Source · Select Committees · Public Accounts Committee
Recommendation 7
7
HMRC acknowledges that debts become harder to collect the longer you wait to collect them.16...
Conclusion
HMRC acknowledges that debts become harder to collect the longer you wait to collect them.16 We are concerned that HMRC does not have the level of staffing it needs to deal with its increased workload in a timely manner, and this will in turn mean more debt goes unpaid.17 In March 2020, HMRC’s debt management team had 3,975 FTE staff. This followed a series of staff reductions over a number of years; at March 2014, HMRC had 4,857 staff in its debt management team.18 While HMRC is confident that it maintained performance with this reduced level of resources, we think it is hard to justify reducing the number of staff when HMRC has estimated that for each additional pound it spent on 9 C&AG’s Report, para 2.22 10 Qq 16–18 11 Qq 31, 84, 118; C&AG’s Report, para 13 12 Q33 13 Qq 29–31; C&AG’s Report, para 2.31 14 Qq 30–31 15 C&AG’s Report, para 2.19 and 3.8 to 3.10; Written evidence submitted by Jim Harra, Chief Executive and First Permanent Secretary of HMRC, dated 28 January 2022 16 Qq 31 17 Qq 61, 85–91; C&AG’s Report, para 3.9, 3.10 18 C&AG’s Report, para 3.11 HMRC’s management of tax debt 11 increasing its debt management staff capacity, it would collect an additional £18 of debt.19 Furthermore, there are indications that performance may not have been maintained. The NAO reported that HMRC wrote off more tax debt as uncollectable in the years running up to the pandemic. In 2018–19 and 2019–20 combined, HMRC wrote-off or remitted around £9.2 billion in tax debt, compared with a total of £8.4 billion in the previous two years.20
Government Response
Not Addressed
HM Government
Not Addressed
2: PAC conclusion: HMRC is not being ambitious enough in bringing down debt levels and securing the resources this will require. 2: PAC recommendation: There is a clear value for money case to increase debt management capacity. HMRC should set out how much more tax debt it can bring in with increased levels of capacity using private sector and public sector options and write to the Committee alongside its Treasury Minute response with its findings and the actions it is taking to maximise value for money. 2.1 The government agrees with the Committee’s recommendation. Recommendation implemented 2.2 HMRC provided evidence to the Committee on 17 January 2022. Subsequently, at Spring Statement 2022, the government announced an additional £62 million over three years to fund additional staff in HMRC to help people and businesses pay their tax debts. This will raise an additional £1.8 billion for the Exchequer between 2022-23 and 2024-25. 2.3 In total, HMRC is recruiting almost 2,000 debt collection staff in 2022-23 to fill vacancies and utilise the additional funding granted at Spring Statement 2022 and previous fiscal events. 2.4 In addition, from September 2022, there will be a new contract through which HMRC places debt with private debt collection agencies (DCAs). This will allow HMRC to increase placements with DCAs by around £1 billion a year without increasing the cost to the Exchequer. 2.5 The government believes the information here, and provided at Spring Statement 2022, is sufficient for the Committee to be reassured that HMRC is taking action to maximise value for money and that a separate letter to the Committee is no longer required.