Latest HMRC performance figures lay out the impact of Covid-19 during a unique financial year, resulting in ‘abnormally’ high debt levels, a sharp drop in tax receipts and a decline in customer service
An update on how the department has performed during the first three quarters of tax year 2020/21 indicate HMRC is currently holding £65bn of debt, around £45bn more than this time last year, while it estimates the debt balance at the end of March will be between £54bn and £70bn.
HMRC acknowledged that debt levels are ‘abnormally high’, but stated: ‘In these unprecedented circumstances, HMRC is rightly prioritising support for customers in urgent need, taking a sympathetic approach to those struggling to pay their tax or file their returns.’
By the end of December, HMRC had collected £394bn in tax, compared to £457bn at the same point in 2019.
The total compliance yield from April to December 2020 was £16.8bn. By the same period in 2019, compliance yield was £26bn, although HMRC said this was skewed by a small number of very large, one-off successful litigations during 2019 to 2020.
The quarterly performance figures also show that HMRC’s customer support phone lines have been under strain throughout the pandemic.
Between October and December last year, taxpayers waited an average of 11:47 minutes for the phone to be answered, similar to the 11:57 minutes wait in the first quarter.
Over those three months, HMRC received 7.6m calls. The department noted that the waiting time was significantly longer than during the second quarter, when the average answer time was 8:55 minutes.
The department said this reflected the high level of customer demand during the national and regional lockdowns in November and December, as well as HMRC continuing its need to divert resources towards the government’s financial support schemes.
HMRC launched a new coronavirus helpline in the space of five days during March 2020, and up to 22 January 2021 had handled more than 1.28m calls across this helpline and others linked to specific support schemes.
In its analysis, HMRC said: ‘It has been a difficult nine months, with HMRC working at stretch and speed, serving customers as best as it can and continuing to chase non-compliance. It has moved staff to support the coronavirus helpline and support schemes, and recruited about 1,500 new temporary staff into customer service and compliance roles.’
HMRC has increased Covid-19 webchats as an alternative to phone calls, holding more than 441,000 webchats with customers up to 22 January, as well as running nearly 600 webinars on Covid-19 support topics, with more than 290,000 attendees.
However, homeworking and the diversion of duties resulted in a deterioration in the handling of post. In the last three months of 2020, only 62% of customer post was cleared within 15 days of receipt, compared with 83% in the same period of the previous year.
HMRC said: ‘This is a unique financial year for HMRC, as the department continues to be at the heart of the government’s Covid-19 response, moving rapidly to deliver financial support to millions of businesses and individuals affected by the pandemic and measures to control the virus.
‘Like other service organisations, it’s been a tough year of urgent and unexpected challenges for HMRC.
‘But despite the impact of the pandemic, the department has successfully delivered unprecedented financial support schemes and done all it can to offer the best possible service to its customers, through an almost entirely home-based operation.’