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
11 results
Clear
7 Recommendation Acknowledged
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
HMRC has worked hard to minimise the costs and maximise the benefits of MTD, committing to free software for the MTD Income Tax Self-Assessment (ITSA) service for those with the most straightforward affairs and working closely with stakeholders to 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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9 Conclusion Acknowledged
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
The government agrees no amount of error and fraud is acceptable, but not all money lost to error and fraud is detectable and recoverable, so HMRC will prioritize egregious cases but not actively search for people who made honest mistakes.
HM Treasury
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11 Conclusion Acknowledged
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
HMRC is carrying out further analysis to understand the reasons for the growing cost of Research & Development (R&D) tax relief, including sectoral analysis of the number and average value of claims, and is working with the Office for National Statistics (ONS) to better understand the discrepancies in R&D expenditure reporting.
HM Treasury
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14 Conclusion Acknowledged
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
The government agrees with the Committee’s recommendation and plans to implement R&D reform measures, including a cross-cutting team focused on abuse, digital claims with more detail, a customer education program, and enhancements to HMRC’s risk profiling.
HM Treasury
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18 Conclusion Acknowledged
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
The government agrees with the Committee’s recommendation and states that HMRC took on significant additional responsibilities during the pandemic and will report compliance activity in the Annual Report and Accounts.
HM Treasury
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19 Conclusion Acknowledged
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
The government agrees with the Committee’s recommendation, and HMRC are funded to reduce the tax gap through core ‘business as usual’ funding and additional “spend to raise.
HM Treasury
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20 Conclusion Acknowledged
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
HMRC stated payback was a key factor when deciding how to deploy its resources, but not the only one, adding that the marginal yield from additional compliance spending would not necessarily be as high as average yield.
HM Treasury
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21 Conclusion Acknowledged
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
HMRC is funded to reduce the tax gap through core ‘business as usual’ funding and additional “spend to raise
HM Treasury
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23 Conclusion Acknowledged
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
HMRC continues to build on the strategy outlined in ‘Tackling promoters of mass- marketed tax avoidance schemes’ published in March 2020, including raising awareness and helping taxpayers steer clear of avoidance through targeted communications and early interventions, and refreshed their ‘Tax avoidance – don’t get caught out’ campaign in 2021.
HM Treasury
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30 Conclusion Acknowledged
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
HMRC has worked hard to minimise the costs and maximise the benefits of MTD, committing to free software for the MTD Income Tax Self-Assessment (ITSA) service for those with the most straightforward affairs and working closely with stakeholders to 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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32 Conclusion Acknowledged
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
HMRC noted that its evaluation suggested that VAT traders found that Making Tax Digital had made dealing with their tax affairs easier, and pointed out that self- employed taxpayers with income under £10,000 a year would not be mandated to be part of Making Tax Digital.
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