HMRC has faced enormous challenges in the past 12 months while being central to the delivery of the government’s response to COVID-19 and EU exit. HMRC describes it as a “tough year of urgent and unexpected challenges” in a news item published by HMRC on 4 February 2021.

The amount of tax debt now owed to HMRC is staggering. It currently stands at £65bn, up from around £20bn this time last year – £45bn higher and a 225% increase. HMRC estimates that the tax debt balance at the end of March 2021 will be between £54bn and £70bn.

The impact is also seen in the compliance yield in the period from April to December 2020 which was £16.8bn, down by more than one-third from the £26bn in the same period in 2019, although HMRC comments that this is skewed by a small number of large settlements in 2019.

HMRC’s immediate priorities remain:

• delivering COVID-19 financial support and preventing fraudulent attacks on the schemes;
• supporting taxpayers who need time to pay; and
• helping businesses navigate the new rules following the free trade agreement with the EU.

HMRC’s customer service levels have suffered and it says: “…call waiting times across our phone helplines have been longer than HMRC would like and we apologise for the inconvenience this causes.”

The average call waiting time increased to 11 minutes 47 seconds for October to December 2020. This compares with just under nine minutes in the previous quarter. This increased waiting time is similar to what was seen in the early months of the pandemic.

Post handling performance is a particular concern, with only 62% being handled within 15 working days of receipt. This is a significant deterioration and is despite HMRC recruiting 1,500 temporary staff to fill customer service and compliance roles.

ICAEW’s Tax Faculty continues to raise members’ concerns about customer service with HMRC. Particular areas of concern are that the helpline opening hours remain restricted and that HMRC has not yet been able to restore priority to the agent dedicated helplines.

The most immediate problem now is to help the group of taxpayers who cannot use the online time-to pay-service and need to contact HMRC to arrange time-to-pay self assessment liabilities. If such taxpayers have not by either paid their 2019/20 liabilities or entered into a time-to-pay arrangement by 2 March 2021, they will be liable to a late payment penalty of an additional 5% of the tax due.