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1.11 pence for every pound collected was the overall cost to the Inland Revenue of collecting taxes and National Insurance contributions, and administering tax credits. Without the tax credit administration the cost was 1.02 pence. These figures are in the Revenue's recently published annual report for the year ended 31 March 2001, and it is unlikely to come as a surprise that the most cost-effective tax was stamp duty at 0.09 pence for every pound collected. The most expensive was income tax at 1.56 pence.
1.11 pence for every pound collected was the overall cost to the Inland Revenue of collecting taxes and National Insurance contributions, and administering tax credits. Without the tax credit administration the cost was 1.02 pence. These figures are in the Revenue's recently published annual report for the year ended 31 March 2001, and it is unlikely to come as a surprise that the most cost-effective tax was stamp duty at 0.09 pence for every pound collected. The most expensive was income tax at 1.56 pence.
In his introduction, Sir Nick Montagu, Chairman of the Inland Revenue, said that the Revenue had 'hit the vast majority' of its key targets in 2000-01, and he thanked everyone, e.g., tax agents, payroll administrators, and taxpayers, who had contributed to this 'success'.
The statistics given relating to 'customer support' (as the Revenue describes it), show that during 2000-01, the Revenue's local offices dealt with some 74 million items of post. The report says that the Revenue's target of a full response made to postal enquiries within 15 working days in 80 per cent of cases, was exceeded, the actual percentage being 84 per cent. This presumably means that 62,160,000 items of post were dealt with within three weeks, but that 11,840,000 were not. To interpret the figures, it should be borne in mind that the 62 million figure includes all the routine bits of paper which have to be sent in to the Revenue and the likelihood is therefore that the 11 million figure mainly comprises correspondence requiring more careful consideration.
The report says there was an increase in the number of telephone enquiries, with nearly 46 million calls received by local offices. The Revenue again exceeded its target for answering 90 per cent of calls within 30 seconds, achieving 96 per cent.
Enquiry centres also recorded success, dealing with 99 per cent of taxpayers within 15 minutes. There are more than 300 enquiry centres nation-wide, and they dealt with 3.6 million enquiries in 2000-01. This represents a 16 per cent decrease in callers from the previous year, and the Revenue suggests that this is due to a fall in enquiries relating to the construction industry scheme and self assessment.
The report also gives figures relating to the amount of additional tax collected by specialist agencies within the Revenue. The Special Investigations Section, which investigates tax avoidance by major corporations and those who use marketed schemes, collected an additional £66 million for 2000-01. The Special Compliance Office concentrates on non-compliance by taxpayers, investigating suspected fraud, evasion and avoidance. It was responsible for raising an additional £378 million in 2000-01, and in addition criminal proceedings were concluded against 70 individuals (56 of whom were found guilty).
Receivables management is the new gobbledegook for what the former Collector of tax used to do. The report says that 'receivables management' is the 'activity of gathering the payments and information' due to the Revenue, and its aim in so doing is to 'help those who are trying to overcome difficulties in complying, and to make swift and effective contact with those who are not doing so'. It reads rather like something out of a George Orwell novel. However, in essence, by the end of the accounting year November 1999 to October 2000, 91.2 per cent of the net sum collectable for assessed and self-assessed taxes had been paid, and tax outstanding for over three months was £1.7 billion. Some £0.42 billion tax was written off in that accounting year, which compares favourably to the £0.53 billion written off in 1999. Of that £0.42 billion, £0.36 billion related to insolvent taxpayers. These figures somewhat mask the fact that tax collection procedures are becoming increasingly aggressive particularly in relation to sums in excess of £5,000.
The Inland Revenue Annual Report for the year ending 31 March 2001 CM5304 costs £18.20 and is available from The Stationery Office, tel: 0845 7 023474.
Dame Barbara Mills remains Adjudicator
The Revenue and Customs have extended their Adjudicator's contract. The contract is reviewed on a yearly basis and the extension takes effect from 26 February 2002. Dame Barbara Mills QC became the Adjudicator for the Revenue and Customs on 26 April 1999.
(Source: Inland Revenue press release dated 7 January 2002.)
Returns deadline
Thursday 31 January is the date by which most 2000-2001 self assessment tax returns must, by law, be delivered to the Inland Revenue. However, tax returns received by the Revenue on Friday 1 February will be late, but no penalty will be due.
A penalty of £100 will be charged where it is clear that the return was delivered after 1 February.
(Source: Inland Revenue press release dated 17 January 2002.)
Retail prices index
The retail prices index figure for December 2001 is 173.4.
Pay in euro
Tax and National Insurance contributions can be paid in euro, as has been possible since January 1999. The Revenue says that 'any tax or National Insurance liability' can be paid in euro, and that it will accept payment via the Clearing House Automated Payment System, Bankers Automated Clearing System, cheque or euro notes (coins are not acceptable). The Revenue will not pass on its administrative costs for converting euro into sterling unless it is a euro payment drawn on an overseas bank account. However, the exchange rate that it will use, will be the one in force when payment is presented by the clearing bank and, if there is a shortfall, then the taxpayer will have to pay the difference. If there is an overpayment, it will be repaid in sterling. The Revenue recommends payment using CHAPS or BACS in these circumstances, as these methods reduce the time for the payment to be cleared.
While payment of tax can be made in euro, United Kingdom tax returns must be completed in sterling. A business can prepare most of its computation in euro, but must present the final figures in sterling. Any capital gains computations must be calculated entirely in sterling.
National Insurance and mileage allowances
Concern over the possible increased burden for employers was expressed by the respondents to the Revenue's draft regulations amending the Social Security (Contribution) Regulations 2001 in relation to the proposed National Insurance contributions treatment of motoring expense payments employers make to employees who use their own vehicles for business purposes. Although none of those responding felt that the regulations were incapable of implementation, most had some concerns, particularly about the differing calculation methods for tax and National Insurance. Respondents thought that this could increase rather than reduce employer burdens.
Furthermore, the need to announce and publicise decisions without delay if employers are to be able to implement the National Insurance changes in April 2002, and comprehensive guidance was strongly requested. There were, however, few adverse comments about the principle of limiting the amount of National Insurance free mileage allowance payment to the prescribed maximum level as for tax.
The Revenue accepted that because of the differences between annual, cumulative tax calculations and National Insurance pay period calculations, implementation of the regulations as drafted could lead to complexities where employers pay other than a flat rate pence a mile, or where employees' business mileage patterns are irregular. So for National Insurance purposes the 40 pence rate for cars and vans will apply for all business mileage in 2002-03. (It remains the case that the 40 pence and 25 pence rates introduced in Finance Act 2001 will apply for tax.)
The draft regulations have been amended accordingly and the revised regulations will be made and laid early in January 2002 to come into force from 6 April 2002.
Replaced statement
Statement of Practice 3/92 has been withdrawn and replaced by Statement of Practice 4/01 - Double taxation relief: status of the United Kingdom's double taxation conventions with the former USSR and with newly independent states, which sets out the latest position. The new statement is available on the Internet at: www.inlandrevenue.gov.uk/pdfs/sp4_2001.pdf.
