Source · Select Committees · Public Accounts Committee
Recommendation 16
16
Accepted
HMRC shows strong progress recovering pandemic tax debts through improved practices.
Conclusion
Following our previous recommendations on HMRC’s debt management practices during and after the pandemic, HMRC has made changes to its approach aimed at supporting people and businesses to pay what they owe and recovering debts more quickly. This includes tailoring its approach to each taxpayer’s circumstances and ability to pay, and informing this with new data from credit reference agencies. HMRC has also added 500 staff to its debt management service. It told us that these efforts have improved its productivity at recovering overdue debts and that it has made strong progress to settle the tax debts amassed during the pandemic, which we welcome.27
Government Response Summary
The government agrees with the committee's welcomed observation, confirming that flexible repayment practices are in place, online Time to Pay services are being improved, 500 debt management staff have been recruited, and additional funds will be provided for private sector debt collection.
Government Response
Accepted
HM Government
Accepted
4.1 The government agrees with the Committee’s recommendation. Recommendation implemented 4.2 The department has a strong track record in providing flexible repayment practices to support people and businesses in temporary financial difficulty and will continue to do so. At the end of December 2022, around 731,000 taxpayers had around £4.8 billion worth of debt in Time to Pay (TTP) instalment arrangements. 4.3 At Spring Budget 2023, the government announced funding for improvements to the department’s online TTP service. HMRC has already extended this service to PAYE and most recently VAT. The Spring Budget funding will allow for increased functionality to allow more taxpayers to arrange their own flexible repayment plans at a time convenient for them. 4.4 The department constantly monitors whether it has sufficient resources for debt recovery work. The resource available for HMRC for its compliance work is agreed with ministers at spending reviews. 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. 4.5 At the Spring Statement 2022, the government provided funding for an additional 500 staff over three years for debt management activity. The recruitment process is complete, and the staff are in place supporting people and businesses to pay their tax debts. 4.6 In addition, the government provided £20 million for the years 2023-24 and 2024-25 to place additional debt with private sector debt collection agencies. This will further help to address the increase in debt levels and provide additional and flexible debt collection capacity.