Author: Great Britain: Parliament: House of Commons: Committee of Public Accounts

Publisher: The Stationery Office

Published: 2009-06-09

Total Pages: 44

ISBN-13: 9780215530639

In 2007-08, HM Revenue & Customs (HMRC) collected around £450 billion in tax and National Insurance contributions from 35 million taxpayers. At 31 March 2008 the Department was owed £17.3 billion in outstanding tax, interest and penalties, £4.5 billion of which was more than a year old. Debts arise when people or businesses forget to pay, do not understand the need to pay or deliberately try to avoid or delay payment. Most tax payments are made on time, but during 2007-2008 30 per cent of tax payments were made after they were due, the number of tax debts increased by 22 per cent and the level and age of debt increased on some taxes. HMRC needs to change the behaviour of taxpayers who persistently pay late. HMRC could do more to encourage prompt payment and it also lags behind best practice in recovering debt. For example, it does not risk score its debtors. Risk scoring would allow it to tailor the help it gives to those who do not understand their obligations or are in financial crisis, while dealing promptly with debtors who deliberately pay late. HMRC is also unable to automatically link debts owed on different taxes by the same taxpayer. In managing tax debt, HMRC must balance the need to maximise revenue for the Exchequer with that of offering support to individuals and businesses in temporary financial difficulty. Balancing these objectives becomes more difficult in a recession. Since launching the Business Payment Support Service in November 2008, HMRC had - by February 2009 - agreed over 60,000 'time to pay' arrangements with individual businesses, worth £1 billion in deferred tax.