Minutes of the Working Together Steering Group Meeting

5 March 2007

HM Revenue & Customs, 100 Parliament Street, London

Theresa Middleton (TM) – HMRC Chair
Alison Walsh (AW) – HMRC Secretary
Greig Rattray – HMRC Minutes

Derek Allen (DA) – ICAS
Jane Gilchrist (JG) - HMRC
Aleem Islan (AI) - AAT
Peter Jennings (PJ) - ACCA
Tony Kelly (TK) - HMRC
John Kimmer (JK) - ATT
Keith Lang (KL) – HMRC
Richard Mannion (RM) - CIOT
Madeline McGrillen (MMcG) – HMRC
Elizabeth Parks (EP) - ICAEW
Richard Shooter (RS) – ICAEW
Anne Smith (AS) - HMRC
Robin Ward (RW) – HMRC

1 Welcome & Apologies, Minutes of the Previous Meeting and Matters Arising

1.1 TM welcomed everyone to the meeting, particularly Aleem Islan for his first attendance at WT Steering Group.

1.2 Apologies had been received from Stephen Banyard, Paul Gray, Roger Halson and Brian Palmer.

1.3 There was uncertainty as to whether the last draft minutes had been approved by HMRC. A reply was awaited from Roger Halson, who was currently on holiday. HMRC confirmed that it was content that the last set of draft minutes could now be regarded as final.

1.4 Actions 1, 2 & 3 arising from the Presidents’ meeting are covered in today’s main agenda.

1.5 Action point 4: JK had drawn up a paper on the expansion of Working Together to include the CAR offices. This was not discussed in depth but HMRC would consider the contents and discuss this at the WT Steering Group June meeting. Mary Hay to be invited to the June meeting, if possible.

Action: AW to put down as agenda item for next meeting and invite Mary Hay to the meeting to take part in the discussion.

2 Processing Pacesetter

2.1 AS gave a presentation on the Pacesetter Programme – Processing.

2.2 During the course of the discussion, the following main points were made.

2.3 AS said that the programme wanted to work with local Working Together to ensure that the Programme is successful.

2.4 JK queried the move of work from Sussex to Centre 1 and pointed out that there was the possibility of a conflict between English and Scots Law.

2.5 AS explained that, following the recommendations of the Lyons Report, HMRC is committed to moving work from London and the South East. AS acknowledged that differences in law between England and Scotland should be taken into account when offices are relocated between the countries.

2.6 AS stressed that the measures in the programme did not affect the local face-to-face service network.

2.7 RM said that the acid test for him was that someone should take ownership of a case where something went wrong.

2.8 AS confirmed that Contact Centres would continue in the way they are currently organised. TM suggested that HMRC needed to improve on the way that Contact Centres worked for agents.

2.9 RS said that partners were picking up signals of demoralisation and demotivation amongst HMRC staff.

2.10 TM agreed that HMRC managers were concerned about this too.

3 HMRC/Agent Relationship

3.1 Introducing this item, TM explained that, following feedback, Roger Halson had produced a revised version of his paper on consultation forums. The paper acknowledged that:

there was confusion about the remit of the various forums
there was a duplication of issues raised at the various forums
there should be a discussion about the current Working Together sub-group structure.

3.2 RS suggested that the paper had been produced to justify what was already in existence.

3.3 Moreover he was concerned that the members of the Tax Agents and Advisers Steering Group (TAASG) had been nominated by HMRC rather than nominated by the professional bodies.

3.4 RM asked for issues raised at the TAASG to be communicated to the Working Together Steering Group.

3.5 TM stressed the need to ensure that the links between the forums were robust.

3.6 TM noted that Dave Hartnett had expressed concerns that the format of local working together was not bringing value to agents or to the Department, however senior management are committed to Working Together.

3.7 TM said that the WT sub-groups reflected the 3 key issues: online services, customer contact and compliance.

3.8 RM queried the current status of the Agent Authorisation Steering Group

3.9 It was explained that the group had been set up in order to deal with a specific piece of work: that of including VAT on the form 64-8.

3.10 KL said that the other sub-groups continued but that only the 3 main sub-groups would report to the Steering Group at each meeting.

3.11 Summing up the discussion TM suggested that it was appropriate to deal with agent authorisation issues in the contact sub-group.

