The Government is ploughing £163million into HM Revenue & Customs’ debt management team in a bid to recoup £4.67billion in unpaid taxes over the next six years.
According to Treasury estimates, the injection of cash will help HMRC’s debt management team recoup £515million in taxes in 2024-25.
By 2025, over £1billion worth of unpaid taxes will be recovered, the Autumn Statement published on Wednesday claims.
Mission tax recoup: The Government is injecting cash into HMRC’s debt management team
The Treasury wants to resolve the so-called ‘tax gap’ between what is owed to the national coffers and what is being collected.
It said: ‘The government is investing in HMRC’s ability to support individuals and businesses who are unable to pay their tax debts by increasing HMRC’s debt management resource.
‘This will allow HMRC to better target their debt collection activity, pursuing those with tax debts that can afford to pay, and providing support to those that are temporarily unable to pay.
‘The government is also taking action against those who continue to bend or break the rules, by reducing opportunities for tax fraud in the construction industry and taking strong action against promoters of tax avoidance.’
Recent figures from HMRC show the amount of tax owed but unpaid totalled £45.5billion at the end of September.
This comprised £7.8billion of ‘managed debt’, while the debt available for pursuit reached £37.7billion, according to accounting group BDO.
The majority of this tax debt was owed by small and medium-sized businesses, but the numbers also included personal tax debt, it added.
Dawn Register, head of tax dispute resolution at BDO, said: ‘While this additional investment in HMRC’s debt management capability is very welcome it’s long overdue and probably insufficient to tackle the eye-wateringly high levels of tax debt currently owed to the Exchequer.
‘What’s clear is that HMRC is likely to get much tougher against those who can pay but are trying to manage their cashflow by dragging their feet.
‘For individuals who are struggling to pay tax bills, it’s always worth getting in touch with HMRC to discuss your situation. If you have debts of up to £30,000 you can apply online for a Time to Pay arrangement.
‘Businesses too are able to set up Time To Pay arrangements for certain taxes online. For example, instalment plans can now be set up for some VAT and employers payroll liabilities.
‘However, these online facilities don’t yet apply to some important taxes such as corporation tax so, in time, we would hope to see these extended.’
In 2022 to 2023, HMRC collected £788.8billion in tax receipts for the Exchequer, representing an increase of 10.2 per cent on the previous year.
Taxes as a share of gross domestic product will hit a new post-war high of nearly 38 per cent by 2029, according to the Office for Budget Responsibility, having stood at 33 per cent before the pandemic.
In the Autumn Statement on Wednesday, Jeremy Hunt unveiled a slew of measures aimed at reviving the economy and boosting people’s finances.
However, thresholds for income tax, the annual Isa allowance and inheritance tax remained unchanged, prompting some to warn of the impact of ‘sleuth’ taxes and fiscal drag.
