HMRC Annual Accounts 2020-21

Public Accounts Committee Closed Inquiry
Opened: 21 Oct 2021 Closed: 26 Apr 2022 Parliament page
The Committee will hold its annual evidence hearing with senior HMRC officials on the overall position of UK tax revenues and how HMRC manages the taxation ‘tools’ at its disposal to achieve policy ends; the ‘tax gap’ of taxes owed which are not collected through error, avoidance or evasion; the … Read more
35 Conclusions
1 Report
1 Oral session
2 Letters
1 Event
Activity timeline 6 events
28 Apr
2022
Report published
25 Apr
2022
Correspondence
25 Apr
2022
Correspondence
11 Feb
2022
Report published
1 Dec
2021
Oral evidence
1 Dec
2021
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
Oral evidence sessions 1 session
1 Dec 2021
View on parliament.uk
HMRC Annual Accounts 2020-21
Angela MacDonald · HMRC Jim Harra · HMRC Joanna Rowland · Home Office Justin Holliday · HMRC
Title HC No. Published Items Response
Thirty-Seventh Report - HMRC Performance in 2020–21 HC 641 11 Feb 2022 35 Responded
Recommendations & Conclusions
35 results
2 Conclusion
Thirty-Seventh Report - HMRC Perfo…
HMRC does not understand the reasons for the growth in the cost of research and...
HMRC does not understand the reasons for the growth in the cost of research and development tax reliefs including how much is due to abuse. The cost of research and development (R&D) tax reliefs has grown by 240% over the … Read more
Government Response
2.1 The government agrees with the Committee’s recommendation. Target implementation date: Winter 2023 2.2 HMRC is carrying out further analysis to understand the reasons for the growing cost of Research … Read more
HM Treasury
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3 Conclusion
Thirty-Seventh Report - HMRC Perfo…
HMRC does not have a convincing plan for restoring compliance activity back to pre-pandemic levels.
HMRC does not have a convincing plan for restoring compliance activity back to pre-pandemic levels. In response to the pandemic, HMRC suspended some of its compliance work in 2020–21 where taxpayers could not cope with inquiries, and because it needed … Read more
Government Response
4. PAC conclusion: While we wait for the much-delayed SEND review, the support system continues to fail many children and remains financially unsustainable.
HM Treasury
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4 Conclusion
Thirty-Seventh Report - HMRC Perfo…
Resource constraints are limiting HMRC’s ability to get the optimum level of compliance yield.
Resource constraints are limiting HMRC’s ability to get the optimum level of compliance yield. Compliance yield represents the additional revenues that HMRC considers it has generated and the revenue losses it has prevented through its enforcement and compliance activities. HMRC … Read more
Government Response
4: PAC conclusion: Resource constraints are limiting HMRC’s ability to get the optimum level of compliance yield. 4: PAC recommendation: HMRC should, in its Treasury Minute response, set out: • … Read more
HM Treasury
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5 Conclusion
Thirty-Seventh Report - HMRC Perfo…
It is too easy for taxpayers to be unwittingly lured into tax avoidance schemes.
It is too easy for taxpayers to be unwittingly lured into tax avoidance schemes. HMRC introduced the loan charge in 2019 to recoup tax from people who used ‘disguised remuneration’ schemes to avoid tax. The imposition of the loan charge … Read more
Government Response
5: PAC conclusion: It is too easy for taxpayers to be unwittingly lured into tax avoidance schemes. 5: PAC recommendation: To reduce the risk of taxpayers getting involved in tax … Read more
HM Treasury
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6 Conclusion
Thirty-Seventh Report - HMRC Perfo…
Yet again customer service has collapsed and HMRC’s recovery plans are not clear.
Yet again customer service has collapsed and HMRC’s recovery plans are not clear. For over a decade this Committee has repeatedly reported on HMRC’s inadequate levels of customer service. Following an examination by this Committee in 2016, HMRC’s customer service … Read more
Government Response
6: PAC conclusion: Yet again customer service has collapsed and HMRC’s recovery plans are not clear. 6a: PAC recommendation: HMRC should, in its Treasury Minute response, explain: • the service … Read more
HM Treasury
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7 Conclusion
Thirty-Seventh Report - HMRC Perfo…
The benefits of Making Tax Digital to those with simple tax affairs are not clear.
