Source · Select Committees · Public Accounts Committee
Recommendation 5
5
HMRC is not using all relevant data sources to understand how the pandemic is affecting...
Conclusion
HMRC is not using all relevant data sources to understand how the pandemic is affecting taxpayer’s ability to repay. The pandemic has had a varied economic impact, with some groups improving their financial position during the pandemic while others have been negatively affected. HMRC used data it already held, on business customers’ revenue, staffing and use of employment support schemes, to identify how severely they were affected by the pandemic. However, HMRC has not used business sector data – and does not plan to. We believe that sectoral data is likely to become more important over time as the pandemic continues to affect business sectors differently and, as government support schemes close, data about which customers accessed these schemes will be less informative about their current situation. HMRC told us that it does not wish to drive any viable business to the wall by pushing them to repay debt too quickly, but we cannot see how HMRC will be able to make informed judgements about how hard it chases customers without understanding the context in which they operate. Recommendation: HMRC should identify and obtain the data sources which are most relevant to understand the ongoing impact of the pandemic on businesses. As a minimum we would expect HMRC to make use of sectoral data.
Government Response
Not Addressed
HM Government
Not Addressed
5: PAC conclusion: HMRC is not using all relevant data sources to understand how the pandemic is affecting taxpayer’s ability to repay. 5: PAC recommendation: HMRC should identify and obtain the data sources which are most relevant to understand the ongoing impact of the pandemic on businesses. As a minimum we would expect HMRC to make use of sectoral data. 5.1 The government agrees with the Committee’s recommendation. Target implementation date: December 2022 5.2 HMRC recognises the importance of using relevant data about businesses to understand their ability to pay their debts and that this is important beyond the impact of the pandemic. HMRC already has access to a lot of data about businesses through their various tax returns. HMRC used changes in turnover, visible from VAT returns, and changes in the number of employees and overall pay bill, visible from PAYE returns, when assessing how businesses had been impacted by the pandemic. 5.3 HMRC will combine its response with recommendation 4 and set out what data it is using, or planning to use, to assess ability to pay and why. Acquiring, analysing and using data has financial and opportunity costs, so it is important to consider the value for money of each data source. 5.4 HMRC will re-assess the extent to which sectoral data adds value to its segmentation approach. However, previous analysis has shown that it is less effective than business- specific data as impacts within sectors can vary widely.