UK Inquiry Tracker

HMRC’s management of tax debt

Public Accounts Committee Closed Inquiry

Opened: 26 Nov 2021 Closed: 27 May 2022 Parliament page

A recent report by the NAO found that tax debt is now more than double pre-pandemic levels, and current staffing at HM Revenue & Customs (HMRC) are unlikely to be enough to manage the increased tax debt workload as the UK emerges from the COVID-19 pandemic, with HMRC needing to … Read more A recent report by the NAO found that tax debt is now more than double pre-pandemic levels, and current staffing at HM Revenue & Customs (HMRC) are unlikely to be enough to manage the increased tax debt workload as the UK emerges from the COVID-19 pandemic, with HMRC needing to pursue tax debt while allowing taxpayers time to recover their finances. Total tax debt rose to £42 billion in September 2021, from £16 billion in January 2020. Total tax debt peaked at £67 billion in August 2020. More debt has been repaid as extensions for VAT and Self Assessment passed, and the economy has reopened. HMRC forecasts total tax debt will fall to £33 billion by March 2022, but this assumes the COVID-19 pandemic has not changed repayment behaviour. Research indicates the impact of the COVID-19 pandemic on taxpayers is polarised, with some groups shoring up their bank balances, and others more badly affected. Up to 2.4 million more taxpayers are in debt to HMRC following the COVID-19 pandemic, and those who were already in debt owe more. The average amount taxpayers owe has increased by 60%, from around £4,300 to £6,800. Older debts, which are often more difficult to collect, have increased in value from £2.5 billion in 2019-20 to £4.4 billion in 2020-21. Pre-pandemic, HMRC achieved workforce efficiencies, but it did not close the gap between new tax debts and debts collected., and is now unlikely to have enough staff to manage the increased tax debt that has resulted from the COVID-19 pandemic. HMRC intends to recruit 1,000 full time staff in 2021-22, however, it told the NAO that once staff turnover is factored in, this resource will only address current staffing shortfalls. HMRC forecasts that it will have twice the usual level of debt to manage at the end of March 2022. New debtors may require more support in the short term to agree payment plans. The Committee will question senior officials at HMRC. If you have evidence on these issues, please submit it here by Monday 10 January 2022. Show less

15 Recommendations

12 Conclusions

1 Report

1 Oral session

1 Letter

1 Event

Activity timeline 5 events

27 May
2022

Report published

Treasury minutes: Government response to the Committee of Public Accounts on the Forty Eighth report from Session 2021-22

26 Mar
2022

Report published

Forty-Eighth Report - HMRC’s management of tax debt

7 Feb
2022

Correspondence

Correspondence from Jim Harra, Chief Executive and First Permanent Secretary, re Debt Management, dated 28 January 2022

17 Jan
2022

Oral evidence

HMRC’s management of tax debt

17 Jan
2022

Formal meeting (oral evidence session) · The Grimond Room, Portcullis House

HMRC’s management of tax debt

Oral evidence sessions 1 session

17 Jan 2022

View on parliament.uk

HMRC’s management of tax debt

Jim Harra · HMRC Justin Holliday · HMRC Marc Gill · HM Revenue and Customs

Reports 1 report · click to expand

Title	HC No.	Published	Items	Response
Forty-Eighth Report - HMRC’s management of tax debt	HC 953	26 Mar 2022	27	Responded

Recommendations & Conclusions

3 results

4 Recommendation Not Addressed

Forty-Eighth Report - HMRC’s manag…

HMRC is far behind where it needs to be in making good use of data...

HMRC is far behind where it needs to be in making good use of data to manage debt effectively. Over a decade ago, in 2009, HMRC told our predecessor committee that it planned to take an incremental approach to gradually … Read more

Government Response

This response discusses elective and cancer treatment waiting times, which is unrelated to the recommendation about HMRC's use of data to manage debt.

HM Treasury

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1 Conclusion Not Addressed

Forty-Eighth Report - HMRC’s manag…

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 the issue of its management of tax debt.1

Government Response

The government's response is a restatement of the context, acknowledging the report and the evidence taken, but it does not address the substance of the conclusion itself.

HM Treasury

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22 Conclusion Not Addressed

Forty-Eighth Report - HMRC’s manag…

HMRC suggested that the number of customers its staff refer to the Extra Support Team...

HMRC suggested that the number of customers its staff refer to the Extra Support Team may have remained stable because the wider changes it has made to its debt management approach, in particular taking a more empathetic tone with customers, … Read more

Government Response

The government's response repeats the response to recommendation 6, which focuses on training and research for identifying vulnerable people, but does not address the initial conclusion about HMRC's suggestions regarding stable referral numbers and the role of accountants.

HM Treasury

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Government Response AI assessment · 27 of 15 classified

Accepted 20

Accepted in Part 2

Acknowledged 2

Not Addressed 3

Total 15 recs + 12 conclusions

Correspondence 1 letter

7 Feb 2022 Correspondence from Jim Harra, Chief Executive and First Permanent Secretary, re Debt Management, dated 28 January 2022

Parliament page