The benefits of Making Tax Digital to those with simple tax affairs are not clear. The requirement for taxpayers to keep tax records and submit quarterly returns to HMRC digitally is a key part of its 10-year modernisation strategy. From … Read more
Government Response
7.1 The government agrees with the Committee’s recommendation. Recommendation implemented 7.2 Research conducted by HMRC and peer reviewed by independent academics indicates that Making Tax Digital (MTD) for VAT is … Read more
HM Treasury
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8 Conclusion
Thirty-Seventh Report - HMRC Perfo…
Changed working practices have left HMRC with more office space than it needs.
Changed working practices have left HMRC with more office space than it needs. We have long standing concerns about the flexibility of HMRC’s estates strategy which is seeing it move to 13 regional centres with long-term non-breakable property leases. The … Read more
Government Response
8.1 The government agrees with the Committee’s recommendation. Target implementation date: Summer 2022 8.2 HMRC anticipated changes in its office space requirements and negotiated flexibility such as assignment, subletting and … Read more
HM Treasury
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1 Conclusion
Thirty-Seventh Report - HMRC Perfo…
On the basis of a report by the Comptroller and Auditor General, we took evidence...
On the basis of a report by the Comptroller and Auditor General, we took evidence from HM Revenue & Customs (HMRC) on its performance in 2020–21.1
Government Response
2. PAC conclusion: We are concerned that HM Treasury does not intend to adequately monitor and update the ongoing cost of COVID-19 to the taxpayer. 2. PAC recommendation: As part … Read more
HM Treasury
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9 Conclusion
Thirty-Seventh Report - HMRC Perfo…
In its evidence to us, TaxWatch said the legacy of the employment support schemes risks...
In its evidence to us, TaxWatch said the legacy of the employment support schemes risks being damaged if more is not done to recover the billions of pounds stolen from them.20 The Association of Accounting Technicians submitted evidence to us … Read more
Government Response
1.1 The government agrees with the Committee’s recommendation. Recommendation implemented 1.2 Since compliance work commenced on the COVID-19 support schemes, a great deal has been learnt about types and levels … Read more
HM Treasury
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10 Conclusion
Thirty-Seventh Report - HMRC Perfo…
HMRC is responsible for administering Corporation Tax research and development (R&D) reliefs, which support companies...
HMRC is responsible for administering Corporation Tax research and development (R&D) reliefs, which support companies that work on innovative projects. There is a scheme for small and medium-sized enterprises, and a research and development expenditure credit scheme, mainly for larger … Read more
Government Response
2.1 The government agrees with the Committee’s recommendation. Target implementation date: Winter 2023 2.2 HMRC is carrying out further analysis to understand the reasons for the growing cost of Research … Read more
HM Treasury
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11 Conclusion
Thirty-Seventh Report - HMRC Perfo…
The cost of R&D tax reliefs has grown by 241% over the last four years...
The cost of R&D tax reliefs has grown by 241% over the last four years to reach £9.3 billion in 2020–21 (Figure 1). In 2019, UK companies claimed tax relief on £47.5 billion of R&D spending; 83% more than the … Read more
Government Response
2.1 The government agrees with the Committee’s recommendation. Target implementation date: Winter 2023 2.2 HMRC is carrying out further analysis to understand the reasons for the growing cost of Research … Read more
HM Treasury
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13 Conclusion
Thirty-Seventh Report - HMRC Perfo…
HMRC estimates that error and fraud in R&D tax reliefs was £336 million in 2020–...
HMRC estimates that error and fraud in R&D tax reliefs was £336 million in 2020– 21, or 3.6% of related expenditure (2019–20 – £311 million or 3.6% of related expenditure). The C&AG considers the level of error and fraud estimated … Read more
Government Response
2.4 The government agrees with the Committee’s recommendation. 9 Target implementation date: Winter 2023 2.5 Activities are currently underway to address key error & fraud issues, including designing and implementing: … Read more
HM Treasury
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14 Conclusion
Thirty-Seventh Report - HMRC Perfo…
We asked HMRC how much of the increase in the cost of R&D tax reliefs...
We asked HMRC how much of the increase in the cost of R&D tax reliefs was down to abuse. HMRC said monitoring was difficult because over time R&D tax reliefs had become increasingly generous and thus an increase in claims … Read more
Government Response
2.4 The government agrees with the Committee’s recommendation. 9 Target implementation date: Winter 2023 2.5 Activities are currently underway to address key error & fraud issues, including designing and implementing: … Read more
HM Treasury
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15 Conclusion
Thirty-Seventh Report - HMRC Perfo…
Given the uncertainties in HMRC’s current estimates of error and fraud in R&D relief claims,...
