Memorandum submitted by the Inland Revenue|
(ITSA) AND CORPORATION
ASSESSMENT (CTSA) DIFFER,
THE ITSA HEADING
3. Self Assessment for income tax and capital
gains tax was introduced on 6 April 1996.
Around 9 million people out of approximately 26 million
taxpayers are required to fill in a tax return each year. These
others from whom we need additional
information to collect the right amount of tax, typically Pay
As You Earn (PAYE) higher rate taxpayers and some pensioners.
4. The introduction of ITSA represented
a major change in tax administration, with new and advanced Information
Technology support. It was the biggest change since the introduction
of Pay As You Earn (PAYE) over 50 years earlier, and was brought
in on time. But it did not introduce any new liability to tax.
5. ITSA also brought a much clearer timetable
for making tax returns and paying any tax due.
6. The key objectives of ITSA were to:
give taxpayers greater responsibility
for their tax affairs;
establish a fixed timetable for returns
and payment; and to
bring in a new enquiry process with
clear procedures setting out the rights and responsibilities of
taxpayers and the Revenue.
7. But stemming from the key objectives
were more detailed aims identified at the introduction of ITSA
and which sought to bring about specific improvements. These included:
simplification and streamlining of
procedures, giving rise to some administrative savings;
eliminating the historic and costly
regime of dealing with an annual cycle of;
estimated assessments and appeals;
establishing a less confrontational
making greater use of information
ITSA Tax Returns
8. We issue around nine million tax returns
each year. However, we keep the ITSA population under regular
review to make sure that only those people who need to complete
a tax return get one, and the people who don't need one can have
their tax affairs processed each year with the minimum amount
of contact with us. For example:
Up to 400,000 people, around half
of them pensioners, were taken out of the Self Assessment system
Details of ITSA tax returns issued at the start of
the tax year, ie main return issue only:
|Non Resident Company Landlords||
|Total paper Returns||8,365,628
|* SA316 Notice to Complete a Tax Return
* (SA316 Notice to Complete a Tax Return is issued when we
received the return electronically or were sent a substitute paper
return for the previous year).
9. The ITSA tax return has been developed with customer
input and testing. It comprises a core of questions appropriate
to most people and sets of additional questions (for example,
relating to self employment) that will not apply to all. The computer
system automatically selects the additional sets of questions
to accompany the core tax return based on the taxpayer's last
completed tax return. For people with new sources to be taxed,
for example, capital gains, we give clear advice which explains
that they need to ask us for the appropriate additional set of
Help Available to ITSA Filers
10. Help is available at the time people need it and
not just during office hours. We have:
a dedicated Helplineopen seven days a week
from eight am until eight pmto give help in completing
an Orderlineopen seven days a week from
eight am until 10 pmwhich deals with requests for additional
supplementary return pages;
Business Support Teams who help the newly self
employed and provide ITSA advice;
help and support available from our 300 Inland
Revenue Enquiry Centres (IRECs) in all major cities and towns.
These are open from 8.30 am until 5 pm (and some now open on Saturday
and in the evenings to coincide with late night shopping) and
see people without appointment;
an Inland Revenue Website at www.inlandrevenue.gov.uk;
a variety of leaflets and guides.
Late Filing Penalties and Surcharge
11. There are automatic penalties on those who do not
file their returns on time. The penalties are £100 (but the
penalty is capped at the amount of tax ultimately due if that
figure is less). The first penalty takes effect after the 31 January
filing deadline and the second penalty takes effect six months
12. When people miss the payment and filing deadlines,
we make quick initial contact with them. Since last year we have
done that by sending them an automated reminder letter followed
by a phone call from our new outbound telephone centre and, if
needed, contact from our network of local recovery offices.
13. Late payments of tax incur interest and surcharge.
We charge interest on all SA liabilities (except on interest itself)
from the date on which the liability should be paid until the
liability is paid.
