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HMRC’s management of tax debt


A recent report by the NAO found that tax debt is now more than double pre-pandemic levels, and current staffing at HM Revenue & Customs (HMRC) are unlikely to be enough to manage the increased tax debt workload as the UK emerges from the COVID-19 pandemic, with HMRC needing to pursue tax debt while allowing taxpayers time to recover their finances.

Total tax debt rose to £42 billion in September 2021, from £16 billion in January 2020. Total tax debt peaked at £67 billion in August 2020. More debt has been repaid as extensions for VAT and Self Assessment passed, and the economy has reopened. HMRC forecasts total tax debt will fall to £33 billion by March 2022, but this assumes the COVID-19 pandemic has not changed repayment behaviour.

Research indicates the impact of the COVID-19 pandemic on taxpayers is polarised, with some groups shoring up their bank balances, and others more badly affected.

Up to 2.4 million more taxpayers are in debt to HMRC following the COVID-19 pandemic, and those who were already in debt owe more. The average amount taxpayers owe has increased by 60%, from around £4,300 to £6,800. Older debts, which are often more difficult to collect, have increased in value from £2.5 billion in 2019-20 to £4.4 billion in 2020-21.

Pre-pandemic, HMRC achieved workforce efficiencies, but it did not close the gap between new tax debts and debts collected., and is now unlikely to have enough staff to manage the increased tax debt that has resulted from the COVID-19 pandemic. HMRC intends to recruit 1,000 full time staff in 2021-22, however, it told the NAO that once staff turnover is factored in, this resource will only address current staffing shortfalls. HMRC forecasts that it will have twice the usual level of debt to manage at the end of March 2022. New debtors may require more support in the short term to agree payment plans.

The Committee will question senior officials at HMRC. If you have evidence on these issues, please submit it here by Monday 10 January 2022.

This inquiry is no longer accepting evidence

The deadline for submissions was Monday 10 January 2022.

Reports, special reports and government responses

View all reports and responses
Forty-Eighth Report - HMRC’s management of tax debt
Inquiry HMRC’s management of tax debt
HC 953
Response to this report
Correspondence from Jim Harra, Chief Executive and First Permanent Secretary, HM Revenue & Customs, re Management of Tax Debt, dated 22 December 2022
Response to this report
Treasury minutes: Government response to the Committee of Public Accounts on the Forty Eighth report from Session 2021-22
HC 953
Government Response

Oral evidence transcripts

View all oral evidence transcripts
17 January 2022
Inquiry HMRC’s management of tax debt
Oral Evidence
Mr Geoff Bantock (HMD0001)
Adam Smith Institute (HMD0002)

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