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HMRC Reports ‘Extraordinary’ Results During COVID-19 Response

Posted on Aug. 28, 2020

Tax collection was down, but customer satisfaction was up during the first quarter of the 2020-2021 financial year after HM Revenue & Customs adapted its operations to support taxpayers during the coronavirus crisis.

“It’s been an extraordinary first quarter for HM Revenue & Customs and nothing like anything that I have ever seen or could have planned for,” Jim Harra, the U.K. tax authority’s chief executive, said in an August 27 LinkedIn post.

HMRC on August 27 published performance data for April-June 2020 that showed total compliance yield — a measure of tax revenue that would have been missed if HMRC had not intervened — was £7.5 billion, a significant drop from about £15.4 billion during the first quarter of the 2019-2020 financial year. The decrease was attributed to HMRC’s resource-intensive efforts to implement support measures for taxpayers struggling financially as the COVID-19 pandemic unfolded.

“During this extremely difficult time, HMRC did everything possible to support and protect individuals,  businesses, and the economy,” HMRC said in a release. “This included prioritizing work to support customers whilst still tackling serious fraud, criminal attacks, and those who promote tax avoidance.”

HMRC delivered financial support to more than 12 million employed and self-employed workers during the first quarter through the coronavirus job retention scheme and the self-employment income support scheme, according to the release.

HMRC also implemented more than 60 temporary policy measures to further assist taxpayers, including extending appeal deadlines and revising tax rules to ensure that retired National Health Service staff who returned to work will not face pension tax consequences, according to an HMRC policy paper, also published August 27.

While tax collections had decreased, customer service satisfaction with HMRC’s digital services had surged, reaching 85.6 percent in the first quarter of 2020-2021, up from 79.5 percent in the previous reporting period, according to HMRC data.

That increase was largely attributed to a fivefold spike in webchat capacity, which enabled HMRC staff to assist customers from their homes, HMRC said. Ninety percent of HMRC’s 60,000 staff were able to transition to remote working immediately when the United Kingdom locked down to curb the spread of COVID-19, the release said.

While HMRC is prioritizing assisting taxpayers through support schemes, it is also working to ensure those schemes are not abused through criminal activity or other forms of noncompliance, according to the policy paper. Claimants who have made mistakes can correct them without penalty by notifying HMRC by October 20 or within 90 days of grant receipt, whichever is latest, the paper adds.

“Where honest mistakes happen, we’re stepping in to help customers put it right, but are taking tougher action on deliberate fraudulent behavior,” HMRC said. “Following Royal Assent to the Finance Bill, which gave HMRC investigatory powers, we are starting to investigate claims in depth.” Finance Bill 2020 received royal assent July 22, becoming an act of Parliament.

HMRC reiterated some key principles it will follow regarding tax collection, communication, and customer service, while keeping in mind any difficulties related to the pandemic. It will also conduct compliance checks, resume debt collection activities by focusing on those who are minimally affected by the crisis, and build on its experiences to modernize its tax administration system over 10 years as operations return to a “new normal” in the future, the paper says.

The U.K. tax authority’s performance update comes as tax administrations around the world consider ways to continue supporting taxpayers struggling through the coronavirus crisis while also building on their experiences as they rethink their operations.

The OECD Forum on Tax Administration, which comprises tax commissioners and tax administration officials from 53 countries, published several reports to support tax administration responses to the pandemic. These reports focused on a range of topics, including how tax administrations can support their respective governments more broadly with new responsibilities, how to manage fraud risks, and how to manage reputational risk that could damage taxpayer trust.

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