INLAND REVENUE :sx PURPOSE AND AIMS .sx The following statement of the Inland Revenue's purpose and aims cover all the work of the Department .sx The Inland Revenue is responsible , under the overall direction of Ministers , for the administration of income tax , corporation tax , capital gains tax , petroleum revenue tax , inheritance tax and stamp duties ; and valuation services for revenue and rating purposes and for Government departments .sx Our purpose is :sx to collect the proper amount of tax due by law , and to value property accurately .sx to advise Ministers on policies for tax and valuation , and when required to implement Government policies in those areas .sx We are continually searching for new and better ways to do all these things more economically , efficiently and effectively , to improve our expertise , and to provide a fair and helpful service to the public .sx In administering the tax system we will aim to :sx advise the public of their rights and duties .sx treat people equally under the law .sx encourage mutual trust and co-operation between the Department and the public .sx pursue tax which is properly due under the law .sx deter and detect evasion .sx value property to professional standards .sx In advising Ministers on policy issues we will aim to consider a range of factors including :sx estimated cost and yields .sx social and economic considerations .sx the contribution of tax and valuation proposals to the Government's wider policies .sx effects on compliance costs for taxpayers , and our own costs .sx scope for consultation with taxpayers and representative bodies .sx We will prepare and publish our overall plans and account fully for our use of the resources provided by Parliament .sx We will , whenever possible , set clear objectives , allocate responsibility to staff for achieving them , and monitor progress and results .sx HIGHLIGHTS OF 1990/91 .sx This is our 133rd Annual Report to Parliament .sx It covers the year ended 31 March 1991 .sx It records the Department's activities and performance during the year against the plans and targets we set out in our Departmental Statement for 1990/91 .sx The year began with detailed plans , agreed with Treasury Ministers , for all the Department's operations , for introducing independent taxation , and for continuing to implement our strategies for compliance , information technology and staffing the Department .sx Our Management Plan for 1990/91 to 1992/93 , published in February 1990 , gave more information about this work .sx But the Government's decision to abolish the composite rate tax on bank and building society interest from 6 April 1991 added a new priority to our previous plans , It meant we needed to review existing targets and timetables and add new plans to implement this tax reform .sx The Inland Revenue ended 1990/91 with strong performance and its operations although the downturn in the economy meant it was a more difficult year for collection of tax debts .sx The Department also made preparations for the abolition of composite rate tax and other changes to the tax system , to improve and extend our service to customers , and to reshape the way we organise and manage our staff and work .sx We comment here on some of the highlights of the year .sx CUSTOMER SERVICE .sx During 1990/91 we reviewed , as planned , our service to the public .sx We published in February 1991 , as part of our Next Steps action plan , a new customer service plan .sx We have already implemented parts of it .sx A new version of the Taxpayer's Charter was published in August 1991 .sx We are increasingly seeking taxpayer's views by means of customer surveys .sx Better measures of performance are being piloted for introduction in tax offices in 1992/93 .sx These plans and initiatives are being developed as part of the Government's initiatives for improving public services under the Citizen's Charter .sx Collecting tax can never be a popular task , but our aim has always been to carry it out accurately , courteously and professionally .sx We owe a responsibility to our customers to give them a high level of service .sx Good service also makes sense :sx we believe that the highest level of voluntary compliance is achieved by offering good service to all our customers .sx ASSESSMENT AND COLLECTION .sx The taxes for which we are responsible are assessed and collected through the network of local tax and collection offices , supported by the two Accounts Offices and the Enforcement Office , and through the specialist offices which deal with claims , inheritance tax , stamp duties , oil taxation , foreign dividends and pension funds .sx In 1990/91 they handled the affair of over 30 million customers ( individuals , partnerships , companies and trusts) .sx There were , as expected , further increases in the numbers of customers we deal with .sx In particular we received a quarter of a million more accounts from businesses than in 1989/90 .sx Detailed objectives and targets for 1990/91 for the operations of these offices were agreed and published in the Departmental Statement last year .sx Offices generally achieved their targets for current work , and for reducing backlogs , which are vital both for good service to taxpayers and for the timely flow of tax revenue to the Exchequer .sx Collection of tax debts fell short of some of the targets we agreed last year , largely because of the economic downturn and general credit conditions , but there was nevertheless , a further reduction in the amount of tax still uncollected three months after the due date for payment .sx We attached particular importance to offices keeping on top of work in 1990/91 because of the changes they were implementing , or preparing for , in the tax system .sx Ministers' decisions to introduce independent taxation and to abolish the composite rate tax made the tax system more evenhanded , but both changes add to the number of separate individuals whose tax affairs we have to deal with directly in one way or another .sx INDEPENDENT TAXATION .sx We reported last year the successful completion of the very large amount of work to prepare for the introduction of independent taxation on 6 April 1990 .sx But this was by no means the end of one of the biggest changes since income tax was introduced .sx The successful implementation of the new legislation was one of the priorities we set for tax offices for 1990/91 .sx During the