1. HMRC TAX RESEARCH AGENDA
Nick Catton
Knowledge, Analysis & Intelligence (KAI)

2. Structure of Talk Recap David Ulph’s talk 12 months ago
Developments since then
Our research needs
Process, including funding for academics
Data - access, coverage, legalities
Conclusions

3. 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 HMRC’s research programme

4. HMRC External Research Programme
Supported for 5 years
All aspects of HMRC’s work - from policy partnership through to tax administration, compliance and customer experience
Tax policy development and evaluation: definitions of R&D for tax credits, awareness of capital allowances for ICT investment, company car tax reform, climate change levy, R&D tax credits
Strategic: developing modelling / analytical capacity (eg savings & general equilibrium models); funding of academics

5. 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

6. 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

7. 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

8. Plans for developing analytical capacity: Strategic 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

9. 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

10. 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

11. 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

12. 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?

13. 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

14. 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

15. 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

16. 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 HMRC’s published National Statistics
see
Legal position permits researcher access to micro data when it is on behalf of HMRC (ie in pursuance of HMRC’s functions), subject to criminal sanctions as per HMRC staff
Statistics Commission reviewing data published and external users’ views on data access

17. 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)