HMRC Annual Report and Accounts 21-22

Public Accounts Committee Closed Inquiry
Opened: 26 Jul 2022 Closed: 13 Apr 2023 Parliament page
Gareth Davies, the Comptroller and Auditor General (C&AG) of the National Audit Office, has ‘qualified’ his audit opinion on HMRC’s 2020-21 Annual Resource Accounts because of “material levels of error and fraud in the COVID-19 support schemes, Personal Tax Credits expenditure and Corporation Tax research and development reliefs” . The … Read more
10 Recommendations
13 Conclusions
1 Report
1 Oral session
3 Letters
1 Event
Activity timeline 6 events
12 Apr
2023
Report published
11 Jan
2023
Report published
6 Dec
2022
Correspondence
15 Nov
2022
Correspondence
20 Oct
2022
Oral evidence
8 Sep
2022
Correspondence
Oral evidence sessions 1 session
20 Oct 2022
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HMRC Annual Report & Accounts 21-22
Angela MacDonald · HMRC Jane Whittaker · HM Revenue and Customs Jim Harra · HMRC Justin Holliday · HMRC
Title HC No. Published Items Response
Thirty-Third Report - HMRC performance in 2021–22 HC 686 11 Jan 2023 23 Response document linked
Recommendations & Conclusions
23 results
2 Recommendation
Thirty-Third Report - HMRC perform…
Resourcing HMRC’s compliance work to maintain rather than reduce the tax gap means the government...
Resourcing HMRC’s compliance work to maintain rather than reduce the tax gap means the government is missing out on billions in lost revenue. HMRC estimates that the tax gap—the difference between the amount of tax that should, in theory be … Read more
HM Treasury
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3 Conclusion
Thirty-Third Report - HMRC perform…
HMRC’s plan to only recover a quarter of losses due to fraud and error on...
HMRC’s plan to only recover a quarter of losses due to fraud and error on its COVID-support schemes does not go far enough. HMRC estimates that total error and fraud across the lifetime of the COVID-support schemes is £4.5 billion, … Read more
HM Treasury
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4 Recommendation
Thirty-Third Report - HMRC perform…
We are concerned that HMRC may be lagging behind other established tax authorities in preventing...
We are concerned that HMRC may be lagging behind other established tax authorities in preventing fraudulent VAT registrations. HMRC is constantly changing its processes to prevent criminals from exploiting the tax system. VAT is particularly susceptible to fraud and criminality … Read more
HM Treasury
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5 Recommendation
Thirty-Third Report - HMRC perform…
Taxpayers and their agents are still not receiving an acceptable level of customer service.
Taxpayers and their agents are still not receiving an acceptable level of customer service. In the last five years, HMRC has reduced its customer service staff numbers from 25,500 to 19,500. During the pandemic, HMRC’s performance in replying to post … Read more
HM Treasury
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6 Recommendation
Thirty-Third Report - HMRC perform…
HMRC has further to go until it can differentiate between taxpayers who are genuinely struggling,...
HMRC has further to go until it can differentiate between taxpayers who are genuinely struggling, and those who can afford to meet their liabilities but are choosing not to. Total tax debt in August 2022 was £46 billion, less than … Read more
HM Treasury
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7 Recommendation
Thirty-Third Report - HMRC perform…
Research and development tax reliefs are costly, prone to abuse and provide questionable benefit to...
Research and development tax reliefs are costly, prone to abuse and provide questionable benefit to the UK economy. The government has a target of 2.4% of GDP to be invested in research and development. In 2021–22, HMRC spent £9.5 billion … Read more
HM Treasury
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1 Conclusion
Thirty-Third Report - HMRC perform…
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 2021–22.1 HMRC published its annual report and accounts for 2021–22 on 18 July 2022, shortly … Read more
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8 Recommendation
Thirty-Third Report - HMRC perform…
HMRC’s 2020–21 estimates of the tax gap are more uncertain than usual due to the...
HMRC’s 2020–21 estimates of the tax gap are more uncertain than usual due to the impact of COVID-19 on the data it uses to inform its estimates. For example, HMRC said it has had to make some assumptions about the … Read more
HM Treasury
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9 Conclusion
Thirty-Third Report - HMRC perform…
With the resources it was given in the 2021 Spending Review, HMRC’s aim is to...
With the resources it was given in the 2021 Spending Review, HMRC’s aim is to maintain the tax gap and prevent it from growing. For every £1 that it spends on compliance activity, it said it recovers £18 in additional … Read more
HM Treasury
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10 Conclusion
Thirty-Third Report - HMRC perform…
HMRC estimates that total fraud and error across the lifetime of the COVID-support schemes was...
HMRC estimates that total fraud and error across the lifetime of the COVID-support schemes was £4.5 billion, representing 4.6% of the total support provided. This is lower than the estimate HMRC included in its 2020–21 accounts. HMRC has drawn on … Read more
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11 Recommendation
Thirty-Third Report - HMRC perform…
HMRC has been given £100 million to fund a temporary taskforce to investigate fraud and...
