Examination of Witnesses (Questions 1
WEDNESDAY 6 MARCH 2002
1. Mr Banyard, welcome to this first session
in our inquiry into Self-Assessment for individuals and companies.
For the benefit of the shorthand-writer, could you introduce yourself
and the rest of your team, please?
(Mr Banyard) Thank you, Chairman. I am
Stephen Banyard and I am the Director of Local Services. On my
left is John Gilbody, who is an Assistant Director from Revenue
Policy. On my near right is Gordon Smith, who is our Director
of Receivables; and on the outside right is Stephen Jones, who
is our Director of the Large Business Office.
2. Thank you very much. Perhaps I could open
up by telling you that obviously we have received a lot of submissions
about the way in which Self-Assessment is going; a lot of these
do refer to the difficulty people have simply in understanding
the system because it is so complex. Indeed, the PCS, the staff
union, told us that taxpayers find the tax return, and I quote,
"difficult to complete and Inland Revenue staff find the
system hard to administer . . ." How do you react to that?
(Mr Banyard) It is our job to make Self-Assessment
as easy and as straightforward to use as we can, and we do it
really in two ways. One is, we try to produce products, forms,
that people find easy to use and we try to back that up with help
and guidance, where they need it. We have got a substantial number
of our customers who find Self-Assessment relatively straightforward,
but there are parts of the system which some people find difficult
to use. The main areas of concern, for some people, are the return
itself, the statement and the calculation guide; most problems
are with the statement and the calculation guide. We have done
a great deal to improve these since Self-Assessment was introduced,
but it has been in place five years now and we want to take a
fresh look; so we have brought together a team specifically to
take a new look at improving SA further, in the light of experience.
At the moment, they are looking at the return and the calculation,
together with other forms that taxpayers find most difficult.
We are not doing it just on our own, we have invited some small
practitioners, at the sharp end, to join in with us, and we will
be working with our own staff as well in workshops, and also we
will be consulting the representative bodies. We have got an open
mind about the changes which might eventually be introduced.
3. And what is the timing of this particular
(Mr Banyard) It is an ongoing piece of work and we
have not put timing limits on it, at the moment, it is a piece
of work in progress to get our ideas in shape.
4. But it must finish at some point?
(Mr Banyard) Indeed, it will; but at the moment we
have put a review in place to scope out the extent of the work
we have to do.
5. Is it possible to simplify the system without
actually reforming the underlying tax regime?
(Mr Banyard) What we are going to do is have a look
at cases of people who have particular difficulty with the system.
I think you need to remember that in the United Kingdom between
15 million and 20 million people do not use Self-Assessment at
all; only nine million of our taxpayers are within Self-Assessment,
and for many of them it is straightforward. What we want to do,
in the first instance, is look at areas where people have particular
concerns and see if we can address them, either by taking them
out of Self-Assessment altogether, or by seeing if we can find
some simplified way for them to assess. I think, only when we
have looked at that would we know whether we had to change the
6. But the whole object of Self-Assessment was
to give taxpayers greater responsibility for their own tax affairs;
taking them out of Self-Assessment would imply that that was being
abandoned, would it not?
(Mr Banyard) No, not at all. We are looking at those
people at the margin, where organisations like the Low Income
Tax Reform Group have suggested to us that we should look and
see either whether we can simplify things for them or whether
we should take them out of Self-Assessment.
7. Could you just summarise for us exactly how
many people and what the percentage of taxpayers is now who rely
on the Revenue to calculate the filing, who file before 30 September;
how many million people do that?
(Mr Banyard) Before 30 September, 72 per cent of the
people who submit their returns rely on us to calculate for them,
28 per cent of them self-calculate. After 30 September, 75 per
cent of the people who file self-calculate, 25 per cent look to
us to do it.
8. And has that percentage changed over the
(Mr Banyard) I do not know whether that percentage
has changed, but we have looked at the proportion of people who
use an agent, or who come in and fill in their return themselves;
and the proportion of people who use an agent, in fact, has fallen
slightly over the last four years, and the proportion of people
who do it themselves has gone up.
9. What does that tell you?
(Mr Banyard) It does not tell us that there is a system
that is getting radically worse, it is a broadly stable position.
Four years ago, 53 per cent of people used an agent, now 51 per
cent do. We are not driving people into agents' arms.
10. Mr Banyard, could I just put to you what
the Institute of Chartered Accountants of England and Wales have
submitted to us, and I quote: ". . . In recent years [the
Revenue's] advertising budget has been directed towards encouraging
taxpayers not to self-assess but to submit their tax returns by
30 September, leaving the Revenue to make the assessment."
And that is a quotation from their evidence. I wonder whether
you think there is some contradiction in the stance you are adopting,
if the advertising budget is being deployed in the way that the
(Mr Banyard) No. I think they have got a misunderstanding.
There is a difference between self-assessing, telling us what
income you have got, and self-calculating. What we are saying
to people is that, if you find the calculation difficult, and
I think that is, for some people, the most difficult part of the
form, we will do it for you; and so we provide an incentive. If
you bring in your form by 30 September, we will do the calculation
for you, but they are still assessing themselves, they are declaring
their income and they are responsible for displaying it to us.