Given the uncertainties in HMRC’s current estimates of error and fraud in R&D relief claims, we asked HMRC what it was doing to improve its estimates. It told us that it was planning a random enquiry programme for R&D claims … Read more
Government Response
2.4 The government agrees with the Committee’s recommendation. 9 Target implementation date: Winter 2023 2.5 Activities are currently underway to address key error & fraud issues, including designing and implementing: … Read more
HM Treasury
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16 Conclusion
Thirty-Seventh Report - HMRC Perfo…
HMRC estimated that compliance yield from its tax compliance activities in 2020– 21 was £30.4...
HMRC estimated that compliance yield from its tax compliance activities in 2020– 21 was £30.4 billion. Yield was down 18% from the £36.9 billion HMRC generated in 2019–20. HMRC has reported the reduction reflected higher than usual performance in 2019–20 … Read more
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17 Conclusion
Thirty-Seventh Report - HMRC Perfo…
We asked HMRC whether it was going to return to the cases it had not...
We asked HMRC whether it was going to return to the cases it had not taken forward during 2020–21. It told us that, by and large, the action it took in 2020–21 would defer its ability to correct any non-compliance … Read more
Government Response
3.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2022 3.2 HMRC took on significant additional responsibilities during the pandemic, providing essential COVID-19 economic support whilst continuing … Read more
HM Treasury
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18 Conclusion
Thirty-Seventh Report - HMRC Perfo…
We raised our concerns with HMRC that the impact of COVID-19 will make it difficult...
We raised our concerns with HMRC that the impact of COVID-19 will make it difficult to make like for like comparisons of its performance. HMRC agreed that there will be distortions but said it would do its best to be … Read more
Government Response
3.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2022 3.2 HMRC took on significant additional responsibilities during the pandemic, providing essential COVID-19 economic support whilst continuing … Read more
HM Treasury
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19 Conclusion
Thirty-Seventh Report - HMRC Perfo…
HMRC’s annual report shows that it spent over £1.5 billion on compliance activities in 2020–21.31...
HMRC’s annual report shows that it spent over £1.5 billion on compliance activities in 2020–21.31 The rate of return from those activities varied across HMRC’s five customer groups in 2020–21 (Figure 2). Returns were highest from large businesses, with average … Read more
Government Response
4.1 The government agrees with the Committee’s recommendation. Recommendation implemented 4.2 HMRC are funded to reduce the tax gap through core ‘business as usual’ funding and additional “spend to raise Read more
HM Treasury
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20 Conclusion
Thirty-Seventh Report - HMRC Perfo…
We asked HMRC whether it would generate more revenue if it concentrated more of its...
We asked HMRC whether it would generate more revenue if it concentrated more of its compliance activities on large companies and less on small businesses and individuals. It told us that payback was a key factor when deciding how to … Read more
Government Response
4.1 The government agrees with the Committee’s recommendation. Recommendation implemented 4.2 HMRC are funded to reduce the tax gap through core ‘business as usual’ funding and additional “spend to raise Read more
HM Treasury
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21 Conclusion
Thirty-Seventh Report - HMRC Perfo…
In its evidence to us TaxWatch argued for a substantial investment in tax compliance to...
In its evidence to us TaxWatch argued for a substantial investment in tax compliance to ensure that public confidence in the tax system is maintained and enhanced.33 In its evidence, the Association of Accounting Technicians (AAT) argued that HMRC should … Read more
Government Response
4.1 The government agrees with the Committee’s recommendation. Recommendation implemented 4.2 HMRC are funded to reduce the tax gap through core ‘business as usual’ funding and additional “spend to raise Read more
HM Treasury
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22 Conclusion
Thirty-Seventh Report - HMRC Perfo…
HMRC told us the nature of tax avoidance has changed.