14. Surcharge is imposed in two stages: an initial surcharge
on any tax unpaid more than 29 days after it was due, and an additional
surcharge on any tax still unpaid more than six months after the
due date. Both initial and additional surcharges are for 5 per
cent of the tax due. We send taxpayers a formal notice of surcharge
against which they have 30 days to appeal.
ITSA Return Processing
15. ITSA introduced a clear timetable for submitting
tax returns and making tax payments. The filing date of 31 January
after the end of the tax year gives nearly 10 months for taxpayers
to assemble information and submit their returns.
This is an improvement on the old system under which:
the filing period was very short and depended
on when the return was issued;
payment dates were different for different types
of tax; eg tax on rents, business profits and capital gains had
different payment dates.
16. Under ITSA taxpayers have consistently sent in around
90 per cent of tax returns by the 31 January deadline, although
this has slipped slightly each year. However, the result is much
better than under the previous system. Then, only around 50 per
cent of the information needed was received by the date for making
assessments and the outstanding information had to be pursued
through a complex process of estimated assessments, appeals and
postponement applications. That complex and costly system has
An initiative was introduced in 2001 to try to understand the
cause(s) of the slight but persistent reduction in the percentage
of returns filed before 31 January each year, and to reverse that
trend. The results of that initiative will be reflected in the
percentage of returns filed before 31 January 2002.
TSA total return statistics, ie those in the main start-of-year
issue and those issued subsequently in-year:
at 31 October
* Final figures will be available shortly.
17. The Self Assessment return is at the core of the
ITSA regime and the processing of returns is, therefore, central
to its operation.
Returns received undergo a process of:Logging; Correction
(where necessary); and Capture.
Pre-capture checks are carried out to see that the return is signed,
supplementary pages have been attached and that the return is
generally complete. If not the return will be sent back to the
taxpayer/agent. Satisfactory returns are date stamped and logged
onto the computer system to show the date of receipt.
Because our aim, where possible, is to capture the Self Assessment
return made by the taxpayer and input that information onto our
computer system, we "correct" any obvious errors or
mistakes using information supplied with or on the tax return.
This avoids having to send returns back to taxpayers for them
to correct obvious errors.
Validation checks are carried out by the computer system as the
return is captured. "Warning" and "error"
messages alert staff to possible problems or mistakes.
18. We have a quality monitoring system under which we
carry out an annual review of ITSA processing work.
Returns are reviewed for processing accuracy against nine pre-defined
quality criteria. These cover all the actions taken once we receive
an ITSA return from, for example, recording the information provided
on the return to making a repayment and revising a PAYE tax code.
Three of those criteria cover all of the areas which affect the
tax bill. The remaining six, whilst having no tax consequence,
nonetheless monitor important areas of ITSA processing work.
The tests for accuracy are, therefore, extremely stringent. Any
case will fail if a single error is identified in any of the nine
pre-defined quality criteriawhether or not that error has
a tax consequenceeven if that error has subsequently been
corrected. Consequently, the accuracy target is a particularly
demanding one to both manage and attain.
19. National Quality Assessment/Quality Control (QA/QC)
was launched in March 2000. This is a mandatory system, designed
specifically to raise standards, by ensuring national consistency
in all our Network offices, with a commitment to improve both
equity and quality of service. It is therefore challenging both
performance and culture, and is supported by a major education
programme which gives knowledge and direction on how to address
Phase 1 of that training programme was completed by 31 March 2001
and was followed by Phase two this year, involving both managers
and staff. Currently, the QA/QC modules that measure quality have
been specifically targeted where we have the most concern, and
are in the following work areas:
Receivableseight work areas;
Processingfour work areas;
National Insurance (Operations)four work
Each work area has checks to be carried out to a published timetable,
with a clear reporting structure to enable monitoring and audits
to be carried out.
We have an ongoing commitment to develop further modules where
these are most needed.