year some three quarters of a million tax returns were received from married women for the first time .sx All were examined on time .sx Tax offices were also preparing in 1990/91 for the additional repayment claims expected to follow independent taxation .sx ABOLITION OF COMPOSITE RATE TAX .sx In his Budget speech on 20 March 1990 the then Chancellor of the Exchequer , the right hon .sx John Major MP , announced that the composite rate of tax on interest paid by banks and building societies would be abolished from 6 April 1991 .sx Ministers decided to implement the change by allowing individual investors to claim payment of interest gross if they could certify that they did not expect to be liable to tax on their interest for the year .sx Others would receive interest after tax and be entitled to reclaim any tax deducted in excess of their true liability .sx This was one of the biggest changes in this part of the tax system for many years , not only for the Department but also for the financial institutions involved .sx In 1990/91 over 35 million people in the United Kingdom ( owning between them about 100 million interest-bearing accounts ) were liable to composite rate tax at 22 per cent .sx Of these over 15 million were either not liable or only just liable to tax .sx Preparations for the abolition of composite rate tax became our top priority for 1990/91 .sx In order to meet Ministers' timetable we had to :sx devise detailed procedures for deduction of tax from interest and for enabling non-taxpayers to receive payments of interest gross by means of a registration scheme .sx publicise the new arrangements .sx develop computer systems and working procedures to support the new arrangements .sx recruit and provide accommodation for the extra staff required to run the new system .sx Detailed plans for all these areas were drawn up and all of the action required was completed by the end of the year .sx Extensive consultations took place with the British Bankers' Association and the Building Societies' Association .sx Inland Revenue staff staged 45 roadshows in 42 different towns throughout the country to explain the scheme to the people in the high street branches of banks and building societies who will be directly involved in operating it .sx With the help of market research we designed a simple registration form and explanatory leaflet .sx The forms and leaflets were stocked by the banks and building societies , and were also sent to every home in the United Kingdom .sx Television and press advertising was timed to coincide with the delivery of the leaflet .sx Market research indicated that by the end of the campaign awareness of the changes had increased from 20 per cent to 60 per cent amongst those we were aiming to reach .sx We opened in 1990/91 , as planned , 15 of the 24 new offices which will deal with the bulk of repayment claims and recruited over 1,000 of the staff who will work in them .sx We developed and introduced a computerised claims repayment system in January 1991 .sx This system , which was designed for existing claims and those generated by independent taxation , will be adapted and extended to deal with the expected increase in claims .sx The abolition of composite rate tax has given us opportunities , to explore new and more effective ways of communicating with the public and with the organisations that have to operate tax procedures ; to consider novel staffing arrangements ; and to investigate developments in new technology .sx Until we actually receive the claims next year , we cannot be sure how many of those entitled to claim repayment of tax on bank and building society interest will in practice do so , or how quickly they will put in their claims after the beginning of the new tax year .sx The margin of uncertainty is very great .sx For example , if the number of people who actually claim is 10 per cent more or less than the number that we have ( with Ministers' authority ) assumed , that will make a difference of something like three-quarters of a million claims for repayment of tax - representing several hundreds more or less manyears of work .sx We have therefore had to develop and keep up to date flexible contingency plans for handling either more or fewer claims than expected .sx COMPLIANCE .sx While encouraging voluntary compliance by giving our customers good service we also have a duty to detect and tackle those who , either deliberately or through misunderstanding , do not comply with their obligations , or do not do so fully .sx Our strategy for detecting and tackling non-compliance requires an active Inland Revenue presence in all parts of the tax system .sx The direct yield from this work in 1990/91 was pounds3 .sx 9 billion , equivalent to the yield from 2 pence on the basic rate of income tax .sx This was an increase of 34% over results in 1989/90 , and the largest figure yet recorded .sx RECEIPTS AND COSTS .sx In 1990/91 the Department registered total tax receipts of pounds82 .sx 5 billion ( against a forecast of pounds81 .sx 9 billion) .sx We also collected , on behalf of the Department of Social Security , National Insurance contributions totalling pounds33 .sx 4 billion ( against a forecast of pounds33 .sx 1 billion) .sx The costs of collecting this revenue were pounds1402 .sx 1 million in 1990/91 ( pounds1234 .sx 3 million in 1989/90) .sx This total includes pounds46 million ( 3.3% ) for the new arrangements for taxing bank and building society interest .sx The Department was funded for expenditure of pounds1,408 .sx 1 million , of which pounds1,3276 .sx 6 million was for our running costs .sx INFORMATION TECHNOLOGY .sx The Department's dependence on , and investment in , information technology ( IT ) continues to grow .sx Capital investment in the year under review was some pounds58 million .sx The number of terminals in use is now some 48,000 , an increase of 8,000 since our last report .sx By the end of 1993/94 it is expected to reach 67,000 .sx During the year contracts were signed for a new 'strategic' terminal which will improve the resilience of the taxes and collection networks and meet the requirements for network offices in the 1990s .sx The new terminal provides local processing power which , when fully exploited , will be used for a range of functions , including computer based training , on-line instructions , and office automation , in addition to the basic work of local offices .sx