Implementation of the contract for Measures to Assist in the Modernisation of the Bulgarian Financial Administration has now entered its most active phase. The contract was signed on 14th June 2007 and a press release was issued by the Ministry of Finance on 25th June, outlining the key Programme objectives.  These are:

• the enhancement of state revenue
• preventing operations connected with money laundering
• reducing corruption
• improving mutual exchange of database information
• addressing EU membership provisions
• addressing horizontal coordination issues between the Ministry and the key revenue agencies

Crown Agents produced an Inception report in July 2007, outlining 72 proposals for action under the programme. Following its acceptance by the Minister of Finance, the CA advisors are undertaking reviews of current legislation and assessment of the working practices, systems and procedures relating to the enhancement of the collection of state revenue and other work. The reviews completed so far have resulted in a total of 87 specific recommendations for improvement. Crown Agents’ experts are providing advice and technical assistance with planning and implementation of these recommendations.

In order to further ensure the sustainability of the results achieved by the previous Programme for Modernisation of Bulgarian Customs Administration, Crown Agents experts have also made an assessment of the outstanding recommendations from that Programme. These are now being pursued under the current programme.

One of the major areas of Crown Agents’ current work is providing assistance with the development of the National Revenue Agency (NRA) Risk Management approach. The CA advisors have produced a range of Compliance Risk Management information notes, providing useful insights into managing and improving tax compliance and audit case selection systems. The strategic approach of the UK HM Revenue and Customs to risk management in an operational context was also studied with the assistance of Crown Agents. As a result, the NRA received a suite of 330 proven Risk Rules developed to identify tax non-compliance. Crown Agents also reviewed the Bulgarian Tax Insurance Procedure Code and provided recommendations towards strengthening the mechanisms to effectively combat dishonest taxpayers.

Crown Agents has also made an initial evaluation of the use and deployment of the existing NRA mobile teams. A programme for development of these mobile resources has been agreed with the management of the Agency. Crown Agents is now providing assistance with planning and coordination of future taxpayer compliance campaigns to be carried out by the NRA mobile teams. This includes developing campaign activity plans and producing guidance for the participating officers. Operational guidance covering the control checks to be applied when reviewing hotels has been trialed during the Winter Compliance Campaign in the ski resort complexes.

Assistance also continues to be provided to the National Customs Agency (NCA) mobile teams which were created under the previous programmes. CA advisors have visited all the regions to observe current operating practices and procedures in the examination of imported cargo and on control visits to excise warehouses. Specific training and development needs have been identified and Crown Agents has provided operational advice on the deployment and prioritisation of targets. Mobile Assurance Teams annual plan of monthly exercises was adopted and CA advisors are continuing to assist and advise on its implementation. Support is also provided to the NCA Intelligence and Analytical Function to develop internal analysis of potential targets and review existing risk profiles.

Another major work area under the Programme for Modernisation of Bulgarian Financial Administration is the enhancement of information exchange between the NCA and the NRA. Crown Agents has facilitated an inter-agency workshop focused on identifying a possible methodology for engaging in enhanced information exchange to protect the revenue more effectively. Work has now begun to consider the IT implications and requirements of a joint information system.

Analysts from the NRA and the NCA are now actively working together with CA to develop and implement operational plans to tackle aspects of some carousel frauds and exchanging relevant information to enhance this joint approach.

Measures for minimising tax evasion were also proposed by Crown Agents’ experts, who prepared an extensive analysis of the Collection of Revenue Debts. This contains a number of recommendations which should improve the overall approach towards the collection of revenue debts and the controls to maximise revenue receipts to the Budget.

Crown Agents is assisting in the improvement of MoF’s capability to identify and prevent suspicious financial operations through enhancement of analytical processes and compliance measures.  Its experts have also provided initial advice to the State Receivables Collection Agency and continue to work with all agencies to enhance their effectiveness.

Crown Agents has additionally provided specific recommendations to the Ministry of Finance for the enhancement of the constitution and remit of the State Public Consultative Commission on Support of the Customs Administration Development.