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HMRC faces challenge amid £42bn tax payment backlog

22-11-2021

The tax office may struggle to recoup a vast backlog of payments that has accrued during the pandemic as HMRC does not have enough staff and budget cuts to its collection department have resulted in an increasing number of debts being written off. Analysis by the National Audit Office (NAO) shows that tax debts increased by £26bn between January 2020 and September of this year, with the debt pile currently standing at £42bn. The backlog in payments - which comes after HMRC paused collections and focused on supporting struggling businesses during the coronavirus crisis - is on top of the estimated £6bn of public money already lost to fraud via various pandemic-related support schemes. Gareth Davies, head of the NAO, said it would be years before HMRC was able to recover money owed to taxpayers, warning that the tax authority “faces several years of managing a far greater level of debt than it has been used to.” “HMRC needs to significantly increase its capacity if it is to meet the changed scale and nature of the challenge,” he added. Nimesh Shah of Blick Rothenberg says HMRC’s collection process is “broken” and has warned that taxpayers faced being “short-changed”. “The Government has provided significant funding to HMRC to address these issues, but would seem fruitless if HMRC cannot physically chase down the debts”, he added.

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