Recommendation 4

The pandemic has significantly increased HMRC’s workload and made the organisation more complex. HMRC has had to reallocate a significant number of its staff to work in COVID-19-related roles. At its peak, in May 2020, HMRC reallocated more than 9,000 (16%) of its staff. HMRC is facing a huge operational challenge. It is responsible for tackling a growing debt balance (while being sensitive to the hardships faced by taxpayers due to COVID-19), error and fraud in the COVID-19 employment support schemes, restoring its usual level of enforcement and compliance activities and pursuing its transformation plans. This is on top of dealing with the demands of EU Exit, on which more than 6,000 HMRC staff worked in 2019–20. HMRC also has to maintain and improve its customer services performance while facing increasing demand for its limited resources from other parts of its business. To achieve its objectives HMRC has published a 10-year strategy for modernising the tax administration system. However, short-term Spending Reviews, like the one in November 2020, may not provide HMRC with the opportunity to achieve a financial settlement commensurate with its long-term responsibilities, needs and ambitions. Recommendation: HMRC should review its priorities and work with HM Treasury to ensure it has sufficient capacity and resources to effectively manage its workload. HMRC should, following the November 2020 Spending Review, write to us, setting out the findings of its review and explaining what it might need to deprioritise if it has not secured sufficient additional resources.