20. If we do not receive a return we can issue a "determination"
of the amount of tax due. Taxpayers must pay the amount determined
or send in their return. If taxpayers do not make a Self Assessment
return to overturn the determination we can use enforcement procedures,
such as court action, to collect the tax due as determined.
21. Determinations allow us to:
prompt taxpayers to send in their returns; and
set up payments on account for the next year.
The determination procedure is straightforward and does not require
a costly appeals process, in contrast with the previous tax regime.
22. A special exercise carried out for the National Audit
Office looked at determinations issued for two years 1996-97 and
1997-98 and the first three months of 1998-99. It showed that
40 per cent of the 104,000 determinations issued over that period
resulted in the submissions of returns.
Details obtained subsequently for the whole period up to March
2001 show that since the start of ITSA we have issued 210,000
determinations of which 105,000 (50 per cent) have resulted in
the submission of the return.
But we also recognise a need to step-up the use of our powers,
such as the imposition of daily penalties, in appropriate cases
to get in outstanding returns.
23. The computer system supporting ITSA comprises:
the Local Data Capture system, which is a data
processing system used to capture the information from ITSA tax
the ITSA mainframe computer and database which
is used to store, view and update customer records; and
a management accounting system.
24. The Local Data Capture system (used for processing
tax returns) has to be rewritten each year to reflect changes
in the underlying tax system. In 2000 there were problems with
late delivery of the software resulting in delays in processing
ITSA returns. We have learned a number of lessons from this and
the Local Data Capture system was delivered on time in April 2001
for the processing of 2000-01 tax returns. The system has worked
very well. Over the last 12 months we have averaged 99.63 per
cent availability. This has consistently exceeded the target of
98.5 per cent.
Mainframe response times have also improved over this period and
in November 2001 we were able to speed up the on-line calculation.
25. A continuous programme of developments is in place
to improve system performance and reliability and to introduce
26. The facility to file ITSA tax returns over the Internet
was introduced on 3 July 2000 and allows most individual taxpayers
to send their own tax return to us over the Internet. It was extended
in August 2001 so that agents can file individual clients' returns
on their behalf. So far, more than 1,000 Agents have registered
to send their clients' ITSA returns over the Internet.
In the first filing period to 31 January 2001 38,981 individuals
filed their returns over the Internet. This number increased by
94 per cent to 75,449 for the equivalent filing period to 31 January
We recognise that this is a slow start but customer inertia is
a phenomenon experienced by many organisations in the early years
of persuading customers to move to conducting transactions electronically.
But we are working to improve the levels of electronic filing.
27. The Internet service is safe and secure and offers
significant advantages over the traditional paper Self Assessment
tax return: For example:
taxpayers get an online acknowledgement when their
return is received;
there is automatic calculation of the tax as the
return is completed so that taxpayers do not have to self calculate;
repayments of tax to taxpayers are dealt with
Internet returns are processed faster and there
is no keying of data by staff eliminating the scope for keying
28. We have started Internet returns with a simple product
that does not cover all circumstances, although it is suitable
for a large number of taxpayers. But in response to customer feedback
we are redesigning and extending "SA Online" beyond
the core tax return, employment, and self employment pages offered
last year to include land and property, and partnership pages.
"SA Online" is also being improved to make it more user-friendly
by improving the screen layout and navigation between screens,
as well as expanding and improving the online help.
29. Additionally, we are changing the registration process
to allow new users (whether they choose to use "SA Online"
or third-party software) to complete and send a tax return over
the Internet in a single session. Up to now they have been required
to wait for their "User ID" to arrive through the post
before the transaction could be completed.
We expect in these ways, and through encouraging people to "try
it out", that take-up will increase significantly in the
next few years.
