Source · Select Committees · Public Accounts Committee
Recommendation 7
7
Rejected
Compliance yield per HMRC staff member declined significantly during pandemic years.
Conclusion
During the two pandemic years of 2020–21 and 2021–22, ‘compliance yield’ (the additional revenues protected as a result of HMRC’s interventions) per staff member fell from £1.3 million a year to £1.1 million (in 2021 prices).10 HMRC told us this was due to several factors, including the fact that staff redeployed away from tax compliance and onto the COVID schemes were typically more experienced.11 HMRC’s operations were also affected by external factors such as court closures and requirements on homeworking, social distancing or personal protective equipment.12
Government Response Summary
The government disagrees with the committee's observation, stating that HMRC sets compliance yield targets to maintain a stable tax gap, deploys resources effectively, and that the tax compliance gap remained low during the pandemic years.
Government Response
Rejected
HM Government
Rejected
3.1 The government disagrees with the Committee’s recommendation. 3.2 In accordance with an agreed methodology between HMRC, HM Treasury (HMT) and Office for Budget Responsibility (OBR), HMRC sets compliance yield targets at a level that meets the OBR expectation for maintaining a stable tax gap and delivering additional revenues from fiscal event measures. In turn, the OBR’s fiscal forecasts assume that HMRC’s baseline compliance work maintains the tax gap at a stable level. 3.3 In any year, HMRC will decide how best to deploy its compliance resources against compliance risks in order to deliver the best outcomes. Compliance risks that were identified but not addressed during the COVID-19 pandemic period can still be acted on. HMRC constantly assesses the full range of risks that are present, both new and historical, when deciding how best to deploy its resources. Where the planning work indicates it is suitable to do so, HMRC will work newer, higher priority or higher value risks instead of acting on older risks. 3.4 The resource available for HMRC and its compliance work is agreed with ministers at spending reviews and fiscal events. The agreed level is shaped by economic factors and enables HMRC to carry out the compliance activity required to maintain a stable tax gap over the medium term. 3.5 HMRC published the 2023 edition of Measuring Tax Gaps on 22 June 2023, which shows that the tax compliance gap remained low in the pandemic years, 2020-21 and 2021-22, in line with pre-pandemic years.