HMRC TAX RESEARCH AGENDA

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HMRC TAX RESEARCH AGENDA

• Nick Catton
• Knowledge, Analysis Intelligence (KAI)

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Structure of Talk

• Recap David Ulphs talk 12 months ago
• Developments since then
• Our research needs
• Process, including funding for academics
• Data - access, coverage, legalities
• Conclusions

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Recap context of external research in HMRC

• Single analysis unit to serve both Treasury and
  Revenue Customs
• Forecasting tax receipts, costing and analysing
  tax options in support of ministers fiscal,
  economic, social and environmental objectives
• Supporting PSA targets (compliance, customer
  experience, frontiers)
• efficiency agenda, performance measurement
• Management of HMRCs research programme

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HMRC External Research Programme

• Supported for 5 years
• All aspects of HMRCs work - from policy
  partnership through to tax administration,
  compliance and customer experience
• Tax policy development and evaluation
  definitions of RD for tax credits, awareness of
  capital allowances for ICT investment, company
  car tax reform, climate change levy, RD tax
  credits
• Strategic developing modelling / analytical
  capacity (eg savings general equilibrium
  models) funding of academics

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HMRC External Research Programme 2

• Strategic compliance developing measures of tax
  gaps on alcohol tobacco cross-border shopping
  
• Risk quantifying VAT deterrent effects,
  modelling risk
• Customer experience Customer Service Survey,
  evaluation of short SA return pilot, employers
  experience of student loans collection
• Performance SA filing payment behaviour,
  attitudes to tax debt enforcement, surveys of
  e-filers vs paper filers

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Recent developments and plans .

• Research conference
• Strengthening capacity for strategic analysis and
  modelling
• External advisory panel
• Forward look at research needs
• Interface for researchers access to funding
• Data availability Stats Commission review

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Research Conference Aims

• Helping us to learn what academics are doing in
  related areas and so benchmarking our research
  against best practice
• Encouraging the interchange of ideas between our
  specialists and outside academics
• Encourage interest in the whole area of taxation
  research so that our analysis, policy making, and
  implementation can be based on a much larger body
  of work
• Validating and improving quality of our research,
  particularly methodology

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Plans for developing analytical
capacityStrategic Analysis, Modelling Research

• Expanded higher profile function, with
  dedicated senior leadership
• Supporting infrastructure for first class
  analysis
• Already includes research coordination,
  evaluation guidance, general equilibrium model,
  cross-cutting analysis
• Doing more
• Pro-active engagement with academia, other fiscs
  multinational institutions
• to bring in best practice methodologies support
  our own analysis
• Quality assurance across our work
• Secretariat for new external advisory group

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External Advisory Panel

• Still embryonic
• Half-dozen leading academics
• economists other social sciences
• Quality assurance for our internal analysis
• Bring into HMRC latest academic work
• Advise on methodologies, eg sampling frames,
  econometrics
• Contribute think-pieces, empirical work etc

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Strategic look at HMRC research needs 1.
Compliance

• Tax Gap expand and improve measure of the gap
  between theoretical liability and actual receipts
• Behaviours understand attitudes to compliance
  impact on tax gap
• impact of HMRC interventions
• how different types of non-compliance interact
• Evaluate compliance interventions - direct
  indirect effects
• Tax planning schemes better understanding of the
  market for tax planning advice

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Strategic look at HMRC research needs 2.
Customers compliance costs

• Deregulation compliance costs
• understand the relationship between compliance
  costs and other HMRC objectives
• measure change in compliance costs over time / in
  response to HMRC actions
• Increased HMRC focus on understanding customer
  behaviour
• knowledge of customers attitudes
• explore and measure customer perception
  experience
• evaluate HMRC guidance, operational changes etc

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Strategic look at HMRC research needs 3.
Operations

• Operational Efficiency
• what impact do long-term trends have? eg social
  demographics, technology
• Tax credits
• understand link with other incentives to work
  childcare
• evaluate operational / procedural pilots
  marketing initiatives
• Debt
• how do people view HMRC debts?
• how does HMRC debt change over time?

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Strategic look at HMRC research needs 4.
Policy-partnership

• Support policy development, for example
• What is the effect of tax benefit system on
  incentives to work, save invest
• How does the tax system for large business impact
  on cross-border location decisions
• Policy evaluation learn lessons improve
  policy-making

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Process Internal vs external research?

• Case-by-case judgement
• Data availability - often need survey data
• Expertise - in particular econometric modelling
• now employing an academic econometrician as a
  consultant
• Resources - constraints both on internal analysts
  budget for external research
• Consider case for research being independent of
  government

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Process 2 Involving academics

• Communicating our research needs (eg today),
  stimulate interest
• Establish procedures for academics to propose
  research
• Funding available in principle, but must be in
  competition with internally generated research
  proposals
• Access to administrative data available in
  theory to researchers under contract to HMRC,
  subject to usual criminal sanctions
• Participation in research steering groups peer
  review

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Process 3 Making data available

• Potential to fill gaps in evidence base by
  facilitating external research
• Extensive aggregate data published, Survey of
  Personal Incomes lodged in Essex data archive
• Admin data is based on liabilities, receipts
  tax bases for all taxes
• ie micro data behind HMRCs published National
  Statistics
• see www.hmrc.gov.uk/stats
• Legal position permits researcher access to micro
  data when it is on behalf of HMRC (ie in
  pursuance of HMRCs functions), subject to
  criminal sanctions as per HMRC staff
• Statistics Commission reviewing data published
  and external users views on data access

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Conclusions working together

• Share our research needs
• Access to funding , where appropriate, data
• Formal informal advice scrutiny
• Build capacity within outside govt
• Government has to be able to communicate its
  needs and priorities clearly to the academic
  sector if the research agenda in academia is to
  reflect its requirements
• (Adding It Up Report Improving Modelling
  Analysis in Central Govt , 2000)