Electronic Lodgement Service
30. The Electronic Lodgement Service (ELS), which allows
agents to send in their clients' tax returns electronically and
receive statements over a dedicated secure dial up connection,
was introduced in 1997. Usage has grown steadily since then. There
are currently 2,939 agents registered to use the service and they
submitted a total of 335,187 tax returns in the period from 6
April 2001 to 31 January 2002, an increase of 17.5 per cent over
the corresponding period to 31 January 2001.
Tax Calculation & Calculation Guides
31. If a tax return is sent in by 30 September we calculate
the tax due in order for payment to be made on 31 January. After
30 September we will still calculate tax but cannot guarantee
to do it in time for a calculation to go out to the taxpayer for
the payment date of 31 January.
If for any reason we fail to calculate the tax due for a return
received by 30 September in time for payment to be made by 31
January, we allow extra time to pay and cancel any interest or
surcharge up to that extended payment date.
32. The six-step standard Tax Calculation Guide is sent
to all unrepresented taxpayers receiving a paper return. It can
be used by taxpayers who have reasonably straightforward tax affairs
and who want to work out their tax bill themselves.
33. The Comprehensive Tax Calculation Guide is only available
on request from the telephone Orderline. People with more complicated
financial affairs (for example, double taxation relief or capital
gains) need to work through the Comprehensive Tax Calculation
Guide if they wish to work out their tax bill. But many of these
will be represented by agents.
34. So, in summary, taxpayers have the options of:
A guarantee that that we will do the tax calculation
for them if they send in their returns by 30 September;
Using our Internet Service which allows them to
complete their tax returns using our new Internet application,
called "SA Online", or third-party software. This will
automatically calculate the tax for them whether before or after
Asking any of our offices for help by calling
in at the local Enquiry Centre;
Contacting the Self Assessment Helpline on 0845
Statements of Account
35. Statements of account are essentially a summary of
the taxpayer's payment position showing:
36. In the early years of ITSA there was concern from
agents and taxpayers that the statement of account was complicated
and difficult to understand. So in recent years we have made considerable
effort to improve it. For example we have made changes to the
layout and to the customer service messages, in response to feedback
from taxpayers to make the messages clearer and more user-friendly.
We have made real progress in this but recognise there is more
to be done and the statements improvement programme is a continuous
process. We continue to invite and listen to feedback on statements
and consult with agents and taxpayers. Changes were made in 2000
in response to feedback received which improved the general format
37. Twice a year we send agents details of all transactions
on their clients' Self Assessment accounts. In future we hope
to be able to provide agents with electronic copies of their clients'
Statements of Account.
SA Filing & Payment Reminders
38. These have been redesigned to help taxpayers understand
the action they need to take and by when. We now issue a customer
focused set of reminders.
39. We have ongoing consultation with accountants and
taxpayers to identify ways that we can improve ITSA forms. Most
recent changes have been the improvements to the statement of
account and the shorter six-step tax calculation guide.
40. "Compliance" in this context describes
the work we do to encourage people to submit returns that are
correct and complete, and to detect and put right returns that
are not correct and complete. To encourage people to submit timely
and correct returns, we provide help and guidance through the
Internet, local tax offices, contact centres and the SA Helpline.
We use the procedures described at paragraphs 11 to 14 to follow
up cases where returns are late, and we check a proportion of
all returns we receive using risk-based enquiry procedures.
41. Whilst we accept the vast majority of ITSA returns
as they stand, we risk assess them all and make enquiries into
a proportion of the returns we receive to check their accuracy
42. Compliance activity under ITSA is more focussed than
before because we have a clear enquiry process set out in legislation.
It is clear to everyone:
when they must file their tax return;
when they must pay their tax; and
the time limit that we have for opening an enquiry.
ITSA changed the tax system fundamentally by removing the need
for the Revenue to make assessments. As a result, the structure
of the way we looked into tax returns in detail also changed.
ITSA brought in a new enquiry procedure which provides for:
a set time by which an enquiry must be opened;
a formal opening letter; and
a formal closing letter.
