Capgemini Consulting and HMRC benchmark the performance of tax administrations in ten countries to identify further steps for improvement
HM Revenue and Customs is responsible for safeguarding the flow of tax revenues to the UK Government, through collection, compliance and enforcement activities. It makes sure money is available to fund the UK’s public services. It has direct contact with almost every UK individual and business, and it aims to administer the tax system in the simplest, customer focused and efficient way. HMRC has committed to making efficiency savings of 25% in the period to 2015.
Tax authorities around the world undertake similar activities and are facing the same challenges, to deliver more with less. Benchmarking offers the potential to compare the administration of tax across a group of peer tax authorities. It involves identifying common tax processes, comparing cost and other performance indicators and carefully interpreting differences identified. This in turn enables the sharing of best practise and the identification of opportunities for efficiency and performance improvement.
HMRC conducted an initial feasibility study in 2009 with data from the tax administrations of South Africa and Australia. A follow on project was designed to build on this existing work, expanding both the number of participating tax administrations and the number of benchmarks.
As a result of a competitive tendering process, Capgemini Consulting was selected to help deliver the benchmarking project. The feasibility study had already established eight benchmarks covering customer contact, personal income tax returns processing, complex query resolution for large businesses, VAT/GST registration, VAT/GST risk assessment, Corporation Tax audits/enquiries. Capgemini proposed that an additional benchmark be added to these to measure the cost and effectiveness of debt management and it was also agreed to compare personal income tax disputes. This allowed HMRC to extend its analysis across all the core tax processes.
The participation of an additional seven countries was secured – Canada, France, Ireland, the Netherlands, New Zealand, Poland and Spain – bringing the total to ten. Administrations were chosen according to their level of process maturity, degree of centralisation and innovation, with the aim of ensuring valuable comparisons for all participating organisations. A joint HMRC and Capgemini Consulting team carried out the work over 12 months starting in April 2010. They conducted in-country workshops with representatives from each tax administration, mapped the processes, identified similarities and differences between countries, and gathered and analysed data and evidence of leading practices, to identify opportunities for actionable improvement.
The study quantified the relative performance of the ten countries for each of the benchmarks, and identified a range of leading practice, grouped by performance lever. It has helped decision makers in participating authorities know how to target opportunities for efficiency and performance improvement. The findings have been presented and discussed at Board level in many of the participating administrations, including HMRC, which has also developed action plans for each relevant business area, identifying the steps that will be taken to implement the findings.
There is strong interest from HMRC and the other participating administrations in carrying out further benchmarking in future.