UK Inquiry Tracker

Managing tax compliance following the pandemic

Public Accounts Committee Closed Inquiry

Opened: 28 Nov 2022 Closed: 21 Jul 2023 Parliament page

The impacts of the COVID-19 pandemic affected both the risks to tax compliance and the ability of HM Revenue and Customs (HMRC) to carry out its compliance work. The need to prioritise direct responses to the pandemic (including new employment and self-employment support schemes) reduced HMRC’s overall capacity for tax … Read more

6 Recommendations

20 Conclusions

1 Report

1 Oral session

1 Letter

1 Event

Activity timeline 5 events

21 Jul
2023

Report published

Treasury minutes: Government response to the Committee of Public Accounts on the Forty-ninth report from Session 2022-23

3 May
2023

Report published

Forty-Ninth Report - Managing tax compliance following the pandemic

23 Feb
2023

Correspondence

Joint correspondence from Jim Harra, Chief Executive and First Permanent Secretary, HM Revenue & Customs, re update on Managing Tax Complia…

26 Jan
2023

Oral evidence

Maintaining tax compliance following the pandemic

26 Jan
2023

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

Maintaining tax compliance following the pandemic

Oral evidence sessions 1 session

26 Jan 2023

View on parliament.uk

Maintaining tax compliance following the pandemic

Alison Bexfield · HM Revenue and Customs Jim Harra CB · HM Revenue and Customs Penny Ciniewicz · HMRC

Reports 1 report · click to expand

Title	HC No.	Published	Items	Response
Forty-Ninth Report - Managing tax compliance following the pande…	HC 739	3 May 2023	26	Responded

Recommendations & Conclusions

3 results

3 Conclusion Not Addressed

Forty-Ninth Report - Managing tax …

Set clear targets for compliance yield shortfall and rolling percentage of tax revenues.

Compliance yield fell during the pandemic, and HMRC does not know what level it should be targeting with its current resources. In the five years before the pandemic, HMRC collected on average around 5.2% of tax revenues through its compliance … Read more

Government Response

The government response provided only states a different PAC conclusion (number 4) and does not contain a response to Recommendation 3 regarding compliance yield targets.

HM Treasury

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6 Conclusion Not Addressed

Forty-Ninth Report - Managing tax …

Specify a contingency plan for increasing compliance capacity to tackle growing non-compliance risks.

There are signs that the tax gap may grow, and that HMRC does not have the operational resilience needed to deal with this. HMRC is funded to stop the tax gap from growing. The tax gap is an important measure … Read more There are signs that the tax gap may grow, and that HMRC does not have the operational resilience needed to deal with this. HMRC is funded to stop the tax gap from growing. The tax gap is an important measure of how much revenue may be missed—due to evasion, avoidance or non-payment—that could otherwise fund vital public services. Due to the way it is estimated, the tax gap does not yet reflect the full impact of the pandemic and will not do so for some time. HMRC’s latest estimate is that the tax gap was stable in 2020–21, but HMRC says that this has a much larger range of uncertainty than normal and may need to be revised as it gets more data. There is a significant risk that the tax gap will grow, in light of compliance yield dropping and levels of debt and non-payment rising. HMRC’s own planning estimates indicate that it is unlikely to generate enough compliance yield to stop the tax gap from growing in the next few years. However, it does not have a contingency plan if this happens. Since it takes four years to get compliance staff fully trained and up to speed, there could be a long lag if HMRC waits to determine whether it needs more resources. HMRC has up to 20 years to pursue cases of suspected non- compliance, but this only applies to fraud cases. For errors the period is less, and in some cases HMRC cannot go back more than four years. Recommendation 6: a) HMRC needs to build in more resilience to the tax system, with the tax gap at risk of growing and high returns available from compliance work there is a strong value for money case for increasing resources. b) At a minimum, HMRC should specify a contingency plan for bringing in additional compliance capacity to ensure increased levels of non- compliance can be tackled quickly, and before the window closes for investigating cases it did not pursue during the pandemic. 8 Managing tax compliance following the pandemic 1 Impact of the pandemic on tax compliance Show less

Government Response

The government response provided addresses a recommendation to the Cabinet Office regarding contingency plans for the Shared Services Strategy, which is entirely unrelated to the committee's recommendation concerning HMRC's operational resilience and tax gap capacity.

HM Treasury

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1 Conclusion Not Addressed

Forty-Ninth Report - Managing tax …

Committee examined challenges for HMRC in tackling post-pandemic tax non-compliance.

On the basis of a report by the Comptroller and Auditor General, we took evidence from HM Revenue & Customs (HMRC) regarding the challenges to tackle non-compliance during and following on from the pandemic.1

Government Response

The government acknowledges that the Committee took evidence from HM Revenue and Customs based on a report by the National Audit Office.

HM Treasury

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Government Response AI assessment · 26 of 6 classified

Accepted 14

Not Addressed 3

Rejected 9

Total 6 recs + 20 conclusions

Correspondence 1 letter

23 Feb 2023 Joint correspondence from Jim Harra, Chief Executive and First Permanent Secretary, HM Revenue & Customs, re update on Managing Tax Compliance HMRC, dated 9 February 2023

Parliament page