Recommendation 19

HMRC explained that its strategy is to promote good compliance and prevent non–compliance (collectively known as ‘upstream’ compliance), and this is “bearing fruit,” with upstream yield increasing to about a third of all yield in 2023–24. HMRC considers that upstream compliance is less costly than ‘downstream’ work (carried out in response to suspected non–compliance), although downstream work continues to be necessary.33 HMRC acknowledged that it does not currently have sufficient analysis of how its costs fall between upstream and downstream compliance or the marginal returns from adding compliance resource.34 HMRC also told us that it has been investing in digital support for its compliance work to help it better target cases, thereby improving compliance productivity and the experience of compliant customers by reducing checks on them.35