43. Before the introduction of ITSA, individual Inspectors
carried out a compliance risk assessment of each return and set
of accounts, contemporaneously, as they were received. The returned
figures either had to be agreed or a decision made to question
or investigate the return/accounts.
That approach had the potential for inconsistency. It made the
time that could be allocated to compliance risk assessment too
susceptible to fluctuations in daily work-flows.
44. The need to make a contemporaneous decision as to
whether or not to agree the figures meant that the relative compliance
risk in returns/accounts received only days apart could not be
That piece-meal methodology for identifying compliance risk, driven
by the flow of the receipt of returns/accounts locally and the
need to decide quickly whether to agree them, made forming a national
strategy for compliance risk assessment very difficult.
45. ITSA introduced what is commonly termed an "enquiry
window". Unlike the system before ITSA, Inspectors do not
have to decide the relative compliance risk of returns as they
are received. Instead, the ITSA legislation gives us a longer
period of time, (the "enquiry window"), usually 12 months
from the statutory filing date, in which to open an enquiry. That
allows the Department to risk assess all returns and to select
for enquiry those which present the greatest risk.
46. Self Assessment legislation gives the Inland Revenue
the power to enquire into any return. But in order to focus enquiry
work at the right level and ensure that we deploy our resources
effectively we classify ITSA enquiries into "full" and
47. "Full" enquiries consider the fundamental
veracity, completeness and accuracy of the whole of the return.
"Aspect" enquiries typically focus on a small number
of elements of the return, often turning on technical (question
of law) issues.
48. A small proportion of returns is selected randomly
for enquiry. Randomly selected (full) enquiries were introduced
with ITSA to ensure that any return could potentially be selected
for enquiry. This approach aims to deter those who might otherwise
suppose that they could avoid enquiry by manipulating their figures
to present what they suppose is an apparently low risk.
In addition, random enquiries have given us, for the first time,
valuable data about the extent of non-compliance amongst different
groups of SA taxpayers. We are using this information to inform
future risk assessment.
We are learning about patterns of behaviour and risk among different
groups of people and we are feeding that information back into
our risk assessment profiles so that we continue to target our
resources towards the greatest risks and develop appropriate responses.
49. Compliance risk assessment is undertaken through:
a head office risk team; and
a network of local offices with specialist risk
assessment teams (RIATs).
The head office team undertakes research and analysis on a national
basis to identify national business and other trends that present
particular risk to the Exchequer.
Locally based RIATs work in partnership with the other operational
teams in an Area, to undertake compliance risk assessment and
identify returns for both "full" and "aspect"
At both national and local levels compliance risk assessment involves
sharing information and expertise with HM Customs & Excise.
50. The implementation of ITSA was a huge task which
complex legislation in three successive Finance
the design and construction of one of the world's
largest computer systems;
management of a budget of £800 million, significant
risks, and a large number;
of activities and inter-dependencies;
delivery of a significant staff training programme,
and an agent/employer;
adherence to an implementation date set in statute.
51. Both the Chartered Institute of Taxation and the
Institute of Chartered Accountants have welcomed the main findings
of the National Audit Office report on Income Tax Self Assessment,
"Our overall conclusion is that self assessment has improved
the administration of income and capital gains tax. It has made
assessments more straightforward and allowed a more focused approach
to compliance work."
52. Nevertheless, we recognise that there are a number
of areas where we need to improve and these include:
minimising the number of people who are asked
to make an ITSA return;
developing a better understanding of the problems
experienced and perceived by taxpayers, especially those which
impact on taxpayer behaviour;
improving our accuracy;
simplifying ITSA for taxpayers and our staff;
improving the rate of timely filing;
encouraging and simplifying electronic filing;
making further and real improvements to our forms
improving our IT systems.