3.12 It was clear that work was going on across all of the sub-groups, not just the core 3 however there was a need for communication to be improved.

3.13 TM explained that there was a difference between the TAASG and the Working Together Steering Group in that the Working Together Steering Group deals with the Department’s day-to-day relationships with agents.

4 Retirement Annuity Contracts (RACs)

4.1 TM introduced RW to the meeting.

4.2 From April 2007 around 1.1 million pensioners will have their annuities taxed under PAYE for the first time.
4.3 HMRC has worked closely with annuity providers and lobby groups such as LITRG.
4.4 With the co-operation of the annuity providers, over the last 12 months they have provided the personal details of all of their customers receiving a retirement annuity. HMRC has then tried to match that information with its own records and over 700,000 of the 1.1million customers were found with an existing tax record. For the other 400,000 customers, tracing letters have been issued and so far around 250,000 have replied.

4.5 This has meant that about 950,000 customers have either been linked to their existing tax record or have had a new record created. At that stage of the setting up process a provisional code number for 2007/08 was put on the record. The provisional codes are then reviewed by HMRC advisers as they process the information provided by the customers, and this will ensure that the tax code numbers to be used against the annuities are based on the most up to date information available. .

4.6 Around 760,000 code numbers were issued in mid January as part of the annual HMRC coding process, and this meant that there was insufficient time for all of them to be reviewed by that time, so some were provisional. Of these, some had not been reviewed because the customer had not replied or no address was known, and for the remainder the customer had replied but their information was still waiting to be reviewed.

4.7 HMRC had anticipated that this situation would arise and had ensured that the provisional code numbers would not result in any tax being deducted where the annuity was below £100 per week, unless there was specific information available to show that the customer had other taxable income. In those situations, the provisional code number would tax the annuity at the basic rate of 22% on the assumption that all of the personal allowances were utilised against the other income.

4.8 HMRC also anticipated that because every customer would be sent a P2 coding notice, the response rate would be very high, so an explanatory notes page was produced outlining the reasons for the change and how the code number was calculated. This was designed to help answer the more straightforward enquiries and reduce the level of customer contact. But because the 796,000 P2s were issued over just a 4 day period, the number of lines into the RACs helpline was not able to cope with the sudden surge in calls, and customers were unable to get through. This led to many continually redialling which in turn compounded the problem and added to their frustration.

4.9 There are still around 200,000 customers who either have not responded to HMRC letters, or for whom no address is known. Until such time as these situations are rectified, the provisional code numbers of PA or BR will remain in operation.

4.10 Leicester and Northants Office are now working to ensure that HMRC can issue the correct code for the start of the new tax year.

4.11 HMRC knows that some of their customers will not contact them and therefore they will remain on a default code number.

4.12 RM observed that there had been articles in the professional press indicating that things were going wrong. There had been an opportunity to counteract these by issuing communications through Working Together.

4.13 RW noted that Working Together may not have been the ideal medium for such communications, given that the vast majority of RAC customers are unrepresented.

4.14 JK queried whether the issue of the code number could have been postponed. RW replied that HMRC had to be guided by the coding runs, which had to be done in January and February and therefore HMRC did not have this discretion

4.15 TM said that it struck her that this had been a planned exercise which required a planned message which would have helped to contain the alarmist stories in the press.

4.16 RW pointed out that there were problems arising from about 150,000 annuitants where no address could be traced e.g. because they were abroad, had been admitted to hospital, were in care homes, etc.

4.17 JK asked if there was any scope for addresses to be traced through the banks. RW replied that there may be some scope to do that in some cases.

5 Feasibility of Agents Amending Notices of Coding

5.1 TM said that she had been advised that the Department has looked at the feasibility of doing this more than once (“self-coding”). Although there would be some mutual benefits, HMRC had concluded that this would present it with considerable resource costs in systems changes and operationally.

5.2 HMRC may revisit the subject however its current priority is delivering the Carter recommendations and seeing them bed in.

5.3 Taxpayers or their agents can appeal against a code number, and HMRC will usually accept any reasonable requests for amendments.

5.4 From 2007-08 HMRC is introducing changes to its systems which will improve the accuracy of coding work. These changes will enable it to issue more accurate codes

for taxpayers in receipt of benefits in kind and
for taxpayers who have had more than one employment.

