The Recovery of Debt by the Inland Revenue


By using SIMUL8, the Inland Revenue were able to save $3 million. SIMUL8’s solution supported communication between National Audit Office and the Inland Revenue staff as it provided a common visualization of the process on which to base discussions and recommendations.



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The Challenge

The National Audit Office (NAO) scrutinizes UK public spending. They are independent of Government. The NAO audit the accounts of all government departments and agencies as well as a wide range of other public bodies. They report to the UK Parliament on the economy, efficiency and effectiveness on how government bodies have used public money.



The Inland Revenue (IR) collects a total of around $300 billion of taxes and National Insurance Contributions. Some individuals and businesses end up owing the department money. This debt has to be recovered.

The National Audit Office's study had to examine:

  • The Inland Revenue's performance in collecting debt
  • Whether the Inland Revenue could collect and enforce debts more quicklu and at a lower cost

The Solution

The Inland Revenue’s Receivables Management System (RMS) provides a “start to finish” debt management function. A simulation of the RMS was developed. The simulation work was carried out in two phases. The first phase built an "overall" simulation of the RMS to help the NAO further understand the RMS process. The second phase gathered appropriate data to extend the simulation to answer the following questions:



  • Where do peaks of debt occur?
  • When do these occur during the year?
  • How long do these peaks take to clear?


The simulation was initially based on a process map produced jointly by the NAO and the IR. A workshop session with IR staff was then carried out to validate the simulation structure and to involve them in the building process. Once validation was complete the simulation was ready to answer questions.

The Result

The simulation proved a great tool for assisting communication between NAO and Inland Revenue staff as it provided a common visualization of the process to base discussions on. The simulation was also used in the final report to the British Parliament by the Comptroller and Auditor General.

The simulation showed that:

  • Peaks on some tax types build up during September, January and March and can take up to 10 weeks to clear.
  • 50 additional temporary staff would reduce those peaks and save around $3 million net a year.
  • For some types of tax debt, nearly 90% of debt cases are cleared within 90 days. This compared favorably with the Utilities Sector (which was considered a similar industry and hence suitable for comparison)

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