Revenue Case Study Sean Connolly

Transforming a Large Organisation

- the successful experience of the Irish Revenue Commissioners

IPA October 2008

Topics:

The Revenue Business

Transformational Change

What have we learned?

IPA October 2008

By three methods we may learn wisdom:

First, by reflection, which is the noblest;

Second, by imitation, which is the easiest;

And third, by experience, which is the bitterest.

Confucius

•Citizen/Customer

•Organisation Member

•Domain/ICT Expert

•Public Servant Reformer

Perspectives?

Tax Collection

Key function in organised society As old as time Unpopular Customers?

Apples +10% Vat

Fair?

Efficent?

Complexity?

Impact on the market?

How much?

Compliance Costs?

Evasion?

Deterrence?

Redistribute Wealth?

The perfect tax system?

Certainty?

Convenience?

“Excise ….a hateful tax levied upon commodities and adjudged, not by the common judges of property but by wretches hired by those to whom the Excise is paid.”

Samuel Johnson’s Dictionary 1755

The Revenue Story

The old Revenue Why did we change? What did we do? Impact on our Customers? What could be of value to you?

Revenue in the 1990s“If it ain’t broke don’t fix it”

Good track record Annual collection targets exceeded Successes

Good computer systems Self assessment for the Self Employed 1992 Single Market Relocation of 1,300 staff from Dublin

Pressures Customer Service concept Our “captive market” was changing Greater Business sophistication & wealth

creation Increasing evidence of non-compliance Public expectations increasing with economic

growth Speed of change in environment Technology opportunities

Restructuring – where it started

Statement of Strategy 1997 – 1999

“a root and branch review of our organisational structure… to ensure … the best possible fit between how we organise ourselves and our strategy to improve overall effectiveness and efficiency.”

Incoherent

Claims, reliefs,allowances,

entitlements, etc.

Claims, reliefs,allowances,

entitlements, etc.

VRTVRT

CROCRO

Tax ClearanceTax Clearance

VATVAT

PAYE / PRSIPAYE / PRSI

Returns (All)Returns (All)Income Tax

Income Tax

CorporationTax

CorporationTax

Start up VisitStart up Visit

CertificationCertification

PaymentsPayments

RefundsRefunds

InspectionInspection

Admin. PolicyAdmin. Policy

ExciseLicence

ExciseLicence

CG’sCG’s CI’s

CI’sLocal Coll.

Local Coll.Nenagh

NenaghCustomHouse

CustomHouse

P35’sP35’s

TFA’sTFA’s

PaymentsPayments

EFTEFT

CI’sCI’s

CG’sCG’s

Local Coll.

Local Coll.

EnforcementEnforcement


CG’sCG’s

LocalColl.

LocalColl.


Same as for VAT

Same as for VAT

Vat RefundVat Refund

BIKBIK

CI’sCI’s

CG’sCG’s

C&EC&E

CI’sCI’s

Taxpayer(e.g. Publican)


Stam p Duty

CapitalTaxes

Em ployersPAYE

Custom s &Residence

Paym ents

CollectorGeneral

Com m issioner

Custom er serviceCom pliance

AuditEnforcem ent

ChiefInspector of Taxes

CI

Custom s &Excise

Custom s &Excise

InterpretationIncentives

Policy &Legislation

Com m issioner

Chairm an

How we saw a Customer

How we administered the country

6 different administrative maps Tax Districts Customs Collections Excise Districts Collector General’s

Bailiwicks Revenue Mobile

Service Regions Local Collection

Regions

CustomersCustomers

East & South East Region

South-West Region

Border Midlands West Region

DublinRegion

Before After

Taxes & Duties / functional Taxes & Duties / functional hybridhybrid

Coherent



Revenue District

Revenue District

County

Region

Com m issionerOperations

Chairm an

Stam p Duty

CapitalTaxes

Em ployersPAYE

Custom s &Residence

Paym ents

CollectorGeneral

Com m issioner

Custom er serviceCom pliance

AuditEnforcem ent

ChiefInspector of Taxes

CI

Custom s &Excise

Custom s &Excise

InterpretationIncentives

Policy &Legislation

Com m issioner

Chairm an

Before After

What the boss wants…

“When I have a problem I want to see the whites of one pair of eyes, not twenty pairs of heels”

