Source · Select Committees · Public Accounts Committee
Thirty-Sixth Report - HMRC performance 2019–20
Public Accounts Committee
HC 690
Published 20 January 2021
Recommendations
4
The pandemic has significantly increased HMRC’s workload and made the organisation more complex.
Recommendation
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 …
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HM Treasury
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Conclusions (25)
2
Conclusion
A lack of certainty about the COVID-19 support schemes has undermined businesses’ ability to plan effectively. We recognise that it is not easy to provide support to everyone considering the unique circumstances of each individual and business. However, the uncertainties around the timings and details of schemes have made a …
3
Conclusion
HMRC’s estate strategy risks becoming woefully out of date. Our long-standing concerns about HMRC’s non-breakable long-term property leases have become all the more relevant, and prescient, given the COVID-19 pandemic. In April 2017, long before COVID-19, we raised our concerns about HMRC locking government into holding larger properties for longer …
5
Conclusion
HMRC has spent too much of its IT budget on patching up legacy systems rather than modernising them. The COVID-19 pandemic has shown the importance of an effective tax administration system. There is a strong case for investment in a modern IT system. Of the additional costs incurred by HMRC …
6
Conclusion
HMRC too often struggles to provide reliable and timely financial estimates upon which good financial and operational planning depends. HMRC is responsible for dealing with vast sums of public money, both revenue and expenditure. Reliable and timely financial estimates are vital if it is to manage and allocate resources effectively, …
1
Conclusion
On the basis of a Report by the Comptroller and Auditor General, we took evidence from HM Revenue & Customs (HMRC) on its performance in 2019–20.1
7
Conclusion
Following our evidence session HMRC added that people with more than one employment can be furloughed simultaneously by different employers and that eligible employees can be on any type of employment contract, including “IR35, umbrella company and agency working”. With the CJRS extension, the cut-off date has moved from 19 …
8
Conclusion
HMRC is responsible for administering several government interventions in response to COVID-19. These include: grant-paying measures, such as the Coronavirus Job Retention Scheme and Eat Out to Help Out; measures to defer payments of tax liabilities, such as deferring VAT and self-assessment payments; and other tax measures, such as a …
9
Conclusion
We asked HMRC whether it had carried out any evaluation of the Eat Out to Help Out scheme to inform its possible reintroduction.23 The scheme allowed customers, at participating establishments, to get a 50% discount on food or non-alcoholic drinks to eat or drink in (up to a maximum of …
10
Conclusion
We asked HMRC whether the Coronavirus Job Retention Bonus scheme had been cancelled or just delayed.26 The scheme would have granted a one-off payment to employers of £1,000 for every employee who they previously claimed for under the Coronavirus Job Retention Scheme and who remained continuously employed through to 31 …
11
Conclusion
“Building Our Future Locations” is one of the major programmes in HMRC’s transformation portfolio. It consists of creating 13 regional centres, redeploying staff and disposing of buildings.31 In terms of the impact of the COVID-19 pandemic on HMRC’s plans for these regional centres, the Department told us that it remains …
12
Conclusion
We questioned the Department on its policy of entering into non-breakable 25-year lease agreements, which we had criticised in the past. We wanted to know whether the impact of the pandemic on the commercial property market, such as falling rents as a result of reduced demand for space, had made …
13
Conclusion
We asked the Department if it had taken on any more leases on a 25-year non- breakable basis in the last year. HMRC said its estate strategy had not changed in the last year and it did not think it had taken on any more 25-year leases but it would …
14
Conclusion
Following our April 2018 session we had questioned whether the regional office deals HMRC had struck would offer sufficient flexibility to cope if plans did not work out as intended.38 In our 2020 evidence session HMRC told us that it expects to have more 31 C&AG’s Report, Figure 18 32 …
15
Conclusion
HMRC told us it still believed the most cost-effective way of getting good deals in the property market is to enter into long-term leases. The Department explained to us that its regional centres are in “attractive locations” and if it transpired that it needed less space because of the COVID-19 …
16
Conclusion
We asked the Department to write to us about how its recruitment and location policy would reflect the ‘levelling-up agenda’.43 HMRC subsequently wrote to us to explain that it was supporting the government’s levelling-up agenda by helping ensure the Civil Service was spread more widely across the UK. HMRC told …
17
Conclusion
COVID-19, and HMRC’s role in the government’s response, has had a significant impact on the Department’s operations. Most of HMRC’s staff are working from home and it has reallocated many of them to support the COVID-19 measures. HMRC told us that customer service performance levels suffered as soon as it …
18
Conclusion
In terms of its compliance work, restrictions on travel and social distancing have affected HMRC’s ability to visit taxpayers and many businesses have not been operating. HMRC told us that while it has restarted some of its criminal investigations, it has put its more routine compliance work that involves visits …
19
Conclusion
HMRC told us that it has a significant debt balance, about £27 billion, which is not in any payment arrangement and has increased mainly as a result of policy decisions to allow taxpayers to defer their tax payments. HMRC aims to get as much of the balance as it can …
20
Conclusion
We asked HMRC about it plans to tackle fraud and error in the COVID-19 support schemes while ensuring the timely payments of support to those in need. HMRC explained that it has to strike a balance between helping as many people as it could, as fast as possible, while also …
21
Conclusion
As HMRC moves towards a fully digital tax system, the capability of its IT systems, including in terms of cyber security, will become increasingly important to HMRC’s ability to operate effectively. HMRC has recognised that, due to the need in the past to forgo operational maintenance and upgrades to its …
22
Conclusion
HMRC told us that it spends too much of its IT budget on maintaining its legacy estate and not enough on investment for the future and modernisation. The Department will seek funding opportunities, such as Spending Reviews, to modernise its systems. HMRC’s experience of implementing the COVID-19 schemes showed the …
23
Conclusion
We asked about the success of the Department’s transformation plans following the ambition it set itself in 2015 to “become one of the most digitally advanced tax administrations in the world”. HMRC considers that, although it is not the most digitally advanced tax administration in the world, it has made …
24
Conclusion
HMRC handles large sums of money, both collecting and paying out.68 It relies on financial estimates in various different contexts to help achieve its objectives. Yet we have recently seen several examples where there have been mistakes in those estimates. We asked the Department about the circumstances of its breach …
25
Conclusion
HMRC’s latest estimate of the level of error and fraud in tax credits indicates that overpayments by HMRC decreased from 5.5% (£1.41 billion) of expenditure on tax credits in 2017–18 to 4.9% (£1.11 billion) in 2018–19. The estimated 2018–19 overpayment rate of 4.9% is lower than HMRC’s forecast of 6.2%.71 …
26
Conclusion
Regarding the COVID-19 support schemes, we asked HMRC whether it had estimated the level of fraud and error in the Eat Out to Help Out scheme considering the scheme had ended at the end of August. HMRC confirmed to us that it did not yet have an estimate of the …