The COVID-19 pandemic may increase the risks of non-payment of taxes and more people may operate in the deliberately hidden part of the economy.26 We asked HMRC about its assessment of the impact of the pandemic on the size of the tax gap and compliance yield. The Department told us that because of the level of uncertainty, it will take some time for the full impact of the pandemic to become apparent.27 Some outcomes of the pandemic, such as, the rise of digital transactions in most businesses and the move away from cash, may have a positive impact on the size of the tax gap.28 However, HMRC expects non-payment of taxes to be a significant issue, particularly because HMRC deferred the collection of a lot of the taxes due in order to support taxpayers. For example, HMRC offered all VAT-registered businesses the option to defer their payments of VAT that were due between 20 March and 30 June 2020 until 31 March next year. It confirmed to us that managing its debt balance in the future and the impact that will have on the tax gap will be one of its top priorities. HMRC has begun to prioritise contacting those taxpayers whose business affairs do not appear to have been significantly reduced due to the pandemic but nevertheless owe taxes to HMRC.29