Our new report “State of Tax Administration 2023” looks at data from HMRC’s Annual Report and Accounts 2022-23, along with Freedom of Information requests and other publicly available data to get a feel for the current state of administration of the UK tax system. We hope that this is a resource that proves useful to organisations and individuals interested in these issues.
Problems with customer service are well-publicised. Jim Harra, HMRC Chief Executive, gave oral evidence to the Treasury Select Committee only last week (18 October) referring to the greater numbers of people being brought into interactions with HMRC due to ‘fiscal drag’ creating increasing pressure on limited resources. HMRC aims to deal with these pressures by moving interactions onto online channels. Further delays in the Making Tax Digital (MTD) programme and concerns from professional bodies about the availability of customer services for taxpayers and their advisers suggest there is still some way to go.
HMRC’s other main duty is to properly police the tax system so that everyone pays the tax they should via its compliance functions. These were significantly impaired by the Covid pandemic and evidence shows it is taking time to recover. Members of the tax profession are also questioning whether HMRC are focussing their efforts effectively, and whether they have suitably qualified staff working in these areas. There are also questions around the limited use of stronger criminal powers intended to have a deterrent effect against non-compliance.
Returns on investment in compliance work have historically been high, though they understandably fell during the pandemic. Given that, it is concerning that figures for return on investment were not published in the latest Annual Report and Accounts. But, in principle, returns on investment have always been strongly positive. It is therefore difficult to understand why the Treasury is not prepared to invest more consistently in HMRC compliance in order to secure the funds to maintain wider public services.
Data behind all these issues are explored in the report here.