Recommendation 3

HMRC is not taking seriously enough the distress caused to innocent citizens when companies use the wrong address to register their business. One particular case involved a taxpayer receiving more than 10,000 letters due to an agent registering companies for VAT at the taxpayer’s address rather than a serviced office that shared the same postcode. Despite this Committee repeatedly raising this case, HMRC was unable to prevent further letters being sent out to the wrong address, including 6 HMRC performance in 2022–23 demands for payment, and even now HMRC cannot guarantee further letters will not be sent. We are concerned that there will be other cases not brought to our attention that remain unresolved. These cases create particular distress for innocent citizens receiving these demands for payments, and an extraordinary amount of time and effort to resolve with HMRC. While HMRC considers this particular case to be a “bizarre accident”, it accepts there is a more widespread issue with bogus registrations from companies seeking to defraud HMRC. It expects new powers for Companies House will help the entire system tackle this issue. Recommendation 3: We expect HMRC to take serious action against companies registering with the wrong addresses. HMRC should report back to the Committee on: • the scale of the issue and the level of tax at risk; and • its plans for ensuring innocent people do not suffer from bogus registrations and HMRC’s demands for tax from the wrong people.