HMRC told us the nature of tax avoidance has changed. It said the bulk of avoidance schemes now relate to employment taxes and are not targeted at affluent people but middle-income earners, some of whom knowingly enter avoidance schemes and … Read more
Government Response
5.1 The government agrees with the Committee’s recommendation. Recommendation implemented 5.2 HMRC continues to build on the strategy outlined in ‘Tackling promoters of mass- marketed tax avoidance schemes’ published in … Read more
HM Treasury
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23 Conclusion
Thirty-Seventh Report - HMRC Perfo…
We are concerned about how taxpayers are protected from those who promote avoidance schemes, and...
We are concerned about how taxpayers are protected from those who promote avoidance schemes, and the financial damage that can follow if taxpayers unknowingly enter unlawful schemes. We therefore asked HMRC what progress it had made in pursuing the promoters … Read more
Government Response
5.1 The government agrees with the Committee’s recommendation. Recommendation implemented 5.2 HMRC continues to build on the strategy outlined in ‘Tackling promoters of mass- marketed tax avoidance schemes’ published in … Read more
HM Treasury
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24 Conclusion
Thirty-Seventh Report - HMRC Perfo…
We asked HMRC whether it could do more to publicise its successes, including the naming...
We asked HMRC whether it could do more to publicise its successes, including the naming and shaming promoters of avoidance schemes. HMRC explained how it was seeking to reduce demand through transparency. It said it published annual reviews of the … Read more
Government Response
5.1 The government agrees with the Committee’s recommendation. Recommendation implemented 5.2 HMRC continues to build on the strategy outlined in ‘Tackling promoters of mass- marketed tax avoidance schemes’ published in … Read more
HM Treasury
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25 Conclusion
Thirty-Seventh Report - HMRC Perfo…
This Committee has regularly examined HMRC’s customer service performance.
This Committee has regularly examined HMRC’s customer service performance. In 2010, this Committee concluded HMRC’s performance in responding to calls had been poor.43 In 2016, the Committee found that customer service levels had collapsed as a result of HMRC assuming … Read more
Government Response
6: PAC conclusion: Yet again customer service has collapsed and HMRC’s recovery plans are not clear. 6a: PAC recommendation: HMRC should, in its Treasury Minute response, explain: • the service … Read more
HM Treasury
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26 Conclusion
Thirty-Seventh Report - HMRC Perfo…
We asked HMRC why response times were very poor at the end of 2020–21.
We asked HMRC why response times were very poor at the end of 2020–21. HMRC said in the first half of 2020–21 it had diverted 5,000 customer service staff to work on COVID-19 support schemes. HMRC also said that during … Read more
Government Response
6: PAC conclusion: Yet again customer service has collapsed and HMRC’s recovery plans are not clear. 6a: PAC recommendation: HMRC should, in its Treasury Minute response, explain: • the service … Read more
HM Treasury
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27 Conclusion
Thirty-Seventh Report - HMRC Perfo…
HMRC told us that its performance was improving in 2021–22.
HMRC told us that its performance was improving in 2021–22. It said it had got helpline performance up to what it regarded as a “decent service”, and had thus diverted resources to handling post, as this was the area with … Read more
Government Response
6: PAC conclusion: Yet again customer service has collapsed and HMRC’s recovery plans are not clear. 6a: PAC recommendation: HMRC should, in its Treasury Minute response, explain: • the service … Read more
HM Treasury
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28 Conclusion
Thirty-Seventh Report - HMRC Perfo…
We asked HMRC why call handling performance had been declining before COVID-19.
We asked HMRC why call handling performance had been declining before COVID-19. HMRC told us that it was resourced to give a “decent” rather than “brilliant” service and it had efficiencies that it had to deliver. It said that although … Read more
Government Response
6: PAC conclusion: Yet again customer service has collapsed and HMRC’s recovery plans are not clear. 6a: PAC recommendation: HMRC should, in its Treasury Minute response, explain: • the service … Read more
HM Treasury
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29 Conclusion
Thirty-Seventh Report - HMRC Perfo…
For 2021–22, HMRC has replaced most of its response time measures with metrics of whether...
For 2021–22, HMRC has replaced most of its response time measures with metrics of whether it is easy for customers to access and deal with HMRC.52 Rather than call handling times, it now publicly reports the percentage of callers wishing … Read more
Government Response
6.1 The government agrees with the Committee’s recommendation. Target implementation date: June 2022 6.2 HMRC have been working through the stocks of correspondence that built up while the department’s resources … Read more
HM Treasury
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30 Conclusion
Thirty-Seventh Report - HMRC Perfo…
HMRC’s Making Tax Digital initiative is central to its 10-year modernisation strategy.
