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Tax debts hit £42bn, with HMRC owed by 2.4m more people

17-11-2021

Data from the National Audit Office (NAO) shows that the UK's tax debt burden jumped from £16bn to £42bn between January 2020 and September 2021, with up to 2.4m more taxpayers having fallen into debt to HMRC. The analysis shows that as of September 30, 6.2m taxpayers owed money to HMRC compared to 3.8m on January 31, 2020, with the average amount taxpayers owe now at £6,800, a 60% increase. The tax office paused most debt collection activity as Britain went into lockdown in March 2020, while payments of VAT and self-assessment income tax were also deferred. The ONS has warned that HMRC faces a "significant challenge" clearing the backlog, warning that staff numbers are unlikely to be enough to manage the increased workload. The tax authority has forecast that it will have twice the usual level of debt to manage at the end of March 2022, predicting that total tax debt will be around £33bn. The NAO suggested that HMRC should develop a revised strategy for recovering the money. Gareth Davies, the head of the NAO, said HMRC is set to see “several years of managing a far greater level of tax debt than it has seen in recent times” as a result of the pandemic. Dame Meg Hillier, chair of the Public Accounts Committee, said the tax authority faces a "careful balancing act", adding: "It must quickly recover the unpaid taxes from those that can afford it, yet support those who are struggling to pay."

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