HMRC Main Estimate 2019-20 - Select Committee Memorandum - HMRC Main Estimate 2019-20 - Parliament UK
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HMRC Main Estimate 2019-20
HMRC Main Estimate
2019-20
Select Committee Memorandum
Page 1 of 11HMRC Main Estimate 2019-20
1 Overview
1.1 We are the UK’s tax, payments and customs authority, and we have a vital purpose: we
collect the money that pays for the UK’s public services and help families and individuals
with targeted financial support. We do this by being impartial and increasingly effective
and efficient in our administration. We help the honest majority to get their tax right
and make it hard for the dishonest minority to cheat the system.
1.2 Our key objectives set out in our Single Departmental Plan are to:
• maximise revenues due and bear down on avoidance and evasion
• transform tax and payments for our customers
• design and deliver a professional, efficient and engaged organisation.
1.3 The Valuation Office Agency (VOA) gives government the valuations and property advice
needed to support taxation and benefits. VOA is an executive agency of HM Revenue
and Customs (HMRC).
1.4 The purpose of this Memorandum is to provide the Select Committee with an
explanation of how the resources and cash sought in this Supplementary Estimate will
be applied to achieve HMRC’s objectives.
2 Spending controls
2.1 HMRC’s spending is broken down into a several different spending totals, for which
Parliament’s approval is sought.
2.2 The key spending control totals for HMRC which Parliament votes are:
• Resource Departmental Expenditure Limit (“Resource DEL”)- day to day running
costs
• Capital Departmental Expenditure Limit (“Capital DEL”)- investment in infrastructure
• Resource Annually Managed Expenditure (“Resource AME”)- less predictable day to
day spending: in HMRC’s case, mainly Tax Credits, Child Benefit, Tax Free Childcare,
Lifetime ISA, other reliefs and entitlements.
2.3 Budgets are split between those voted by Parliament and those where appropriation is
covered in other legislation (non-voted).
2.4 In addition, Parliament votes a net cash requirement, designed to cover the elements
of the above budgets which require HMRC to pay out cash in-year.
Page 2 of 11HMRC Main Estimate 2019-20
3 Efficiency plans
3.1 Our Spending Review 2015 settlement provided HMRC with additional funding to
transform HMRC, making it quicker and easier for customers to report and pay their
taxes online; and to tackle avoidance, evasion and non-compliance.
3.2 In 2017-18 HMRC made sustainable annual efficiency savings of £410 million against its
target of £380 million, in line with Spending Review 2015 and subsequent fiscal events.
We continue to work towards £717 million target of annual, sustainable efficiencies by
2019-20.
4 Performance
4.1 HMRC look at a range of compliance, operational and customer service measures
throughout the year to assess our performance. Monthly reports shows how HMRC has
done against its key customer service performance objectives, such as:
• use of digital services
• answering phones
• handling customer post
• responding to complaints
5 Ambit changes
5.1 No changes to the Ambit are required.
Page 3 of 11HMRC Main Estimate 2019-20
6 Departmental Expenditure Limits (DELs)
Table A: DEL Mains 2019-20 budget compared to 2018-19 Supplementary Budget
Subheads Description Resource Capital
This year Last year This year Last year
(Main (Supp (Main (Supp
Estimates Estimates Estimates Estimates
budget budget Change from last see budget budget Change from last
sought) approved) year para sought) approved) year see para
£ million £ million %
-
A HMRC Administration 3,705.5 3,578.6 126.9 4% 6.1 298.7 366.5 67.9 -19% 6.1
B VOA Administration 164.2 156.3 7.9 5% 6.3 8.0 9.3 -1.3 -14% 6.3
C Utilised Provisions 30.0 52.8 -22.8 -43% 6.6
sub total (voted) 3,899.7 3,787.8 111.9 3% 306.7 375.9 -69.2 -18%
D National Insurance Fund 283.3 287.0 -3.7 -1% 6.8
sub total (non-voted) 283.3 287.0 -3.7 -1%
total voted and non
voted 4,183.0 4,074.8 108.2 3% 306.7 375.9 -69.2 -18%
Note: Table may not appear to add up due to rounding’s
Page 4 of 11HMRC Main Estimate 2019-20
HMRC Administration (Section A)
6.1 This section covers all of the running costs and capital investment provided to HMRC to
deliver our objectives of maximising revenues due and bearing down on avoidance and
evasion, transforming tax and payments for our customers and designing and delivering
a professional, efficient and engaged organisation.
6.2 Between Mains and Supplementary the balance of Resource and Capital is reviewed,
and where necessary funding is switched between Resource and Capital, which is in line
with Managing Public Money guidance.