I do not see an inconsistency there at all.
11. And what proportion of the advertising budget
is directed towards advertising that fact? I think that is a distinction
which is fairly made by you, but it is clearly not one the Institute
of Chartered Accountants have picked up on. It is useful therefore
to know what the advertising budget is; could you give us some
figures on that?
(Mr Banyard) The advertising budget this year was
about £5 million, and we delivered the advertising across
the year as a whole; we do this to retain and maintain awareness
of Self-Assessment, and our research shows we have to do it to
keep people's awareness up. During the course of that advertising
programme, we target particular groups of people where we think
they need to be informed, and we target particular events. So
before September 30 we target people, encourage them to file with
us, if they want us to do the calculation; after that, this year,
we have encouraged people to file electronically, and we have
also reminded them that the filing date was 31 January. I have
not got the division of figures with me as to what we spent before
and after 30 September, but I think it would be fairly easy to
find it, if you wanted it.
12. I think it would be helpful; but it is still
not clear what the end-game is here. Obviously, you want to get
the number up of people who self-assess and self-calculate, those
two things together; have you any targets at all? You gave some
figures to Mr Fallon; are there any targets going forward you
(Mr Banyard) We do not target 30 September; the targets
that we have agreed with Ministers are to get 90.5 per cent of
the returns in, this year, by 31 January. We put advertising into
encouraging people to come in and file by 30 September, but this,
as much as anything, is to encourage people to come in where they
will need to use the Revenue-calculation service; we do not target
particularly 30 September. I have just been told that the split
of expenditure before and after 30 September is about 50/50, if
13. Could I just ask; Self-Assessment is a big
step, have you done any calculations as to the net saving to the
Revenue, in terms of resources you direct to this assessment of
income taxpayers' tax liability, before and after the onset of
this regime for personal, individual taxpayers?
(Mr Banyard) Yes, we have. Self-Assessment, over its
life-cycle, is expected to realise net savings to the exchequer
of £500 million, and we are on course to do that. Part of
that is through staff savings, part of that is through reduced
IT costs; but we have had those figures looked over independently
and we are delivering them.
14. Can I just ask about the shift in the burden
of compliance? I take the point you make that the Inland Revenue
has been able to realise savings, and you have just helpfully
provided those, but the evidence we also have, from the Institute
of Chartered Accountants, in this case, of Scotland, says that
there has been this shift of the burden of compliance, without
any accompanying simplification. And the point also is made, by
the ICA of England and Wales, that the introduction of Self-Assessment
has given rise to, and I quote, ". . . a significant deterioration
in the relationships between the Inland Revenue, taxpayers and
their advisers." What is your response to that?
(Mr Banyard) It is not our experience that there is
a significant deterioration in the relationship with agents; and,
15. But, if I may interrupt you, the Institute
of Chartered Accountants are one of the main agents bodies?
(Mr Banyard) They are one of the many groups which
deal with us, yes.
16. One of many; but this is quite a serious
outfit, and they are making quite a serious point, an allegation,
in fact," . . .a significant deterioration in the relationships
between the Inland Revenue, taxpayers and their advisers."
Are they making it up, or do they not know what they are talking
(Mr Banyard) I think it is for them to form that judgement,
but perhaps I can help the
17. They have already formed it; what is your
response to that then?
(Mr Banyard) My response to it is that, in April 2000,
we launched a new initiative, called Working Together, in which
we have partnered with the ICAEW, the Chartered Institute of Taxation
and, subsequently, other professional bodies, to work together
to see if we can resolve some of the problems and the grit in
the mill. So, for example, we have a mechanism whereby people
surface issues at local level, accountants, and these come forward
to the national level, we post them on a website, they are very
open, and we try to resolve them; these include Self-Assessment
issues. We have conducted a joint inquiry with the Chartered Institute
of Taxation into how we conduct our tax inquiries, we published
a joint report and we have got conclusions from that which we
will be taking forward shortly. So, whether or not Self-Assessment
produced a deterioration in the relations, we are working very
hard to build close links with them.
18. Fine. My final question relates to the scoping
work that you were talking about, I think you said, in reply to
Mr Fallon, that there was an ongoing review that you were undertaking
inside the Revenue as to how you can make improvements to the
regime. I am a bit troubled about the open-ended nature of that
work. It would be helpful, do you not think, to have an end point,
at which you will report not merely to MinistersI would
be quite surprised if Ministers would not want a date from the
Inland Revenuebut also a date by which you can report back
to Parliament, through this Committee? And the absence of end
points of this work, I have to say, troubles me. Can you give
us some assurances that you will discuss with Ministers, which
is obviously what you would have to do, about points at which
you report to Ministers, and therefore to Parliament?
(Mr Banyard) This is an ongoing piece of work, and
we are not proposing to produce a formal report. We expect the
work to last for 18 months. We will be reporting, periodically,
regularly, I am told, to the Paymaster, on it. We are serious
about it; this is something we want to do.
19. You referred earlier, to £500 million
worth of savings; could you just clarify for us over what period
(Mr Banyard) That is over the life cycle of the project.