Recommendation 18

HM Government Not Addressed

3.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2022 3.2 HMRC took on significant additional responsibilities during the pandemic, providing essential COVID-19 economic support whilst continuing their core compliance activities. The Covid schemes have helped millions of people and businesses through the pandemic, with HMRC designing and launching the schemes within 6 weeks. The Coronavirus Job Retention Scheme supported 11.7 million jobs and the Self Employment Income Support Scheme supported 2.9 million individuals. Eat Out to Help Out paid out a total of £840 million to participating businesses. HMRC’s Customer Compliance Group (CCG) deployed significant numbers of people to support delivery of the Covid schemes across 2020/21, including conducting pre-payment compliance checks and providing support to customers. The average CCG deployment in 20-21 on customer support was 700 FTE, peaking at 3,800 FTE in May 2020 as the COVID support schemes became operational. During the year, CCG also redirected resources towards compliance work on the COVID schemes, starting with pre- payment compliance, then nudges and prompts and post-payment compliance work from September 2020. This helped to recover and prevent c£840 million in overpayments due to customer error and fraud. 3.3 During the pandemic, some customers were struggling to engage with tax compliance checks and HMRC deferred that activity in cases where there would be no tax loss as a result. Of the 65k compliance risks deferred across 42k cases, 52k are now closed, 13k are open and being worked and just 126 remain on hold as a result of COVID. Many customers wanted 10 certainty and proceeded with the check. In instances where HMRC suspected serious, deliberate non-compliance HMRC undertook compliance work in the normal way, wherever possible. 3.4 Noting that HMRC prioritised COVID scheme checks and support during the pandemic, HMRC opened 29% fewer civil compliance cases in 2020-21 than in 2019-20 (256,000 compared to 361,000) and closed 26% fewer cases (250,000 compared with 338,000). 3.5 HMRC continued to open new enquiries: • where criminal activity was suspected • where not doing so would have meant missing a deadline preventing HMRC from ever collecting the unpaid tax • to protect employees (for example cases involving the National Minimum Wage) 3.6 HMRC is already actively working, or has resolved, the vast majority of compliance interventions where action was deferred to support customers during the pandemic. It has recruited a further 4200 FTE in 2021-22 who will complete their training in 2022-23. 3.7 HMRC's approach in 2022-23 will be focussed on maintaining/ reducing the tax gap, protecting society from harm and supporting customers into sustained compliance with their obligations. HMRC's compliance activity will be reported in the publication of Annual Report and Accounts.