Source · Select Committees · Public Accounts Committee
Recommendation 17
17
Accepted
HMRC's total debt levels unexpectedly increased to £45.7 billion despite management improvements.
Conclusion
However, HMRC acknowledged that, despite these improvements, its initial expectation that debt levels would reduce has not been borne out in practice. This is because of ongoing economic pressures affecting taxpayers, particularly small businesses. Instead, debt levels have risen again – from £39.4 billion in April 2022 to £45.7 billion in November 2022.28
Government Response Summary
The government has secured Spring Budget 2023 funding for online 'Time to Pay' service improvements and Spring Statement 2022 funding for 500 additional debt management staff. An additional £20 million will be provided in 2023-24 and 2024-25 to utilize private sector debt collection agencies to address rising debt levels.
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.