Thirty-Third Report - HMRC performance in 2021–22

Select Committee
Public Accounts Committee HC 686 11 January 2023
Report Status Response document linked Recorded deadline: 11 Mar 2023

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Conclusions & Recommendations 23 items (10 recs)
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Government response
Treasury minutes: Government response to the Committee of Public Accounts on the Thirty third report from Session 2022-23 · published 12 Apr 2023
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Recommendations & Conclusions

23 results
2 Recommendation
Resourcing HMRC’s compliance work to maintain rather than reduce the tax gap means the government...
Recommendation
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
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3 Conclusion
HMRC’s plan to only recover a quarter of losses due to fraud and error on...
Conclusion
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
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4 Recommendation
We are concerned that HMRC may be lagging behind other established tax authorities in preventing...
Recommendation
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
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5 Recommendation
Taxpayers and their agents are still not receiving an acceptable level of customer service.
Recommendation
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
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6 Recommendation
HMRC has further to go until it can differentiate between taxpayers who are genuinely struggling,...
Recommendation
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
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7 Recommendation
Research and development tax reliefs are costly, prone to abuse and provide questionable benefit to...
Recommendation
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
On the basis of a report by the Comptroller and Auditor General, we took evidence...
Conclusion
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
HMRC’s 2020–21 estimates of the tax gap are more uncertain than usual due to the...
Recommendation
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
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9 Conclusion
With the resources it was given in the 2021 Spending Review, HMRC’s aim is to...
Conclusion
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
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10 Conclusion
HMRC estimates that total fraud and error across the lifetime of the COVID-support schemes was...
Conclusion
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
HMRC has been given £100 million to fund a temporary taskforce to investigate fraud and...
Recommendation
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
We raised the point that there was a moral duty and fairness issue to pursue...
Conclusion
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
We asked HMRC about a case where a criminal used a legitimate company’s details, apparently...
Conclusion
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
HMRC told us that VAT is a particular target for organised crime as it can...
Conclusion
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
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15 Recommendation
HMRC’s post and call handling performance fell significantly during the pandemic.
Recommendation
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
HMRC said that it limits the number of callers that can join the call queue,...
Conclusion
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
HMRC’s expects to improve customer service by continuing digitalise the tax system, for instance by...
Recommendation
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
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18 Conclusion
The total tax debt owed to HMRC in August 2022 was £46 billion.
Conclusion
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
HMRC said it is dealing with a larger number of smaller debts than it is...
Conclusion
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
HMRC said it is trying to improve the data it uses to understand the behaviour...
Conclusion
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
The government has a target of 2.4% of GDP to be spent on research and...
Recommendation
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
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22 Conclusion
In 2021–22, HMRC granted research and development tax reliefs worth £9.5 billion.34 HMRC said the...
Conclusion
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
Fraud and error is particularly high on the scheme for small and medium-sized enterprises, estimated...
Conclusion
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
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