PAC says HMRC must ‘urgently’ address gaps in pandemic support and review the way it does business

26 Jan 2021

The Public Accounts Committee (PAC) has called on HMRC to ‘urgently explain’ why some taxpayers have been unable to access government support during the Coronavirus pandemic.

In a report published last week, the committee notes that, despite HMRC providing more than £80 billion in financial support to businesses and individuals impacted by the pandemic – ‘quirks’ in the tax system ‘have left whole groups of taxpayers without the financial support offered to others’, including some that have ‘not had a penny’.

The committee has called on HMRC to set out – within the next six weeks – how it intends to address this problem and provide support to those so far excluded. They also call on HMRC to consider how it can provide support to those workers who have been moved onto payrolls as a result of IR35 rules, and suggests the tax body look at a scheme that uses average wages over a three year period to determine support.

The report also notes the strains that have been placed on HMRC’s ability to operate as an effective tax agency as a result of the pandemic, Brexit preparations and its IT and estate planning strategies.

Additionally the committee recommends that HMRC:

  • Set out how it will review its estate strategy to ensure value for money for the taxpayer from its investment in commercial properties, the market for which has been suppressed because of the pandemic
  • Works with the Treasury to ensure it has sufficient capacity and resources to effectively manage its workload and to deprioritise projects no longer considered essential
  • Set out to the committee, by March, how it intends to modernise its IT infrastructure and reduce its reliance on ‘patching up legacy systems’
  • Outline the steps it is taking to ensure its financial estimates are sufficiently timely and rigorous, to more accurately estimate the level of error and fraud in its Covid support schemes and to set out its plans for recovering money lost through this.

PAC chair Meg Hillier said that ‘out-of-date tax systems are one of the barriers to getting help to a significant number of struggling taxpayers who should be entitled to support” during the pandemic. Hillier added that there wasn’t ‘really any breathing space’ for HMRC’s systems to catch up with the increasing demands on its services and to “redress the balance in its spending and use of tech, and get ahead on the basic financial and economic metrics that we need to adapt and respond to this pandemic in real time’.

You can read a summary of the committee’s recommendations on pages 5-7 of the report by clicking on this link.

By Hamant Verma