Source · Select Committees · Public Accounts Committee
Recommendation 10
10
In the past HMRC has been successful in securing additional funds from HM Treasury for...
Conclusion
In the past HMRC has been successful in securing additional funds from HM Treasury for time-limited recruitment, for example the additional funding secured at Budget 2020. But HMRC acknowledged that it had to make the case to HM Treasury every time it requested additional funding for this type of recruitment. Therefore, we do not see how HMRC can plan effectively for the long-term under this approach and are concerned that this uncertainty may prevent HMRC from protecting value for money, for example by being able to keep trained staff in the long term.24 The Committee has raised this issue before on HMRC’s compliance work, which also offers high rates of return. In our recent report on HMRC’s Annual accounts, we concluded that resource constraints were limiting HMRC’s ability to get the optimum level of compliance yield. We found that HMRC spent around £1.5 billion on enforcement and compliance activities in 2020–21 and generated a yield of £30.4 billion, and that HMRC’s data indicated that it would increase this yield if it spent more on compliance, particularly if it increased its activities to ensure large businesses complied with their tax obligations.25
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.