Statement of Intent 2009-12: Part three - Strategic overview
A focus on compliance
The effective administration of New Zealand's tax system relies on voluntary compliance being the norm. We rely on customers making their payments and claiming their entitlements in full and at the right time, and most of them do. Our job is to make it easy for our customers to manage their compliance.
We also provide the right information and offer a range of services to support customers who want to comply but do not succeed, and use a range of enforcement activities to make sure that deliberately non-compliant customers meet their obligations.
We aim to:
- continue to increase our understanding of customer needs and use that understanding to inform service design and delivery
- make it easy for customers to meet their obligations and access their entitlements
- make it hard for customers to avoid meeting their obligations.
The New Zealand Institute of Chartered Accountants, Citizens Advice Bureaux, our community networks and our advisory services are also valuable information sources for understanding customer's needs.
We use this information to:
- make it easier for our customers to self-manage their compliance
- develop services that are effective, efficient and provide value for money
- target and tailor our services to meet customers' needs
- better allocate our resources to manage demand for services.
We have based our compliance approach on our compliance model (Figure 6). This ensures that we take compliance action that matches customer behaviour.
Measuring our performance
We measure how well we are understanding and responding to our customers' needs through regular customer satisfaction and perceptions surveys of customers in our key customer groups.[11] We also measure the long-term effects of new business projects through our evaluation work programme (see page 21).
Figure 6 -
Compliance model
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Making it easy to comply
Figure 7 illustrates how we link our outcomes to the outputs we deliver. This includes the links to our strategies and our business plans. It also indicates the other non-financial information we use to monitor our performance.
Figure 7 -
How our outcomes link to our outputs
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A key to increasing voluntary compliance is to make it easy for our customers to comply with their obligations of their own accord, which is more efficient for them and us. This will reduce customers' compliance costs by minimising the need to contact us, and means we use fewer resources to address customers' needs. This also provides better value for money from government spending.
Transform IR will give us greater opportunity to progress this work through its focus on simplifying our processes and practices. This will allow us to:
- enable customers to complete more of their business with us online through information and self-service options
- enhance our services through personal contact channels, such as telephones and correspondence, to ensure customers receive the support and certainty they need.
Self-management and e-services
In the future, we will be increasing the range of information and services that will help our customers to self-manage their interactions with us. This includes:
- raising awareness of obligations and entitlements through targeted communication and advertising campaigns
- delivering information through our website, brochures and guides
- electronic services that allow customers to meet their obligations without having to contact Inland Revenue directly.
Self-management will also help us to reduce demand for more labour intensive contact channels, particularly our telephone contact centres. We will be able to use our contact centres to answer more complex enquiries by helping customers to use e-services to address most of their routine contacts with Inland Revenue. However, we need to make sure that customers using self-service options have certainty that they have met their obligations because the demand for our telephone services from customers trying to reconcile any outstanding issues could increase. We are already encouraging customers to self-manage in a number of areas, for example:
- we developed a range of e-services (eg, Look At Account Information and Client Maintenance) that have helped tax agents to self-manage more of their contacts with Inland Revenue. This has significantly reduced the number of telephone calls we receive from tax agents. We accepted 228,000 (30%) fewer calls from tax agents in 2007-08 than in 2005-06.
- we are introducing a range of services for our families and individuals customers through our portal. Families and individuals customers will be able to update information and work online without the need to contact Inland Revenue directly.
- the number of returns and payments filed electronically is growing. In 2007-08, 34.2% of returns were filed electronically (up from 29.6% in 2006-07) and we received 1.56 million online banking payments (30% more than received in 2006-07). For the eight months to February 2009 38.4% of returns were filed electronically and we received 1.13 million online banking payments (18% more than the same period in 2007-08).
Providing services through customer contact channels
As well as developing our range of e-services, we also need to deliver services to customers who are not able to, or do not want to, self-manage. These services include:
- direct contact services such as telephones, correspondence, counter enquiries and community focused advisory visits (in 2007-08, we responded to 8.1 million customer contacts for direct contact services, a 17% increase on 2006-07)
- taxpayer rulings which provide certainty in specific technical or legal areas (in 2007-08, we finalised 61 private and product binding rulings containing 521 technical issues).
Responding to customers' enquiries in a timely manner is key to providing them with certainty of their obligations. We are working to improve the quality and timeliness of our responses to customers in a number of areas, by:
- working through a programme over the next year to improve the quality and timeliness of our contact centre performance. Initiatives already introduced under this plan include Virtual Hold, which has made it easier for telephone customers to access our customer service representatives and reduced the number of abandoned calls. We are updating our interactive voice response services which we expect will lower call handling times and increase the number of calls that can be handled through self-service options.
- making changes to provide more timely taxpayer rulings especially where the issues are highly complex. This includes making process improvements to reduce the time we take to issue rulings and using staff in our Assurance group to deliver more straightforward rulings.
Measuring our performance
Our ability to measure progress in making it easier to comply is set out in Figure 7, which shows the performance measures (contained in Inland Revenue's Output Plan) and other non-financial management information.
