TaxWatch launches annual report on state of tax administration
TaxWatch is today launching its annual report which seeks to provide an independent analysis of the performance of the government in carrying out the vital role of administering and enforcing the tax system.
The report draws together a number of facts and figures from various sources, including HMRC’s annual reports and tax gap reports, Freedom of Information requests, and other publicly available data. It is hoped that the report will become a valuable resource for the media, politicians and the public.
The intention is that the report will be delivered on an annual basis.
Summary of our report
The United Kingdom left the European Union at the end of January 2021, just as Covid-19 was beginning to spread around the world. Brexit saw the UK leave the EU customs union, the single market, and the VAT area. This has required an entire new system of customs arrangements for the UK, necessitating at least £1bn in investment. With the UK Government phasing in border controls on imported goods over 2021 and 2022, the burden is only increasing as time goes on.
Shortly after leaving the EU, in response to the pandemic the UK entered a lockdown, with all but essential workers either furloughed or told to work from home. HMRC officers had to adapt to home work, all while the courts system was placed on a temporary hiatus, causing a significant backlog.
HMRC was tasked with rapidly implementing large-scale coronavirus support schemes, supporting incomes as well as businesses. These schemes, while drawn up and administered quickly in order to protect jobs while the country ground to a halt, unfortunately, have seen wide-scale abuse costing billions of pounds.
The timings of Brexit coupled with the pandemic has resulted in tax administration in the UK facing a difficult task without equal in modern times, causing a huge amount of stress on the system. For that reason, HMRC’s performance over the last year inevitably looks poor.
However, our concern is that after more than a decade of cuts, and with performance already dropping on previous years, the impact of the stress of the last year could cause long term damage to the UK’s tax administration if the government does not invest significantly more funds in tackling non-compliance and improving customer service.