Recommendation 18

The total tax debt owed to HMRC in August 2022 was £46 billion. This is less than at the height of the pandemic in March 2021 but significantly higher than before the pandemic. HMRC told us that while the size of the debt fluctuates throughout the year, the trend continues to be upwards. It said that the cost of living crisis meant that more people are unable to pay their debts or feel they have to prioritise other spending. It raised concern that some taxpayers had started using HMRC as an overdraft facility.26 In October 2022, for taxpayers on agreed Time to Pay arrangements HMRC was charging interest for late payment at 2.5 percentage points above the Bank of England base rate, far lower than what taxpayers would get charged on a credit card.27