23 01 2017

UK Tax Authority Makes U-Turn On Transformation Plan

HM Revenue and Customs (HMRC) has agreed its estimates of the money it would save by closing more than 100 offices are "unrealistic," according to a report from the National Audit Office.

HMRC is undergoing a major transformation program to redesign and significantly reduce its estate by 2020-21. It is moving from a widely dispersed estate of 170 offices to 13 regional centers, supplemented by four specialist sites and a headquarters in central London. This program is part of a wider civil service agenda to move to shared government "hubs."

The NAO's report says HMRC is now considering how it can adjust the scope and timing of the program to reduce the cost and delivery risk.

Findings show that while HMRC has reduced the size of its estate by over a quarter since 2011, saving GBP102m (USD124m) in annual running costs, the scale of the downsizing has been limited by the terms of its long-running contract with Mapeley STEPS Contractor Ltd, which expires in 2021 and covers around two-thirds of HMRC's estate. In its business case for moving to regional centers, HMRC estimated that it would continue to make savings over the next eight years as it leaves most of its existing buildings.

The tax authority's estimate of its estate costs over the next 10 years has risen by nearly GBP600m, or 22 percent, since it presented its case for structural reform, the report says. More than half of this is due to higher than anticipated running costs for its new buildings, the NAO said.

According to NAO, "HMRC is now re-considering the scope and timing of its moves to regional centers to reduce the costs and the risks of disruption over the next four years. Its options include: changing the timetable for opening regional centers; re-considering the functionality, location, and size of some regional centers; and re-assessing how and when to introduce flexible ways of working.

"Looking ahead, HMRC has acknowledged its original plan for regional centers was unrealistic and is now reconsidering the scope and timing of the program," said Amyas Morse, Head of the National Audit Office. "It should step back and consider whether this strategy still best supports its wider business transformation and will deliver the sustainable cost savings it set out to achieve in the long run."