Strategic PlanningStrategic Planning

Human ResourcesHuman Resources

ICT and eBusinessICT and eBusiness

Operations Policy & EvaluationOperations Policy & Evaluation

Investigations & ProsecutionsInvestigations & ProsecutionsInvestigations & ProsecutionsInvestigations & Prosecutions

Revenue SolicitorRevenue Solicitor

Chairman

Commissioner Commissioner

Chairman

Commissioner Commissioner

Collector GeneralCollector General

CustomsCustoms

Direct Taxes Policy & LegislationDirect Taxes Policy & Legislation

Direct taxes Interpretation & Internationall.Direct taxes Interpretation & Internationall.

Indirect TaxesIndirect Taxes

Border Midlands West RegionBorder Midlands West Region

Dublin RegionDublin Region

East South-East RegionEast South-East Region

Large CasesLarge CasesLarge CasesLarge Cases

South-West RegionSouth-West Region

Divisions & Reporting Relationships

Customer Service

Lo-call phone service Tax Credits replaced Tax Allowances Tax Credit at Source Website [www.revenue.ie] Texting Tax Briefing Bulletin for Practitioners Better Public Offices

Belastingdienst The Dutch Tax & Customs Administration’s motto

We can’t make it pleasant, but we can make it easier.

The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers, with the smallest possible amount of hissing. -- Jean-Baptiste Colbert

RegistrationRegistration

ReturnsReturns

AssessmentAssessment

CollectionCollection

Caseworking/Intervention/Management InformationCaseworking/Intervention/Management Information

PAYE/PRSIEmployers

PAYEEmployees

Value-AddedTax

IncomeTax

CorporationTax

Others >

Common functions across taxes

Registration

Returns

Collection

Assessment

InterventionManagement

MIS

Registration

Returns

Collection

Assessment


MIS

Registration

Returns

Collection

Assessment


MIS

Tax 1

Tax 2

..Tax n

From multiple disparate systems

Still have to cater for certain individual tax characteristics

Tax 1 Tax 2 ..Tax n

Old systems – would havehad to be replaced individuallyin any case

CRS

ITP

AIM

CIF

ROS

To a single integrated framework

Common Registration

Common Returns, Collection etc

Common Caseworking

Common Business Intelligence

…then Internet enabled

What the caseworker sees

Technology enabled a unified view of the customer

All the customer’s tax and duty information is brought together

IPA October 2008

…...whether dealing withtransactions, case-working,doing analysis, or looking up registration details

Provides consolidated customer view

at all times

Advances in Technology

The possibilities exceed our imagination

The Internet Mobile communications Information Society Fund

How was it achieved?

Studies of best practice by a small team Management commitment built on

consensus Communication with internal customers Consultation & involvement: pilot

projects Determination to overcome obstacles

IPA October 2008

The Pilot Project

Norman Gillanders, Assistant Secretary

Restructuring – the Players Project Board with overall responsibility for

organisation restructuring. Management Roadshows Project Teams and Regional Committees plan,

design and implement new Divisions. Focus Groups and Expert Groups facilitate

wider participation. Consultation and communication at every step

in the process. Bulletins/Gateway

Restructuring – The Process

Spring 2001

Spring 2003

PlanPlan

High-Level DesignHigh-Level Design

Project BoardProject Board

Detailed DesignDetailed Design


Implementation PlanImplementation Plan


ImplementationImplementation

Com

mu

nic

ati

on

Con

su

ltati

on

Industrial Relations

Single Grading Structure: very desirable Reclaimed the ‘Radio Station’

Briefing sessions Hotline for queries FAQ service Full text of agreement available

Integration initially accepted by 4 of the 5 unions

But getting there is difficult

It’s like changing the wiring of your house while keeping the lights on

Why change?

