The Government has released its responses to the Public Accounts Committee (PAC) enquiry entitled ‘HMRC’s Management of Tax Debt’. The PAC recommendations have been accepted and HMRC aims to better handle the number of customers with tax debt.

The PAC enquiry highlighted the view that HMRC had insufficient plans in place to deal with the 6.2 million tax customers who had a tax debt.

The Government's responses to the PAC recommendations are summarised below:

  • It agreed that a plan is needed to return the number of taxpayers who are in debt down to pre-pandemic levels.
    • The priority is to engage with taxpayers to bring any debts into a managed position using tools such as Time to Pay arrangements.
    • A plan will be created and shared with a target implementation date of September 2022.
  • The government agreed that debt management capacity should be increased.
    • Additional funding is being allocated to fund HMRC resources.
    • A new contract with private debt collection agencies will be in effect from September 2022.
  • It will produce estimates of the scale of rogue companies exploiting COVID-19 support payments and will use the full force of the law to tackle deliberate non-compliance.
  • The government agreed that it will better use data to manage tax debt. By December 2022 it will:
    • Report to the PAC detailing spending and timelines for the single customer account, inter-department data sharing, and data sharing with the private sector.
    • Set out what data it is using or planning to use to better understand how taxpayers' ability to pay has been affected.
  • The government agreed that HMRC training should be regular and adequate and that research should be undertaken to estimate the effect of tax debt on vulnerable people setting a target date of December 2022.

Useful guides on this topic

Time to Pay agreement
Business and self-employed taxpayers with outstanding tax liabilities may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.

Collecting tax debts via PAYE
When can HMRC collect tax debts via PAYE? What are the limits?

External links

Treasury Minutes: Government Response to the Committee of Public Accounts on the Forty-Third to the Forty-Eighth report from Session 2021-22

Oak ad
Are you enjoying our content? 

Thousands of accountants and advisers and their clients use as their primary TAX resource.

Register with us now to receive our receive our FREE weekly SME Tax News updates.