(Post meeting note: Details on the systems changes referred to)

6 Deficiency Notices

6.1 This issue is being dealt with through the Employer Compliance Forum (ECF). The ECF will report to the Working Together Steering Group as appropriate.

6.2 In reply to points made by RM and JK, TM acknowledged that HMRC needed to take appropriate notice of points made by Steering Group and be receptive to valid items raised. HMRC needs to work with partners on how to manage these messages.

7 SA Filing Update

7.1 TM noted that there had been potential difficulties posed by the industrial action on 31 January. Senior managers had openly communicated with the professional bodies about the position regarding the filing date, the enquiry window, penalties, etc.

7.2 PJ and RS said that they were aware of instances where taxpayers had filed online, on time but had still received a late filing penalty. They agreed to provide the Working Together Team with examples for investigation.

8 Sub-Group Updates

Customer Contact

8.1 KL’s update report had been circulated prior to the meeting.

8.2 On the issue of the attitude of Contact Centre staff: additional training had taken place. Steering Group members had no other examples to report.

8.3 Debt Management and Banking had considerably increased the number of staff to deal with telephone enquiries in the Accounts Offices. The situation appeared to have improved but partners were invited to provide any feedback if this proved not to be the case.

8.4 Delays in handling correspondence by the National Advisory Service (NAS) had been a result of centralising correspondence-handling at Southend. The position had improved and NAS report that they have the situation under control.

8.5 A draft replacement for Code of Practice 1 had been sent out for consultation. Feedback had been requested from partners.

8.6 DA expressed his concern that the new code talks about contacting the person working on the case. DA said he would prefer that the complaint were dealt with by an independent party. KL replied that it would depend upon the nature of the mistake/complaint. The Code encouraged people to complain to the caseworker but that there is an option to invoke the formal complaints procedures.

8.7 In reply to RM, KL said that there would not be a complaints manager in every office; they will be in about 20 offices.

8.8 JG brought the Steering Group up to date with the agent telephone pilot, which has been running in Manchester since December 2006.

8.9 Towards the middle of January, the project managers were becoming worried about the low level of agent participation. A decision was therefore taken to extend the pilot until the end of April.

8.10 HMRC has written to all of the participants for feedback and early indications are that this has had an effect in increasing the amount of feedback received.

8.11 Calls will be recorded and analysed in conjunction with the feedback received. Contact Centre directorate will share this feedback with the Working Together Steering Group.

Online Services

8.12 Partners brought up no issues from the sub-group report, which had been circulated prior to the meeting.

Compliance

8.13 TM recalled that following the Carter recommendations on SA filing dates, the unexpected budget announcement on trusts and the new interventions pilots last year, relations between HMRC and tax advisers had been at a low ebb. Dave Hartnett had asked TM and Stephen Banyard to improve relations. This has led to the establishment of joint initiatives e.g. pre-return work, the increased use of shared workspace and how we might share and use risk assessment.

8.14 TM said that the Working Together Compliance sub-group should be about the day-to-day compliance issues: “the grit in the system”. That is the difference between this sub-group and these initiatives.

8.15 Partners said that they had not received copies of the output from the joint workshop held on 27 February 2007 prior to this meeting.

Action: AW to send copies to partners.

9 Local Working Together

9.1 AW said that progress had been slower that had been anticipated or hoped. A meeting had taken place with Enforcement and Compliance Operations (ECOPS) last week and a proposal is being worked up for the future numbers and locations of local Working Together groups. It is hoped to have this agreed and ready for an April launch.

9.2 TM said that an April launch might be ambitious but that she was pleased that HMRC was aiming for that.

9.3 RS felt that there was some merit in getting some meetings up and running sooner rather than later and was concerned that the process of establishing a revised structure could go on for months and months.

10 AOB

10.1 RM asked that the minutes record the fantastic contribution made to Working Together by Susan Gompels OBE, who had announced that she was standing down from the Steering Group.

10.2 TM concurred and praised the positive contributions Susan made to Working Together.

10.3 TM announced that Alison Walsh was leaving the Team and that Roger Halson was retiring in June.

Next Meeting: 13 June 2007, Room 2/39 HMRC, 100 Parliament Street, London