“An organisation that doesn’t change at the same speed as its environment dies”

Total arrears as % of total gross receiptsTotal arrears as % of total gross receipts

0

5000

10000

15000

2000025000

30000

35000

40000

45000

50000

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

Am

ou

nt

(€m

)

GrossReceipts

Arrears

decline in arrears:from 37% to 1.9% in 2007

“We trained hard….but everytime we formed up teams we would be reorganised. I was to learn that we meet any new situation by reorganising. And a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency and demoralisation”

Petronius Arbiter, 22-66 A.D.

For the good citizen: • a better service/single point of contact

• greater equityFor the tax dodger:

The Results?

• a real probability of detection and punishment

For Revenue:

• more efficient and flexible organisation • new vigour and excitement

To tax and to please, no more than to love and to be wise, is not given to man

Edmund Burke, On American Taxation, 1775, Graduate of Trinity College, Dublin.

IPA October 2008

Analysis of our Experience

Any useful lessons for you?

Lessons Get a clear and shared vision Take the customer’s perspective Communicate, communicate, communicate ICT can be a facilitator and not a barrier Learn from other’s experience Use Pilot projects Fix a date Recognise the barriers:

Culture Self interest/power

Causes of Change

New demands Environment Workforce Structure Technology

Managing Organisation Change

Elements Tasks Individuals Formal Organisation Arrangements Informal Organisation

Problems Resistance Control Power

Task

Structure

Culture/Reward Mechanisms

Process

Individuals Technology

ICT

Strategy Output

Organisation Framework

Strategy

Business: Shareholder value Win/keep profitable

customers Competition

Public Service: Political Agenda – short

term Public Interest Minimise risk

Specific individual behaviour at work is as likely to arise from the nature of the role which the individual occupies, its relation with other roles, and with the entire structure of the social system within which that role is positioned, as from the personality of the individual – Wilfred Brown, Organisation, 1971, p.23

Culture

• Task vs Role• Caution• Written analysis• Hierarchical Control• Precedents• Risk versus rewards

Openness, frankness, genuine disclosure of objectives and of information works well in a pure task culture but they can put one at a big disadvantage in interactions with the more bargaining approach of the role or power culture

- Handy, p. 244

ICT Architecture

First Computer installed in 1963 ICT is indispensable Growing range of skills needed

Technology

• The limit is our imagination • Organisation design is from the

days of quill pen and no communications

• Self service is the ideal• 24x7is the norm• New challenges: security,

complexity, mobility, access

Transition

The temporary process of getting from the current state to the future state.

How it isHow it is How we want it to be

No mistakes

Rational

Certain

Permanent

Based on precedent

Equitable/fair

How we want it to be

No mistakes

Rational

Certain

Permanent

Based on precedent

Equitable/fair

When two worlds collide!

InnovationInnovation

RiskRisk

RewardsRewardsWin/loseWin/lose

Try again!Try again!

FailuresFailures

Chance?Chance?

How it is How we want it to be

Laying the Foundation Stones•VAT assigned to Chief Inspector/Collector-General

• Commission on Taxation

•IMF Visit Dec 1986

•Self Assessment 1989/90: Press Office : New Board’s Report

•Data Study Dec 1989

• Integrated Taxation Proposal 1990

•Common Registration 1996

• The Dirt Enquiry

IPA October 2008

How can you win?

The Common Herd being wise after the event will say either:

”How easy, why think twice about so obviously correct an operation”

or will say: “Criminal idiots to attempt the

impossible”

-General Sir Aylmer Hunter Weston, 29th Division, April 1915, before the Gallipoli Campaign

“It is not the strongest of the species that survives, not the most intelligent, but the one most responsive to change”

Charles Darwin

“An té nach bhfuil láidir, ní foláir do bheith glic”

IPA October 2008

Questions?

IPA October 2008

SAQ 5

Have you experienced any changes in your dealings with Revenue?

Have services improved or deteriorated?

What remains unchanged? Any signs of technology?