Billions in taxes lost as HMRC moves staff to Brexit and Covid fraud

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Almost 2,300 HMRC tax compliance staff were moved to managing the impact of Covid or Brexit last year, an investigation by the Liberal Democrats has revealed.

It means thousands of staff who would usually be working on recovering unpaid taxes were instead redeployed to managing the government’s mishandling of the pandemic and Brexit deal.

The figures also show that a third fewer tax compliance cases were closed last year than pre-pandemic, while the revenue clawed back by HMRC through compliance activity fell by a staggering £7 billion.

The figures were uncovered by Liberal Democrat Treasury Spokesperson Sarah Olney through a series of parliamentary questions. The investigation found that:

• In 2021-22, almost 1,250 tax compliance staff were redeployed to work on Covid-19 schemes administered by HMRC. Another 1,040 were assigned to work on matters relating to the UK's departure from the EU.

• It means almost one tenth (9%) of HMRC’s 25,450 tax compliance staff were deployed in 2021-22 to issues related either to Covid or Brexit.

• HMRC closed just 256,000 tax compliance cases in 2021-22. This is down a third from the 390,000 compliance checks closed in 2018-19.

• £30.8 billion of tax revenue was recovered through compliance efforts in 2021-22, similar to the previous year but down a staggering £6 billion from the tax recovered in 2019-20. 

Liberal Democrat Treasury Spokesperson Sarah Olney said:

“This Conservative government is in non-stop firefighting mode because of their gross incompetence, from the botched EU trade deal to the unforgivable mistakes made during the pandemic.

“Civil servants are being moved from one crisis to another in a constant game of whack-a-mole.

“This is allowing criminals to get away with dodging paying millions of pounds in tax, while hard-working families see their taxes hiked and public services are on their knees.

“The government needs to step up efforts to recover billions of pounds in unpaid taxes, instead of asking the public to clean up their mess.”

ENDS

Notes to Editor

First reported by the Financial Times

Links to parliamentary questions can be found below:

HMRC staff assigned to work on matters relating to the UK's departure from the EU

HMRC staff moved to Covid compliance schemes

Total HMRC tax compliance staff in each of the last five financial years.

Number of tax compliance cases opened and closed by HMRC in each of the last five financial years

HMRC’s compliance yield in each of the last five financial years.