The performance standards in Output Class 2 will gauge how well our efforts to improve the delivery of our information services have progressed (eg, our telephone and correspondence services). They will also show how well we have improved our taxpayer rulings delivery. This information, with other non-financial information, will also help us to develop better options in the future.
In addition, community attitudes to the work we do to improve self-management using e-services and providing general assistance will be assessed through the questions contained in the Customer Satisfaction and Perceptions Survey. Elements of this will also be seen in the results of the customer satisfaction measures in Output Class 2.
The performance standards in Output Class 3 will help to gauge the value of our focus on providing electronic services. For example, the value of our focus on providing self-service options, like filing returns online, will be seen if there is an increase in the proportion of returns filed electronically. The performance standard information and the non-financial information will be used to inform future service design.
Maintaining compliance
Figure 8 illustrates how we link our outcomes to the outputs we deliver. This includes the links to our strategies and our business plans. It also shows the other non-financial information we use to monitor our performance.
Figure 8 -
How our outcomes link to our outputs
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Our compliance focus is based on the knowledge that most of our customers want to and do meet their obligations. We address non-compliance by assisting those customers who want to comply, but have made mistakes, and taking the appropriate enforcement action against those who have made a deliberate choice not to comply.
We use a risk management approach to manage and improve customer compliance that is based on our compliance management cycle, which:
- uses evidence-based intelligence to identify risks to compliance. This involves scanning the environment and assessing external and internal information
- commits resources to address priority risks
- addresses risks using a range of graduated proactive and reactive responses often involving a cross-functional approach
- emphasises learning from our actions.
This year, we will publicly release our Compliance Management Programme, which details the risk focus areas from 2008-09 including:
- registering with Inland Revenue
- GST compliance
- income matching, eg, ensuring customers are on the correct RWT rate
- eCommerce
- property
- debt (including child support debt).
Educating and assisting customers to comply
If customers make a mistake, we will point out the options available to help them manage their obligations. These options include information and tools on our website and access to our advisory services. This will help them to get it right in the future. It shows us why mistakes are being made and helps develop appropriate responses to address them.
We also help customers to comply in cases where they want to but are unable to meet their obligations. For example, when customers are facing financial difficulty, we can set up instalment arrangements for the payment of debts over time.
Addressing non-compliance
Inland Revenue must address a range of compliance issues including managing existing and emerging risks to the tax system. Our responses to non-compliance include:
- analysis of Inland Revenue and third party data to identify possible non-compliance
- maintaining links with international organisations and tax administrations to ensure that emerging risks are identified and mitigation strategies are developed
- raising awareness of non-compliance through information and education campaigns
- targeted actions to help customers at risk of non-compliance to manage their obligations
- targeted audits
- litigation to challenge schemes designed to reduce or eliminate tax liability.
We are increasing our efforts to raise our customers' awareness of compliance issues and the actions we are taking to address them. With this approach we are able to influence compliance behaviour in a more cost-effective way than using other enforcement actions. We also continue to work with industry organisations to raise awareness of their members' obligations.
As most people are compliant the community has to have confidence in our ability and willingness to identify and take action against persistent non-compliance. Through this we maintain community confidence in the integrity of the tax system. We will continue to conduct audits where we believe there is non-compliance and we will take necessary action to collect debt resulting from audits or from non-filing or non-payment. We will also prosecute deliberate non-compliance and continue litigation action against schemes designed to avoid or evade tax liabilities.
Measuring our performance
Our approach to measuring progress in maintaining compliance is shown in Figure 8, which shows performance measures (contained in Inland Revenue's Output Plan) and other non-financial management information and statistics.
The performance standards in Output Classes 4 and 5 measure our performance in making it hard for our customers to avoid their obligations. These standards measure our performance in managing overdue debt, outstanding returns, audits and litigation management. In some cases, the performance standards are intended to show changes in customer behaviour, such as the measures for managing new debt and outstanding returns.
In addition, community attitudes to our work to improve voluntary compliance and address non-compliance is measured in the Customer Satisfaction and Perceptions Survey (also in the customer satisfaction measures for Output Class 2).
Our work to develop compliance indicators reflecting the OECD's best practice model (see page 19) will also help us assess our performance.
Summary of links between outcomes and outputs
Figure 9illustrates the main links between the outcomes and the outputs that we are delivering to achieve them. Details of the output classes and performance standards are contained in the Information Supporting the Estimates and also in Inland Revenue's Output Plan. These output measures are also supported by general management information, as shown in Figures 7 and 8.
| Intermediate outcomes | Our approach | Output classes and measures |
|---|---|---|
|
Making it easy to meet obligations and access entitlements:
|
Output Class One
|
Maintaining compliance:
|
Output Class Two
|
11 From 2009-10 our quarterly customer satisfaction survey and annual community perceptions survey have been replaced by a quarterly customer satisfaction and perceptions survey. Our nine key customer groups are tax agents, small and medium enterprises, working for families tax credits, large enterprises, student loans, individuals, not-for-profits, child support and KiwiSaver.
Date published: 19 Jun 2009
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