Recommendation 2

While we recognise the progress HMRC is making to tackle tax debt, we are concerned that it should have sufficient checks to protect taxpayers from being pursued too forcefully. HMRC says it has now worked through the debts created during the pandemic but still new tax debt is being created at record levels, driven by self-employed people and small businesses in financial difficulties. It is reassuring that HMRC appears to be staying on top of these new debts, with the debt balance expected to reduce slightly over the course of 2023–24. It is also positive that HMRC is driving more value from the external agencies it uses to collect debts, with the rate of return improving from £23:£1 to £32:£1. However, we have heard about cases where taxpayers are being pursued repeatedly for often trivial amounts. While HMRC should make every effort to recover its debts, this should be proportionate to the size of the debt and the circumstances of the taxpayer. We are not convinced that customers have an easily accessible and responsive route via which they can raise concerns about HMRC’s debt collection activities. Recommendation 2: HMRC should: a) establish a clear, easily accessible route for taxpayers to report issues they face when dealing with debt collection agencies working on behalf of HMRC; and b) report back to the Committee with a summary of any issues raised and how HMRC has dealt with them.