HMRC are challenged with recovering taxes that were left unpaid due to the pandemic
A group of MPs went on record to state how they believe the Government needs to put pressure on those with outstanding tax debt due to the coronavirus pandemic. The Public Accounts Committee has shared that the tax debt for the UK has reached £39 billion, which is more than double what it was at the start of 2020.
Why did taxes go unpaid during COVID?
After the first lockdown, HMRC paused most of their debt collection services. They did this by reducing the number of collections made in person and letters sent out to those with outstanding tax repayments. These tax payments went unpaid because HMRC believed it was not possible to continue with their services and get the outcome they wanted.
The constantly changing tax debt figures
Taxpayers in debt reached 6.2 million in September of 2021 when it was previously at 3.8 million in January 2020. At its worst, the total amount owed reached a staggering £67 billion in August of 2020. Since then the figure has dropped but is still much higher than the pre-COVID figures which were around £16 billion.
HMRC lays out their tax debt repayment plans
HMRC have provided insight into their plans to resolve this issue by aiming to employ around 2,000 more members of staff. They hope that significantly increasing the amount of staff they have will improve their current collection efforts.
HMRC said that they “are recouping debt safely, taking into account customers’ circumstances and making repayments affordable.” The belief behind this is to make tax repayments viable for businesses after COVID. Additionally, it would allow those who barely made it through the pandemic to find their financial footing. Giving time would mean “viable businesses” are not forced into “insolvency when they can succeed”.
Public Accounts Committee want HMRC to do more
The Public Accounts Committee currently feel dissatisfied with what has been laid out by HMRC. In their report ordered to be printed for the House of Commons by the 21st of March, they expressed their grievances. The report stated that HMRC had not “articulated a clear plan or set out a detailed timescale to give us confidence it can manage the challenge it now faces”.
The report reflects their beliefs that the money will never be paid if extensions are repeatedly made. The Committee currently believes that HMRC is decreasing their chances of the money being collected with its current lax agenda.
Committee chairman Dame Meg Hillier MP said: “HMRC has a tricky balance to strike. Those least able to afford rising bills, including tax bills, are also the easiest collection ‘targets’. But those with more substantial means will continue to pull out ‘tricks’ to avoid payments.” MP Hillier hopes that HMRC can “push much harder at the doors – no matter where they are – of those who are not paying their fair share.”
The Committee also raised significant concerns about those who managed to use the pandemic to exploit measures that had been put in place to help the general public. These companies were referred to as “rogue firms” that used the economic collapse to profit.
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