions to the external recruitment freeze                  | 548                                                   |
| Workforce dynamics                                             |                                                       |
| Annual turnover rate                                           | 6.6%                                                  |
| Black and minority ethnic                                      | 8.3%                                                  |
| Women                                                          | 58.5%                                                 |
| Workforce diversity (headcount)                                |                                                       |
| Disabled                                                       | 16.4%                                                 |
| Black and minority ethnic                                      | 2.7%                                                  |
| Women                                                          | 38.5%                                                 |
| Diversity of Senior Civil Servants only                        |                                                       |
| Women (top management posts)                                   | 31%                                                   |
| Disabled                                                       | 5.2%                                                  |
| Sickness absence                                               | Average working days lost per FTE (rolling 12 months) |
| October                                                        | October                                               |
| HMRC only: People Survey                                       |                                                       |
| 2013                                                           | 2012                                                  |
| Engagement index (%)                                           | 44%                                                   |
| Theme scores (%)                                               | Leadership and managing change                        |
| My work                                                        | 65%                                                   |
| My line manager                                                | 66%                                                   |
| Organisational objectives and purpose                          | 79%                                                   |