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
14 Recommendations
21 Conclusions
1 Report
1 Oral session
2 Letters
1 Event
Activity timeline 5 events
28 Apr
2022
Report published
25 Apr
2022
Correspondence
25 Apr
2022
Correspondence
11 Feb
2022
Report published
1 Dec
2021
Oral evidence
Oral evidence sessions 1 session
1 Dec 2021
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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
17 results
Clear
2 Recommendation Accepted
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
HMRC is carrying out further analysis to understand the reasons for the growing cost of R&D tax relief, working with ONS to understand expenditure differences, and the R&D Mandatory Random Enquiry Programme (MREP) will provide a more robust estimate.
HM Treasury
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4 Recommendation Accepted
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
HMRC is funded to reduce the tax gap and constantly adjusts resource allocation based on expected yield and risks. The 2021 Spending Review gave it an additional £180 million over three years for "spend to raise".
HM Treasury
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5 Recommendation Accepted
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
HMRC will continue to build on its strategy to raise awareness and help taxpayers steer clear of avoidance through targeted communications, early interventions, and work with professional bodies. New powers introduced in Finance Act 2022 enable HMRC to name promoters and schemes early.
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6 Recommendation Accepted
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
HMRC will explain the service levels it is aiming to provide and by when, including for the time taken to answer calls and respond to post, and commit to publishing outturn against these measures; this information will be presented in the Department’s Outcome Delivery Plan, to be published early in 2022-23.
HM Treasury
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10 Conclusion Accepted
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
HMRC is carrying out further analysis to understand the reasons for the growing cost of Research & Development (R&D) tax relief and is working with the Office for National Statistics (ONS) to better understand expenditure. A Mandatory Random Enquiry Programme (MREP) will provide a more robust estimate of error and fraud.
HM Treasury
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13 Recommendation Accepted
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
HMRC is designing and implementing a package of R&D reform measures announced at Autumn Budget 2021 aimed at tackling abuse and improving compliance by April 2023, including introducing a cross-cutting team of c50 FTE focused on abuse in partnership with HMRC’s Fraud Investigation Service, requiring all claims to be made digitally, with more detail, endorsed by a named senior officer, a programme of customer education and enhancements to HMRC’s risk profiling.
HM Treasury
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15 Conclusion Accepted
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
HMRC is designing and implementing R&D reform measures aimed at tackling abuse and improving compliance by April 2023, including a cross-cutting team, digital claims with senior officer endorsement, customer education, and enhanced risk profiling. The Mandatory Random Enquiry Programme results will inform these activities.
HM Treasury
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16 Conclusion Accepted
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
Government Response
The government outlines specific steps HMRC is taking to address reduced compliance, including resolving deferred interventions, recruiting an additional 4200 full-time equivalent staff for 2021-22, and focusing on maintaining the tax gap and sustained compliance in 2022-23.
HM Treasury
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17 Conclusion Accepted
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
HMRC stated it is already actively working, or has resolved, the vast majority of compliance interventions where action was deferred to support customers during the pandemic, and that it has recruited a further 4200 FTE in 2021-22 who will complete their training in 2022-23.
HM Treasury
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22 Recommendation Accepted
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
HMRC continues to build on the strategy outlined in ‘Tackling promoters of mass- marketed tax avoidance schemes’ published in March 2020. This includes raising awareness, early interventions, refreshed campaign, publications, articles, letters to taxpayers, work with professional bodies, shut down websites and published information about avoidance schemes.
HM Treasury
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24 Conclusion Accepted
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
HMRC stated it continues to build on the strategy outlined in ‘Tackling promoters of mass- marketed tax avoidance schemes’ published in March 2020. This includes raising awareness, early interventions, refreshed campaign, publications, articles, letters to taxpayers, work with professional bodies, shut down websites and published information about avoidance schemes.
HM Treasury
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26 Recommendation Accepted
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
HMRC have been working through the stocks of correspondence and expects to reduce to pre-pandemic levels, with performance recovering by the start of 2022-23. Expected performance levels and commitments for 2022-23 will be presented in the Department’s Outcome Delivery Plan.
HM Treasury
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28 Recommendation Accepted
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
HMRC will present its expected performance levels and commitments for 2022-23 in the Department’s Outcome Delivery Plan, to be published early in 2022-23 and publish performance data monthly and quarterly, including AAH, ASA and correspondence percentages.
HM Treasury
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29 Conclusion Accepted
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
HMRC have been working through the stocks of correspondence and expects to reduce to pre-pandemic levels, with performance recovering by the start of 2022-23. Expected performance levels and commitments for 2022-23 will be presented in the Department’s Outcome Delivery Plan. They publish performance data monthly and quarterly.
HM Treasury
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33 Recommendation Accepted
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
The government is committed to free software for the MTD Income Tax Self-Assessment (ITSA) service for those with the most straightforward affairs, removing one of the financial barriers to participating in MTD, and will improve the support offering to those who may be unrepresented or less digitally capable and provide exemptions for those who cannot go digital.
HM Treasury
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34 Recommendation Accepted
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
HMRC will work with the Government Property Agency and the Places for Growth Programme in the Cabinet Office to ensure that any surplus office space in staffed buildings across the HMRC estate is not left vacant, and will report back to the Committee by the end of July 2022.
HM Treasury
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35 Recommendation Accepted
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
HMRC will work with the Government Property Agency (GPA) and the Places for Growth Programme in the Cabinet Office to ensure that any surplus office space in staffed buildings across the HMRC estate is not left vacant and will report back to the Committee by the end of July 2022.
HM Treasury
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Government Response AI assessment · 35 of 14 classified
Accepted 17
Accepted in Part 1
Acknowledged 11
Not Addressed 5
Rejected 1
Total 14 recs + 21 conclusions
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