The UK tax authorities are missing out on billions of pounds in tax revenues due to a ‘failure to better resource compliance’, resulting in an ‘unacceptable’ service.
In a highly critical report Wednesday, the House Public Accounts Committee said: tax Unpaid but increased to £42bn in the UK over 2021-2022, up from £32bn the previous year.
total amount collected in Department of Revenue and Customs It rose to £731bn last year and the tax gap (defined as the difference between what is payable and what is paid) remains stable at around 5% each year.
However, PAC warned that “HMRC has not yet deployed the resources necessary to maximize the tax revenue it collects or to provide an acceptable level of customer service.”
For every £1 an institution spends trying to collect taxes, £18 in tax revenue is collected, and the marginal rate of return decreases as the money grows.
Commission Chair Dame Meg Hillier said:
PAC said it had asked HMRC to set the amount of investment required by the compliance team to reduce the size of the tax gap and to see if there was an intention to increase spending in that area.
Authorities now base their resources on preventing the tax gap from widening rather than narrowing it.
The commission also found that taxpayers and their agents were suffering from “unacceptable” service levels and that HMRC would sometimes simply shut down telephone lines when demand could not be met.
Over the past five years, HMRC has reduced its customer service team from 25,500 to 19,500. Harriet Baldwin, chairman of the Treasury Special Committee, wrote to the Treasury this week following reports of “several hours” of waiting time before the Jan. 31 filing deadline.
Susan Ball, President of the Chartered Institute of Tax Accountants, a professional association, said:
She added that the government “appears to have cut staff numbers in anticipation of efficiencies and time savings from digitalization that have yet to materialize.”
In its report, PAC called on HMRC to develop a plan to bring customer service to an appropriate level as soon as possible.
The commission also said HMRC’s plan to recover only a quarter of its losses due to fraud and errors in its coronavirus assistance plan was “not well advanced”.
agency Estimate Errors and fraud totaled £4.5bn over the lifetime of the coronavirus job retention plan, the self-employed income support plan and the ‘eat out to help’ plan, or 4.6% of the total support provided by these three plans. Equivalent to
In spring 2021, then Prime Minister Rishi Sunak announced that HMRC would provide £100 million in additional funding to investigate fraud and errors in the scheme. The PAC report says authorities have opened about 40,000 investigations through which he is expected to recover £1.1bn.
HMRC said:
The agency added that “Covid support schemes have protected millions of jobs and businesses” during the pandemic, adding that “compliance checks and .