VOA Administration (Section B)
6.3 This section covers the running costs of the VOA, which from 2017-18 included funding
transferred from DCLG. The VOA also recoups expenditure through income. The VOA
has capital investment provided to enable its transformation.
6.4 The VOA received additional funding for Revaluation 2021 following the announcement
in the Spring Statement that the next non-domestic rating revaluation would be brought
forward to 2021. At Supplementary Estimates in 2018-19, the VOA received additional
Resource DEL Programme funding of £7.5m and Capital DEL of £1.5m. At the Main
Estimates in 2019-20, VOA received additional Resource DEL Programme funding of
£25m.
6.5 VOA also received additional funding at Mains 2019-20 for increased pension
contribution costs and funding agreed to enable the VOA to meet in-year commitments.
Utilised Provisions (Section C)
6.6 This section covers the provision requirements for HMRC. When provisions are utilised
the cost is moved from AME to DEL as an equal and opposite transaction. Provisions are
inherently unpredictable in terms of the timing and value of settlements. HMRC have
an established process in place to regularly review and monitor provisions.
6.7 Provisions in HMRC primarily relate to settling legal claims against the department.
Provisions requirements will be reviewed at the Supplementary Estimates.
National Insurance Fund (Non-Voted) (Section D)
6.8 This section covers the budget for administration of the funds and the collection of
National Insurance contributions. HMRC is responsible for the administration of the
National Insurance Funds of Great Britain and Northern Ireland.
Page 5 of 11HMRC Main Estimate 2019-20
7 Explanations of changes (DEL) since SR 15
Table B: Summary of changes to control totals since Spending Review 15
Resource DEL Resource DEL
TDEL Including
Event (£m) Excluding Including Capital DEL
Depreciation
Depreciation Depreciation
Spending Review 2015 2,927.0 3,198.0 216.0 3,414.0
Movement of funding for VOA from DCLG 122.3 122.3 122.3
Net Fiscal Events 156.0 156.0 12.7 168.7
Help to Save 15.0 15.0 15.0
EU Exit Funding 297.0 297.0 78.0 375.0
VOA Reval 21 Funding 25.0 25.0 25.0
Additional funding from HMT 214.9 214.9 214.9
Net transfers with other Departments 46.3 46.3 46.3
Adjustments for Depreciation - 108.4 108.4
Main Estimate 2019 - 20 3,803.5 4,183.0 306.7 4,489.6
Note: Table may not appear to add up due to rounding’s
7.1 The movement of Resource DEL funding for the VOA from the Department for
Communities and Local Government (DCLG) is an administrative change to simplify the
way the VOA receives its funding, which does not increase spending power.
7.2 Resource DEL and Capital DEL funding has been received for Help to Save and new
activity at Autumn Budget 2017 and Spring Budget 2019.
7.3 Funding was agreed for activity to prepare the UK for exit from the EU. This funding is
for staff necessary to develop and operate our activities for our customer services and
compliance activities that are affected by the exit from the EU, IT changes required to
HMRC systems, coordination and delivery of cross government border activity, and
other activity that supports the exit from the EU.
7.4 Additional funding for Revaluation 2021 following the announcement in the Spring
Statement 2018 that the next non-domestic rating revaluation would be brought
forward to 2021.
7.5 Additional funding from HMT to address the increase in pension contribution costs and
funding agreed to enable HMRC to meet in-year commitments.
7.6 Net Transfers with OGDs over the SR 15 period as per the table below.
Page 6 of 11HMRC Main Estimate 2019-20
Table C: Summary of budget transfers with OGDs since Spending Review 15
Budget Transfers £m
Incoming
Transfer from DWP Universal Credit 60.5
Transfer from OGDs (Operational Delivery Profession) 1.5
Transfers from DFID (ODA) 3.8
Transfers with FCO for One HMG 2.1
Transfer from CO (NCSP) 1.5
Outgoing
Transfer out to OGD for SB15 related measures (22.7)
Other outgoing transfers to OGD’s (0.3)
Total 46.3
Note: Table may not appear to add up due to rounding’s
Page 7 of 11HMRC Main Estimate 2019-20
8 Annually Managed Expenditure (AME) Table
Table D: AME Mains budget 19-20 compared to Supplementary budget 18-19
Subheads Description AME
This year Last year
Change from last See
(Main Estimates (Supp Estimates
year para
budget sought) budget approved)
£ million %
E Child Benefit 11,699.6 11,969.3 (269.7) (2%) 9.3
F Tax Free Childcare 286.1 145.9 140.2 96% 9.4
G Providing payments in lieu of tax relief to certain bodies 101.1 97.4 3.6 4% 9.5
H Lifetime ISA 345.4 312.6 32.8 10% 9.6
I HMRC Administration 30.0 55.0 (25.0) (45%) 9.7
J VOA - Payments of rates to LAs on behalf of certain bodies 81.5 76.5 5.0 7% 9.8
K VOA Administration 2.0 2.0 - 0% 9.9
L Utilised Provisions (30.0) (52.8) 22.8 (43%) 9.10
Sub Total (Voted) 12,515.6 12,605.9 (90.3) (1%)
M Personal Tax Credit 25,068.2 23,475.1 1,593.1 7% 10.2
N Other Reliefs and Allowances 5,116.5 4,624.8 491.8 11% 10.3
Sub Total (Non-Voted) 30,184.8 28,099.9 2,084.9 7%
Total Voted and Non-Voted 42,700.3 40,705.7 1,994.6 5%
Note: Table may not appear to add up due to rounding’s
Page 8 of 11HMRC Main Estimate 2019-20
9 Explanations of changes (Resource AME Voted)
9.1 HMRC’s AME budgets consist primarily of Child Benefit, Personal Tax Credits and
Corporation Tax Reliefs. These budgets have been set at the Main Estimate aligning with
forecasts endorsed by the Office for Budget Responsibility (OBR) for Spring Statement
2019.
