Source · Select Committees · Public Accounts Committee
Recommendation 12
12
Rejected
Compliance yield is the primary measure of HMRC’s impact on revenue protection.
Conclusion
HMRC defines compliance yield as the additional revenue collected and protected that would have otherwise been lost to the Exchequer if not for HMRC’s interventions. It is the most direct measure of the impact of HMRC’s compliance work, and it covers both the broad effect of its measures to prevent non-compliance and the direct impact of its enquiries and investigations into non-compliance that has already happened.20
Government Response Summary
The government disagrees with the recommendation, stating that HMRC sets compliance yield targets based on an agreed methodology with HM Treasury and the OBR, aimed at maintaining a stable tax gap and delivering revenues from fiscal event measures.
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.