HMRC’s Making Tax Digital initiative is central to its 10-year modernisation strategy. It requires taxpayers to keep tax records and submit returns digitally. HMRC introduced Making Tax Digital for VAT first. The largest VAT traders provided digital returns in 2019, … Read more
Government Response
7: PAC conclusion: The benefits of Making Tax Digital to those with simple tax affairs are not clear. 7: PAC recommendation: HMRC should, in its Treasury Minute response, explain how … Read more
HM Treasury
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31 Conclusion
Thirty-Seventh Report - HMRC Perfo…
We asked HMRC what Making Tax Digital was for.
We asked HMRC what Making Tax Digital was for. HMRC told us Making Tax Digital was about making tax easier, keeping tax in line with the digital age and making business more productive.56 HMRC also told us that, by providing … Read more
Government Response
7: PAC conclusion: The benefits of Making Tax Digital to those with simple tax affairs are not clear. 7: PAC recommendation: HMRC should, in its Treasury Minute response, explain how … Read more
HM Treasury
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32 Conclusion
Thirty-Seventh Report - HMRC Perfo…
We were concerned about the impact of Making Tax Digital on the smaller taxpayer, such...
We were concerned about the impact of Making Tax Digital on the smaller taxpayer, such as a retired person with rental income from one property. We noted that other administrative tax changes, such as on-line self-assessment, have not provided expected … Read more
Government Response
7: PAC conclusion: The benefits of Making Tax Digital to those with simple tax affairs are not clear. 7: PAC recommendation: HMRC should, in its Treasury Minute response, explain how … Read more
HM Treasury
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33 Conclusion
Thirty-Seventh Report - HMRC Perfo…
We asked about the support and software that would be available to small taxpayers.
We asked about the support and software that would be available to small taxpayers. HMRC said it was gearing up to support customers but that it would not be delivering software itself. Nevertheless it had received pledges from industry that … Read more
Government Response
7: PAC conclusion: The benefits of Making Tax Digital to those with simple tax affairs are not clear. 7: PAC recommendation: HMRC should, in its Treasury Minute response, explain how … Read more
HM Treasury
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34 Conclusion
Thirty-Seventh Report - HMRC Perfo…
We have long-standing concerns about HMRC’s estates strategy.
We have long-standing concerns about HMRC’s estates strategy. In April 2017, long before COVID-19, this Committee raised concerns about HMRC locking government into holding larger properties for longer than needed. The Committee raised similar concerns again in January and April … Read more
Government Response
8: PAC conclusion: Changed working practices have left HMRC with more office space than it needs. 8a: PAC recommendation: HMRC should: • work with Cabinet Office to draw up a … Read more
HM Treasury
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35 Conclusion
Thirty-Seventh Report - HMRC Perfo…
Given the change in HMRC’s need for office space, and wider changes in the commercial...
Given the change in HMRC’s need for office space, and wider changes in the commercial property market, we asked HMRC whether its estate strategy was right for the future. HMRC told us its strategy was the right one and was … Read more
Government Response
8: PAC conclusion: Changed working practices have left HMRC with more office space than it needs. 8a: PAC recommendation: HMRC should: • work with Cabinet Office to draw up a … Read more
HM Treasury
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36 Conclusion
Thirty-Seventh Report - HMRC Perfo…
We asked about the Cabinet Office’s role in co-ordinating government office space.
We asked about the Cabinet Office’s role in co-ordinating government office space. HMRC said it relies on the controls operated by the Cabinet Office, who look at all new property deals and lease extensions, and make sure those needing space … Read more
Government Response
8.4 The government disagrees with the Committee’s recommendation. 8.5 HMRC have reviewed its space requirements following their shift to hybrid office-home working, to establish any surplus capacity, and will continue … Read more
HM Treasury
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Correspondence 2 letters
25 Apr 2022 Correspondence from Jim Harra, Chief Executive and First Permanent Secretary, re Committee of Public Accounts Thirty Seventh report of Session 2021-22: Recommendation 1, dated 20 April 2022
Parliament page
25 Apr 2022 Correspondence from Jim Harra, Chief Executive and First Permanent Secretary, re Committee of Public Accounts Thirty Seventh report of Session 2021-22: HMRC Annual Report & Accounts recommendation 3, dated 20 April 2022
Parliament page