HMRC’s latest accounts show an annual tax take of £536.8bn. This figure exceeded its target for additional revenues (the sixth consecutive year this amount has increased).

Tax revenues were 3.7% (£19.1bn) up on the previous year, driven by a 3.8% increase in income tax and national insurance contributions (NICs) bringing in an additional £10.3bn. Corporation tax increased 9.9% or £4.1bn, and VAT by £2.1bn (1.8%).

Capital gains tax and insurance premium tax also recorded significant increases, by 28.1% (to £7.3bn); and 27.6% (to £3.7bn), respectively. Inheritance tax was up by £300m or 7.9%. The annual cost of running HMRC was £3.2bn in 2015-16, compared to £3.1bn in 2014-15.

HMRC’s estimate of the compliance tax yield in 2015-16 was £26.6bn (against a target of £26.3bn).

In its commentary, the National Audit Office (NAO) was highly critical of the way in which HMRC calculates compliance yield, which it says is not simply a cash figure.

The NAO says compliance estimates draw on “a range of different measures of revenue generated or losses prevented all of which involve a degree of estimation and uncertainty” and wants HMRC to provide further explanation.

The NAO also says that HMRC has yet to estimate the costs for individual taxpayers or businesses of making the transition to online services (or indeed to quantify the benefits they can expect from developments such as digital tax accounts).

As part of a major overhaul of tax services, HMRC is required to achieve a targeted £643m in savings. There will need to be further cuts in staff numbers, and by 2021 HMRC expects to cut 9,600 jobs (around 16% of total staff numbers), from its current base of 60,000.

HMRC’s Annual Report can be found here.