Gareth D. Myles Lynne Oats Jonathan Shaw July 2013

TARC The proposal for a Tax Administration Research Centre developed out of the Joint Research Programme Funding of £2.5m for five years provided by the HMRC/HMT/ESRC The call for applications in February 2012 described the intention “to support high quality research and related activities on tax administration with a view to strengthening the theoretical and empirical understanding of the delivery and design of tax operations and policies”

R ESEARCH T EAM Awarded to a partnership of Exeter-IFS The many dimension of tax administration cut across academic disciplines The Centre has a multidisciplinary research team Drawn from accounting, economics, and psychology

I MPORTANCE The tax system is a point of direct contact between government and citizens This makes good tax design and administration central to the development of a positive relationship The tax system also directly affects the functioning of the economy Our intention is to develop the world- leading centre for research on tax administration

R ESEARCH The work of the Centre is organised under four themes Each theme represents a methodology Analysis and Simulation Estimation and Evaluation Economic and Social Experimentation Interdisciplinary Qualitative Analysis Many projects cross theme boundaries The Centre also has a network of International Fellow s

A NALYSIS AND S IMULATION This theme covers the theoretical research projects The major areas of focus will be compliance behaviour and audit strategy Including application of recent developments in behavioural economics Past work has had no data basis Datalab will permit proper calibration and testing of models

A NALYSIS AND S IMULATION First project will undertake simulation analysis of risk-based audit rules The tax administration uses data from investigations to estimate an audit rule Then implements rule by auditing those predicted to be worst evaders Is it better than random audits? Should a rule be supplemented by a random enquiry programme?

A NALYSIS AND S IMULATION The second part of project will employ Datalab This will permit an informed calibration of the model

Experimentation allows the collection of data without real interventions Experiments can be undertaken in the laboratory, online, or in the field Traditionally experiments have use student subjects These are not a good subject group for tax compliance E CONOMIC E XPERIMENTATION

The first project will explore customer service and customer experiences HMRC interacts with customers through service provision The experiment will involve different levels of customer service It will explore how guidance, thoroughness of support, and complexity affect compliance behaviour and timeliness of returns E CONOMIC E XPERIMENTATION

A second experiment will explore third- party reporting This is a key mechanism for minimising tax evasion The experiment will explore the effect of incentivising consumers to report transactions voluntarily Incentives can be provided through entry into a lottery The experiment can be run in the field E CONOMIC E XPERIMENTATION

This theme includes most empirical projects based on Datalab data It will use econometric techniques to evaluate policy reforms and estimate parameters of interest Areas of focus: behavioural responses to tax reforms, role of networks, efficiency costs of taxation E STIMATION AND E VALUATION

First project will investigate spread of information in networks Idea is to exploit HMRC random enquiry programmes to show how audits affect the behaviour of taxpayers in a network Results important for understanding how networks function E STIMATION AND E VALUATION

Second project will decompose elasticity of taxable income Supply side effect Tax avoidance effect Pay setting effect Combine Datalab and simulation work Policy implications for reducing elasticity E STIMATION AND E VALUATION

Third project will investigate responses to specific tax reforms Capital gains tax Effect of reforms on realisations of gains Corporation tax Effect of starting rate reforms on legal form and how income is taken Implications for understanding behaviour and for future reforms E STIMATION AND E VALUATION

Concerned with better understanding tax in practice Qualitative includes interview and questionnaire based studies Interdisciplinary = drawing on accounting, sociology, psychology and law. I NTERDISCIPLINARY Q UALITATIVE

First project: Intermediaries Interview based study of practitioners from various types of firm Looking at recent administrative changes including Disclosure of Tax Avoidance Schemes, Senior Accounting Officer, General Anti Abuse Rule. Links to existing HMRC run projects Large Business Panel Survey & Tax Opinions Panel Survey. I NTERDISCIPLINARY Q UALITATIVE

Second project: Taxpayer attitudes & motivations Questionnaire based survey, with some qualitative interview follow up Explore aspects of taxpayer behaviour including links between attitudes and compliance, influence of social networks. I NTERDISCIPLINARY Q UALITATIVE