We are working with business representatives, accountants
and others to see how we can address the issues and problems arising
in the day to day operation of ITSA. "Working Together",
our liaison with the accountancy bodies, is essential to improving
performance; it operates centrally and across a national network
CORPORATION TAX SELF ASSESSMENT
53. The introduction of Self Assessment for companies
completed the Self Assessment reforms by extending the principles
of ITSA to company tax returns.
54. CTSA is governed by separate legislation, which,
while broadly parallel to the ITSA legislation, has some important
Corporation Tax is levied by reference to a company's accounting
period, which can vary in length and end on any day of the year;
ITSA by contrast has a fixed annual cycle common to all taxpayers,
based on the tax year 6 April to 5 April.
55. CTSA applies to accounting periods ending on or after
1 July 1999. In an extreme case, a company's first CTSA accounting
period may not have ended until June 2000. Normally, the return
due dates for such a company's first CTSA period would be in June
2001 but it could be as late as December 2001.
This means that it is too early to draw firm conclusions about
the impact and effectiveness of the CTSA regime. We are only now
starting to build up a picture of outcomes for the first annual
cycle. The regime is too immature to provide a reliable statistical
base for such conclusions.
56. Companies normally have to file their returns 12
months after the end of an accounting period. But unlike ITSA,
the date when tax has to be paid is not the same as the date for
filing. For most companies, corporation tax has to be paid nine
months after the end of the accounting period. So a company which
has not filed its return by the due date for payment of tax will
have to pay an estimate of its tax liability.
The position for companies paying very large amounts of tax is
more complex. These companies have to make quarterly payments
of their estimated tax liability, with the first payment due half
way through the taxable period and based on a projection of the
current period's profits.
57. The introduction of CTSA was a less radical change
for companies than ITSA was for individuals. Company taxation
had since 1993 been governed by the Pay and File rules, which
introduced many of the main planks of Self Assessment, such as:
a computational style return form, requiring the
company to work out its own tax bill;
the requirement to pay on a current year basis
before the tax liability is established by self assessment;
a mirror-image interest regime, operating (both
in relation to underand over-payments of tax) broadly on
a principle of commercial restitution for loss of the use of money.
58. The Pay and File system had, though, retained most
of the features of the old enquiry system that had applied to
both IT and CT before the introduction of ITSA. The introduction
of CTSA therefore brought to enquiry work involving companies
the same kind of clarity that ITSA had delivered for individuals.
59. The business case for the implementation of CTSA
was based primarily on:
"the need for the Department to have the best available
system and tools to enable it to undertake its enquiry and technical
review work more effectively and efficiently and in a manner more
commensurate with the increasing complexity of the CT sector".
60. The broad objectives of CTSA are:
to give taxpayers greater responsibility for their
to reduce operating costs founded on a business
process of "process now, check later" backed up by better
information powers and discretionary enquiry powers.
61. Whilst the overall objectives are broadly the same
for both IT and CT, there are some important differences which
need to be recognised:
the taxpayers covered by CT are predominantly
experienced in tax matters; and
the running-cost savings available from streamlining
the CT system were taken on the introduction of Pay and File in
62. So, the reasons for introducing Self Assessment for
CT were more focused on complianceparticularly bearing
in mind that CT covers the largest sector of economic activity
in the country and a sector in which tax planning is at its most
The Company Tax Computer System (COTAX)
63. COTAX is the new Inland Revenue computer system brought
in on 8 November 1999 to replace the CTPF (CT Pay and File) system.
It supports both CTSA (periods ending on or after 1 July 1999)
and the Pay and File regime which applies to earlier periods.
COTAX was enhanced in April 2000 to support quarterly instalment
payments and group payment arrangements for the largest companies.
There have been another five significant software enhancement
releases into the system since then.
64. Over more than two years of live operation, COTAX
has proved to be an exceptionally robust and stable system. The
average system availability has exceeded 99.9 per cent. There
have been no instances of functional loss in this time, and no
significant operational problems.