9.2 A decrease of (£90.3m) Voted AME, which represents a 1% decrease on Supplementary
Budget and consists of the following:
Child Benefit (Section E)
9.3 A (£269.7m) decrease in Child Benefit (2% decrease on Supplementary Budget) which
aligns with Spring Statement 2019. This mains budget is on a cash basis, the
Supplementary budget is on an accruals basis.
Tax Free Childcare (Section F)
1.1 A £140.2m increase (compared to Supplementary Budget) in Tax Free Childcare reflects
the expected growth rate since the scheme launched in April 2017 and aligns with the
Spring Statement 2019.
Payments in Lieu of Tax Relief to Certain Bodies (Section G)
1.2 A £3.6m net increase (4% increase on Supplementary budget) consisting of:
• £4.5m increase in Gift Aid Relief on Micro Donations.
• (£0.8m) decrease in Stakeholder Pensions
Lifetime ISA (Section H)
1.3 A £32.8m increase (10% decrease on Supplementary budget) reflects the OBR approved
forecasts which is based on more recent scheme uptake rates and levels of investment,
since the scheme launched in April 2017.
HMRC Administration (Section I)
1.4 A £25m decrease in new provisions. HMRC have an established process in place to
regularly review and monitor provisions.
Page 9 of 11HMRC Main Estimate 2019-20
Payments of rates to LAs on behalf of certain bodies - VOA (Section J)
1.5 A net £5m budget increase due to changes in diplomatic properties and associated rates.
The VOA compensates local billing authorities for rates due on properties occupied by a
mission with diplomatic status.
VOA Administration (Section K)
1.6 This covers pension costs, provisions, impairments and revaluations required by the
VOA. No changes at Mains.
Utilised Provisions (Section L)
1.7 When HMRC utilise a provision the cost is moved from AME to DEL as an equal and
opposite transaction.
2 Explanations of changes (Resource AME Non-Voted)
2.1 An increase of £2,084.9m Non-Voted AME, which represents a 7% increase on last year’s
Supplementary Budget and consists of the following:
Personal Tax Credit (Non-Voted) (Section M)
2.2 A £1,593.1m increase represents a change of 7% and aligns with the forecast endorsed
by the OBR. This mains budget is on a cash basis, the Supplementary budget is on an
accruals basis.
Section N Other Reliefs and Allowances (Non-Voted)
2.3 A £491.8m net increase (11%) since Supplementary last year. This section covers a range
of tax reliefs, the largest being Large Companies Research and Development Relief
£1,950.4m (increase of £173.1m), Small Companies Research and Development Relief
£2,085.3m (increase of £199.9m), and Film Tax Relief £604.4m (£44.6m). These budgets
align with forecasts endorsed by the OBR.
3 Explanations of changes (Capital AME)
3.1 £10,000 is held in Capital AME for the utilisation of the Child Trust Fund provision. No
changes required.
Page 10 of 11HMRC Main Estimate 2019-20
4 Ring fenced budgets
4.1 Within the budget totals above, the following elements are ring fenced (i.e. savings in
these budgets may not be used to fund pressures on other budgets).
Brexit funding Total DEL £375m
4.2 Funding was agreed for activity to prepare the UK for exit from the EU.
Depreciation DEL £379.4m
4.3 This ring-fence is common to all departments.
5 Approval of Memorandum
5.1 This Memorandum has been prepared in accordance with the guidance in the Estimates
Manual provided by HM Treasury.
5.2 The information in this Memorandum has been approved by the Principal Accounting
Officer, Sir Jonathan Thompson.
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