Source · Select Committees · Public Accounts Committee
Recommendation 18
18
There is evidence that the pandemic has had a varied economic impact, with some businesses...
Conclusion
There is evidence that the pandemic has had a varied economic impact, with some businesses and individuals improving their financial position during the pandemic while others have been negatively affected.42 For example, companies in the hospitality sector have often been negatively impacted.43 However, HMRC has not—and does not plan to— use business sector data in its segmentation of customers.44 It told us that business sector is not as informative as we might imagine and provided us with the example of breweries. As a part of the hospitality sector, we might expect breweries to be very negatively impacted, and indeed, those that supplied pubs and the licensed trade probably were. But breweries that moved quickly into pump supply (supplying pumps to home brewers and similar) may be doing well, thus illustrating why sector is not a reliable indicator of impact.45 Moreover, HMRC explained that businesses within the hospitality sector could 35 Qq 104–107, 110, 113; C&AG’s Report, para 2.15 36 Qq 91, 92, 104–108 37 Qq 98, 109–113 38 Qq 41, 115; C&AG’s Report, para 3.22 39 Q 28 40 Qq 14, 55, 56; C&AG’s Report, para 1.9, 2.10, Figure 12 41 Qq 41, 115; C&AG’s Report, para 2.16 42 C&AG’s Report, para 2.25 43 Qq 42, 54 44 Qq 42, 54, 55; C&AG’s Report, para 2.13 45 Qq 42, 54 HMRC’s management of tax debt 15 still be identified as experiencing a high-impact from the pandemic by its segmentation work, but they would be identified on the basis of their turnover, staff data and use of government support schemes, rather than on the basis of the sector they operate in.46
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.