HMRC has been given £100 million to fund a temporary taskforce to investigate fraud and error on the schemes and has opened about 40,000 investigations so far. HMRC forecasts that by the time the taskforce winds down, it will have … Read more
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12 Conclusion
Thirty-Third Report - HMRC perform…
We raised the point that there was a moral duty and fairness issue to pursue...
We raised the point that there was a moral duty and fairness issue to pursue fraud with, for example, some companies getting an unfair competitive advantage through their abuse of the schemes. HMRC said that it looks into every single … Read more
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13 Conclusion
Thirty-Third Report - HMRC perform…
We asked HMRC about a case where a criminal used a legitimate company’s details, apparently...
We asked HMRC about a case where a criminal used a legitimate company’s details, apparently successfully, to apply for a VAT registration number and make fraudulent VAT 13 Qq 14, 33, 43–45 14 Qq 80–83, 92–95 15 Q 84 16 … Read more
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14 Conclusion
Thirty-Third Report - HMRC perform…
HMRC told us that VAT is a particular target for organised crime as it can...
HMRC told us that VAT is a particular target for organised crime as it can involve HMRC repaying large amounts to taxpayers. HMRC described it as an ‘arms race’, with HMRC constantly changing its processes and risk assessment to prevent … Read more
HM Treasury
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15 Recommendation
Thirty-Third Report - HMRC perform…
HMRC’s post and call handling performance fell significantly during the pandemic.
HMRC’s post and call handling performance fell significantly during the pandemic. For example, in 2021–22 HMRC responded to 39.5% of post within 15 days, compared to 70.3% in 2019–20. The average speed of answering calls to HMRC helplines was 12:22 … Read more
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16 Conclusion
Thirty-Third Report - HMRC perform…
HMRC said that it limits the number of callers that can join the call queue,...
HMRC said that it limits the number of callers that can join the call queue, which can have an impact on its call waiting time measure. Anyone not able to join the call queue is played a “busy message” and … Read more
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17 Recommendation
Thirty-Third Report - HMRC perform…
HMRC’s expects to improve customer service by continuing digitalise the tax system, for instance by...
HMRC’s expects to improve customer service by continuing digitalise the tax system, for instance by developing its digital assistant and single customer account. In this way HMRC hopes to reduce the demand for phone and post by servicing more people … Read more
HM Treasury
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18 Conclusion
Thirty-Third Report - HMRC perform…
The total tax debt owed to HMRC in August 2022 was £46 billion.
The total tax debt owed to HMRC in August 2022 was £46 billion. This is less than at the height of the pandemic in March 2021 but significantly higher than before the pandemic. HMRC told us that while the size … Read more
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19 Conclusion
Thirty-Third Report - HMRC perform…
HMRC said it is dealing with a larger number of smaller debts than it is...
HMRC said it is dealing with a larger number of smaller debts than it is has dealt with before. It told us that it had previously took a one-size-fits-all approach to managing debts, but is now trying to vary its … Read more
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20 Conclusion
Thirty-Third Report - HMRC perform…
HMRC said it is trying to improve the data it uses to understand the behaviour...
HMRC said it is trying to improve the data it uses to understand the behaviour of its debtors. It is experimenting with data from credit reference agencies.29 It is also developing a comprehensive single customer account, using funding it received … Read more
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21 Recommendation
Thirty-Third Report - HMRC perform…
The government has a target of 2.4% of GDP to be spent on research and...
The government has a target of 2.4% of GDP to be spent on research and development.32 To encourage this investment, HMRC administers tax reliefs to companies via two schemes – one for large companies and one for small and medium-sized … Read more
HM Treasury
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22 Conclusion
Thirty-Third Report - HMRC perform…
In 2021–22, HMRC granted research and development tax reliefs worth £9.5 billion.34 HMRC said the...
In 2021–22, HMRC granted research and development tax reliefs worth £9.5 billion.34 HMRC said the relief is an attractive target for abuse, whether by companies that have not carried out any research and development or by advisors encouraging companies to … Read more
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23 Conclusion
Thirty-Third Report - HMRC perform…
Fraud and error is particularly high on the scheme for small and medium-sized enterprises, estimated...
Fraud and error is particularly high on the scheme for small and medium-sized enterprises, estimated at 7.3% in 2021–22. HMRC said it gets about 76,000 claims on this scheme every year, providing a lot of activity for HMRC to police.40 … Read more
HM Treasury
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Correspondence 3 letters
6 Dec 2022 Correspondence from Jim Harra, Chief Executive and First Permanent Secretary, re Thirty-Seventh Report of Session 2021-22: HMRC Performance in 2020–21, dated 30 November 2022
Parliament page
15 Nov 2022 Correspondence from Rt Hon Jeremy Hunt MP, Chancellor of the Exchequer, HM Treasury, re following the Public Accounts Committee session on Thursday 20 October 2022, dated 4 November 2022
Parliament page
8 Sep 2022 Correspondence from Jim Harra, Chief Executive and First Permanent Secretary, re Public Accounts Committee: Thirty Seventh report of Session 2021-22 Recommendation 8, dated 29 July 2022
Parliament page