65. Some 20-25 per cent of the Inland Revenue tax take
is administered through COTAX. Some 1,600 Revenue staff, from
basic grade clerical staff to senior tax specialists, use the
system daily, in local offices and large business offices, local
Receivables offices and the two IR Accounts Offices, as well as
some specialist offices like the Oil Taxation Office and the Special
Compliance Office. It is one of the three or four most complex
computer systems we run.
66. The screen design and general structure of COTAX
is closely based upon CTPF, so it was not a big change for our
staff. But it is much more stable and reliable than CTPF, which
was not well regarded. COTAX, by contrast, has provided a very
firm operational platform for IR staff who administer CTSA.
The CTSA Return Form
67. The CTSA Return Form (Form CT600) comprises a core
form of 12 pages. Every company obliged to file a return must
complete this core. Its heart is a computation of tax liability,
and companies can choose between a short and a detailed calculation
depending upon the complexity of their affairs.
There are seven supplements, applicable only to companies with
certain specific liabilities or activities.
68. Whist the core form is shorter than the ITSA return
the apparent difference masks the complexity of the CTSA form.
Specialist knowledge is required to complete it in any but the
most straightforward of cases, since Corporation tax is complex.
In practice, over 90 per cent of company returns are submitted
by a professional tax agent. The return generally has to be accompanied
by a full set of accounts and detailed tax computations.
Payment Arrangements for Large Businesses
69. Most businesses which are large enough to need to
pay by quarterly instalments are groups of companies. For such
entities, we operate Group payment arrangements to make the administration
of tax payments more straightforward. Over 2,000 groups have signed
up, involving some 25,000 companies. Rather more than half the
total amount paid under quarterly instalment payments was paid
through a group payment arrangement.
70. We are currently developing a range of Internet services
for companies. These were the first to be collaboratively designed
with customers, their agents and others such as software developers.
In line with customer wishes the first service provides a secure,
personalised website for companies to view details of their account
with Inland Revenue. That service is currently being trialled
by 20 volunteer companies. It will be followed by similar services
for agents and groups and new services such as e-filing. We would
be happy to give the Committee a demonstration if they wished.
71. The comments at paragraphs 40 to 49 inclusive all
apply to CTSA. As with ITSA, this has provided an opportunity
to consider over time company return/accounts and to be more systematic
in our risk assessment.
72. There are, though, some differences in the way work
is organised. Most of the largest corporate entities are handled
by the Large Business Office (LBO), with oil companies being the
responsibility of the Energy Group in Revenue Policy. Both those
offices operate comprehensive procedures for risk assessment of
all their cases annually. The LBO also makes use of a sector-based
approach to ensure that work on industries such as pharmaceuticals,
utilities, banking and insurance is informed by shared knowledge
of issues which in those particular businesses give rise to particularly
complex tax problems. A "minimum standard" for exchanging
information with Customs and Excise applies, and in a number of
cases joint working with Customs is being operated.
73. Across the whole field of CTSA, internal information
systems have been supplemented by using commercial databases such
as FAME (Financial Accounting Made Easy) and DASH (Directors and
Shareholders). Bringing together sources of information in this
way is expected to develop greater national consistency and enable
risk assessment methodologies to be refined. Outside the LBO,
approximately 10 per cent of full enquiry cases were in 2001-02
centrally selected using information available to the Head Office
74. Both in the LBO and Energy Group, and in the CTSA
enquiry work done in local tax offices, enquiry work is quality
assessed to consider, for example, whether we avoided undue delays,
and whether we concluded the enquiry with a fair and proper outcome.
Because of its importance, this work is targeted. A new range
of performance indicators is being introduced from April 2002
which measure other important outcomes such as the extent to which
companies have been helped to comply with their obligations.
75. The CTSA regime is still too young to say a lot about
its operational success. However, the business processes are very
similar to Pay and File and there is no indication ofor
reason to anticipatesignificant problems.
14 February 2002
See Ev 11. Back