In the latest financial year HM Revenue and Customers saw a drop of almost £30 billion as a result of the COVID-19 pandemic.
The 2020/21 annual reports showed that HMRC has reported it had collected over £608 billion in tax revenues, this has decreased compared to the 2019/20 report which stated it had collected £636.7 billion.
HMRC claims that the drop comes as the result of the unprecedented economic circumstances which have been caused by COVID-19, along with pandemic restrictions meaning HMRC had to reduce its compliance activity.
The pandemic’s impact on the nation has reinforced the importance of a flexible, responsive, and resilient tax and custom system. With many HMRC colleagues working from home major financial support was still able to be launched throughout lockdown, this includes the Coronavirus Job Retention Scheme and the Self-Employment Income Support Scheme.
HMRC stated that the steps taken when creating the financial support schemes ensured protection from error and fraud as far as possible whilst continuing to balance with speed and delivery. The taxpayer protection taskforce was set up to recover amounts claimed incorrectly. There were also 80 other temporary policy changes or clarifications.
The reduction in compliance activity resulted in a drop of 18% in the additional tax generated by HMRC’s work tackling avoidance, evasion, and other non-compliance. This has dropped by £6.5 billion. The tax authority estimated that the tax gap is now at 5.3%.
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