17
Recommendation
Forty-Eighth Report - HMRC’s management…
Accepted in Part
HMRC told us that it does not wish to drive any viable business to the wall by pushing them to repay debt too quickly.39 Therefore, during the pandemic, it began using data it already holds on customers to inform how urgently it pursues them. Specifically, it uses data on business …
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HMRC told us that it does not wish to drive any viable business to the wall by pushing them to repay debt too quickly.39 Therefore, during the pandemic, it began using data it already holds on customers to inform how urgently it pursues them. Specifically, it uses data on business customers’ revenue, staffing and use of the employment support schemes, to identify how severely they have been affected by the pandemic. It categorises (or ‘segments’) each customer as experiencing a low-, medium- or high-impact from the pandemic and then uses this categorisation to inform how vigorously it pursues the customer—the frequency and tone of reminder letters it sends to them and the speed with which it escalates through its debt recovery actions (sending various letters, then telephoning the customer, before passing the case over to field collections and eventually enforcement).40 HMRC also told us that it is exploring how it can develop this approach, by looking at taxpayers’ propensity to pay, alongside their ability to pay.41
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Government response AI summary
HMRC will re-assess the extent to which sectoral data adds value to its segmentation approach, but previous analysis has shown that it is less effective than business-specific data.
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HM Treasury
18
Recommendation
Forty-Eighth Report - HMRC’s management…
Accepted in Part
There is evidence that the pandemic has had a varied economic impact, with some businesses and individuals improving their financial position during the pandemic while others have been negatively affected.42 For example, companies in the hospitality sector have often been negatively impacted.43 However, HMRC has not—and does not plan to— …
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There is evidence that the pandemic has had a varied economic impact, with some businesses and individuals improving their financial position during the pandemic while others have been negatively affected.42 For example, companies in the hospitality sector have often been negatively impacted.43 However, HMRC has not—and does not plan to— use business sector data in its segmentation of customers.44 It told us that business sector is not as informative as we might imagine and provided us with the example of breweries. As a part of the hospitality sector, we might expect breweries to be very negatively impacted, and indeed, those that supplied pubs and the licensed trade probably were. But breweries that moved quickly into pump supply (supplying pumps to home brewers and similar) may be doing well, thus illustrating why sector is not a reliable indicator of impact.45 Moreover, HMRC explained that businesses within the hospitality sector could 35 Qq 104–107, 110, 113; C&AG’s Report, para 2.15 36 Qq 91, 92, 104–108 37 Qq 98, 109–113 38 Qq 41, 115; C&AG’s Report, para 3.22 39 Q 28 40 Qq 14, 55, 56; C&AG’s Report, para 1.9, 2.10, Figure 12 41 Qq 41, 115; C&AG’s Report, para 2.16 42 C&AG’s Report, para 2.25 43 Qq 42, 54 44 Qq 42, 54, 55; C&AG’s Report, para 2.13 45 Qq 42, 54 HMRC’s management of tax debt 15 still be identified as experiencing a high-impact from the pandemic by its segmentation work, but they would be identified on the basis of their turnover, staff data and use of government support schemes, rather than on the basis of the sector they operate in.46
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Government response AI summary
HMRC will re-assess the extent to which sectoral data adds value to its segmentation approach, but previous analysis has shown that it is less effective than business-specific data.
Read full response →
HM Treasury