In a formal response, accepting most of the recommendations in the Public Accounts Committee’s December 2022 report HMRC performance in 2021–22, the UK government has also confirmed its intention to implement the single customer account by June 2025.
HMRC should publish a formal compliance yield target (compliance yield being the amount of extra tax HMRC considers it has generated, and revenue losses prevented, as a result of its compliance and enforcement activities);
HMRC should publish an ‘uncertainty range’ for its headline tax gap estimate;
HMRC should keep under review the return on investment for deploying more resources to the recovery of Covid support scheme losses (the government notes this is already being actioned, together with a risk-based approach to targeting the most egregious behaviour);
HMRC should engage further with other tax administrations to share practice on how to tackle VAT repayment fraud;
HMRC will write to the Committee in April 2023 setting out plans to improve its service levels for taxpayers and agents;
additional investment in HMRC’s capacity to manage tax debts will enable the department to better distinguish between taxpayers who can afford to settle their tax debts but choose not to, and those who are genuinely struggling - this appears to be a question of exploiting data to make sure HMRC’s approach is correctly targeted; and
HMRC expects the single customer account to be implemented by June 2025, although this will be deployed in increments, with various changes being rolled out in summer 2023.
The government rejects the following two recommendations:
HMRC should set out the level of funding its compliance teams would need to reduce the tax gap (the government considers this a private matter for the Treasury and HMRC);
HMRC should analyse the degree to which the R&D tax relief schemes result in additional R&D expenditure (i.e. how they incentivise investment and innovation). Although this is not accepted, the government notes the existing RDEC impact analysis and further work relating to the imminent R&D tax relief reforms.
In a formal response, accepting most of the recommendations in the Public Accounts Committee’s December 2022 report HMRC performance in 2021–22, the UK government has also confirmed its intention to implement the single customer account by June 2025.
HMRC should publish a formal compliance yield target (compliance yield being the amount of extra tax HMRC considers it has generated, and revenue losses prevented, as a result of its compliance and enforcement activities);
HMRC should publish an ‘uncertainty range’ for its headline tax gap estimate;
HMRC should keep under review the return on investment for deploying more resources to the recovery of Covid support scheme losses (the government notes this is already being actioned, together with a risk-based approach to targeting the most egregious behaviour);
HMRC should engage further with other tax administrations to share practice on how to tackle VAT repayment fraud;
HMRC will write to the Committee in April 2023 setting out plans to improve its service levels for taxpayers and agents;
additional investment in HMRC’s capacity to manage tax debts will enable the department to better distinguish between taxpayers who can afford to settle their tax debts but choose not to, and those who are genuinely struggling - this appears to be a question of exploiting data to make sure HMRC’s approach is correctly targeted; and
HMRC expects the single customer account to be implemented by June 2025, although this will be deployed in increments, with various changes being rolled out in summer 2023.
The government rejects the following two recommendations:
HMRC should set out the level of funding its compliance teams would need to reduce the tax gap (the government considers this a private matter for the Treasury and HMRC);
HMRC should analyse the degree to which the R&D tax relief schemes result in additional R&D expenditure (i.e. how they incentivise investment and innovation). Although this is not accepted, the government notes the existing RDEC impact analysis and further work relating to the imminent R&D tax relief reforms.
