Thirty-Seventh Report - HMRC Performance in 2020–21

HMRC is carrying out further analysis to understand the reasons for the growing cost of R&D tax relief, working with ONS to understand expenditure differences, and the R&D Mandatory Random Enquiry Programme (MREP) will provide a more robust estimate.

HMRC is funded to reduce the tax gap and constantly adjusts resource allocation based on expected yield and risks. The 2021 Spending Review gave it an additional £180 million over three years for "spend to raise".

HMRC will continue to build on its strategy to raise awareness and help taxpayers steer clear of avoidance through targeted communications, early interventions, and work with professional bodies. New powers introduced in Finance Act 2022 enable HMRC to name promoters and schemes early.

HMRC will explain the service levels it is aiming to provide and by when, including for the time taken to answer calls and respond to post, and commit to publishing outturn against these measures; this information will be presented in the Department’s Outcome Delivery Plan, to be published early in 2022-23.

HMRC is carrying out further analysis to understand the reasons for the growing cost of Research & Development (R&D) tax relief and is working with the Office for National Statistics (ONS) to better understand expenditure. A Mandatory Random Enquiry Programme (MREP) will provide a more robust estimate of error and fraud.

HMRC is designing and implementing a package of R&D reform measures announced at Autumn Budget 2021 aimed at tackling abuse and improving compliance by April 2023, including introducing a cross-cutting team of c50 FTE focused on abuse in partnership with HMRC’s Fraud Investigation Service, requiring all claims to be made digitally, with more detail, endorsed by a named senior officer, a programme of customer education and enhancements to HMRC’s risk profiling.

HMRC is designing and implementing R&D reform measures aimed at tackling abuse and improving compliance by April 2023, including a cross-cutting team, digital claims with senior officer endorsement, customer education, and enhanced risk profiling. The Mandatory Random Enquiry Programme results will inform these activities.

The government outlines specific steps HMRC is taking to address reduced compliance, including resolving deferred interventions, recruiting an additional 4200 full-time equivalent staff for 2021-22, and focusing on maintaining the tax gap and sustained compliance in 2022-23.

HMRC stated it is already actively working, or has resolved, the vast majority of compliance interventions where action was deferred to support customers during the pandemic, and that it has recruited a further 4200 FTE in 2021-22 who will complete their training in 2022-23.

HMRC continues to build on the strategy outlined in ‘Tackling promoters of mass- marketed tax avoidance schemes’ published in March 2020. This includes raising awareness, early interventions, refreshed campaign, publications, articles, letters to taxpayers, work with professional bodies, shut down websites and published information about avoidance schemes.

HMRC stated it continues to build on the strategy outlined in ‘Tackling promoters of mass- marketed tax avoidance schemes’ published in March 2020. This includes raising awareness, early interventions, refreshed campaign, publications, articles, letters to taxpayers, work with professional bodies, shut down websites and published information about avoidance schemes.

HMRC have been working through the stocks of correspondence and expects to reduce to pre-pandemic levels, with performance recovering by the start of 2022-23. Expected performance levels and commitments for 2022-23 will be presented in the Department’s Outcome Delivery Plan.

HMRC will present its expected performance levels and commitments for 2022-23 in the Department’s Outcome Delivery Plan, to be published early in 2022-23 and publish performance data monthly and quarterly, including AAH, ASA and correspondence percentages.

HMRC have been working through the stocks of correspondence and expects to reduce to pre-pandemic levels, with performance recovering by the start of 2022-23. Expected performance levels and commitments for 2022-23 will be presented in the Department’s Outcome Delivery Plan. They publish performance data monthly and quarterly.

The government is committed to free software for the MTD Income Tax Self-Assessment (ITSA) service for those with the most straightforward affairs, removing one of the financial barriers to participating in MTD, and will improve the support offering to those who may be unrepresented or less digitally capable and provide exemptions for those who cannot go digital.

HMRC will work with the Government Property Agency and the Places for Growth Programme in the Cabinet Office to ensure that any surplus office space in staffed buildings across the HMRC estate is not left vacant, and will report back to the Committee by the end of July 2022.

HMRC will work with the Government Property Agency (GPA) and the Places for Growth Programme in the Cabinet Office to ensure that any surplus office space in staffed buildings across the HMRC estate is not left vacant and will report back to the Committee by the end of July 2022.