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”
RESEARCH TEAM
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

IMPORTANCE
 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 worldleading centre for research on tax
administration
RESEARCH
 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 Fellows
ANALYSIS AND SIMULATION
 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
ANALYSIS AND SIMULATION
 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?
ANALYSIS AND SIMULATION
 The
second part of project will employ
Datalab
 This will permit an informed calibration
of the model
ECONOMIC EXPERIMENTATION
 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
ECONOMIC EXPERIMENTATION
 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
ECONOMIC EXPERIMENTATION
A
second experiment will explore thirdparty 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
ESTIMATION AND EVALUATION
 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
ESTIMATION AND EVALUATION
 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
ESTIMATION AND EVALUATION
 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
ESTIMATION AND EVALUATION
 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
INTERDISCIPLINARY QUALITATIVE
 Concerned
with better understanding tax
in practice
 Qualitative includes interview and
questionnaire based studies
 Interdisciplinary = drawing on
accounting, sociology, psychology and law.
INTERDISCIPLINARY QUALITATIVE
 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.
INTERDISCIPLINARY QUALITATIVE
 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.