Corporate report

HMRC's annual report and accounts 2024 to 2025: Our accountability

Published 17 July 2025

Governance statement

Introduction and Compliance with the code of good practice

To work most effectively with HMRC and to oversee the implementation of the government’s 3 strategic priorities for HMRC, in September 2024 the Exchequer Secretary to the Treasury became the chair of the HMRC Board.

To best support this several changes were made to the board governance structure. Three new sub-committees were established:

• Customer Service Committee
• Reform and Modernisation Committee
• Closing the Tax Gap Committee

The following Board sub-committees were stood down: Performance Committee, Transformation Committee, Customer Experience Committee and People Committee.

The Board continues to provide challenge and advice on HMRC’s performance, risk, strategy and capability and does not have any role in operational decision-making, tax policy or individual taxpayer matters.

From October 2024 oversight and assurance of the Valuation Office Agency (VOA) has been provided by the HMRC Board and HMRC Audit and Risk Committee.

HMRC’s governance arrangements have been assessed against the requirements set out in the Corporate Governance in Central Government Departments’ Code of Good Practice (2017). There are elements which are not directly relevant to HMRC due to our statutory framework, however we comply with both the spirit and principles of the code where appropriate.

Read the Corporate governance in the central government departments code of good practice 2017 on GOV.UK.

This statement sets out our governance, risk management and internal control arrangements for the financial year 1 April 2024 to 31 March 2025 and up to the date of approval of the Annual Report and Accounts, by HM Treasury guidance.

Ministerial arrangements

HMRC is a department established by the Commissioners for Revenue and Customs Act 2005. This gives legal powers and responsibilities for managing the tax and customs system to the Commissioners for Revenue and Customs, appointed by the King. Our status is intended to ensure that administration of the tax system is fair, impartial and does not bring political decision-making into individual taxpayer affairs. From April to 4 July 2024 the Chancellor delegated responsibility for overseeing HMRC to Nigel Huddleston MP, the Financial Secretary to the Treasury. From 9 July 2024 to the present day, this has been delegated to James Murray MP, the Exchequer Secretary to the Treasury.

The Exchequer Secretary to the Treasury is now the sponsoring departmental minister responsible for HMRC. He chairs the HMRC Board and, on behalf of the Chancellor, sets the department’s budgets, targets and priorities and remit.

HMRC and HM Treasury work in partnership together to advise ministers on developing and delivering tax policy. HM Treasury leads on strategic policy development, supported by HMRC. HMRC leads on policy maintenance and delivery, supported by HM Treasury. This policy partnership covers taxes and duties, National Insurance, tax credits and Child Benefit, for which HMRC has administrative responsibility.

Commissioners for Revenue and Customs

The commissioners are responsible for collecting and managing revenue and payments and managing tax credits. They conduct business according to the Commissioners for Revenue and Customs Act 2005 and are entitled to appoint officers of Revenue and Customs, who must comply with their directions. Between April 2024 to March 2025, we had 7 commissioners — Sir Jim Harra, Angela MacDonald, Justin Holliday, Penny Ciniewicz, Myrtle Lloyd, Jonathan Athow, and Carol Bristow.

First and Second Permanent Secretaries

Our current First Permanent Secretary and Chief Executive, John-Paul Marks, is HMRC’s Principal Accounting Officer. He is responsible for delivering our strategy and is accountable to Parliament for managing our resources. He chairs the Executive Committee and is a member of HMRC’s Board. From April 2024 to March 2025 Jim Harra was the Principal Accounting Officer. We set out Accounting Officer responsibilities in the Statement of Accounting Officer’s Responsibilities section. Our Second Permanent Secretary and Deputy Chief Executive is Angela MacDonald.

Tax Assurance Commissioner

The Tax Assurance Commissioner (TAC) has an explicit challenge role and provides assurance in HMRC’s largest and most sensitive disputes, and a sample of smaller cases. Justin Holliday is the TAC. Decisions about how to resolve our largest and most sensitive cases are considered by a panel of 3 commissioners, usually chaired by the TAC, who reports publicly each year in the annual Tax Assurance Commissioner’s report.

Non-executive directors

Non-executive directors sit on the HMRC Board. They bring external experience and expertise to HMRC, providing advice, challenge and scrutiny. Dame Jayne-Anne Gadhia is our Lead Non-Executive Director. She meets regularly with other non-executive directors, the Exchequer Secretary and the First Permanent Secretary. She liaises with lead non-executive directors across government and develops and appraises non-executives as effective Board members.

HMRC Board members and non-executive members of committees are required to declare real and potential conflicts of interest on appointment and to notify of any arising during their term. This is in accordance with The Code of Good Practice para 4.15.

A comprehensive list of Board members’ interests (both executive and non-executive) are reported on GOV.UK.

Independent Advisors

Independent Advisors sit on particular sub-committees of the Board and ExCom, where additional external expertise is required to support executive and non-executive members. They use their skills and personal experience in their field to contribute to the work of the sub-committees and to wider departmental objectives. From April 2024 to March 2025, Independent Advisors sat on the People Committee, the Customer Experience Committee, the Customer Service Committee and the Professional Standards Committee.

HMRC’s non-executive directors (end of March 2025)

Dame Jayne-Anne Gadhia
Lead Non-Executive
Committees: Nominations Committee

Mike Bracken
Committees: Reform and Modernisation

Patricia Gallan
Committees: Reform and Modernisation, Professional Standards, Nominations

Michael Hearty
Committees: Audit and Risk, Performance, Customer Service

Bill Dodwell
Committees: Closing the Tax Gap

Paul Morton
Committees: Audit and Risk, Professional Standards, Closing the Tax Gap

Jennifer Tippin
Committees: Customer Service

Non-executive and sub-committee members (end of March 2025)

Charlotte Moar
Committees: Audit and Risk

Andre Katz
Committees: Audit and Risk

HMRC’s Executive Committee members (end of March 2025)

Sir Jim Harra KCB
Commissioner for Revenue and Customs, Chief Executive and First Permanent Secretary, Principal Accounting Officer, and member of the Board

Angela MacDonald
Commissioner for Revenue and Customs, Deputy Chief Executive and Second Permanent Secretary and member of the Board

Jonathan Athow
Commissioner for Revenue and Customs, Director General Customer Strategy and Tax Design

Carol Bristow
Commissioner for Revenue and Customs, Director General Borders and Trade

Penny Ciniewicz
Commissioner for Revenue and Customs, Director General Customer Compliance

Alan Evans
General Counsel and Director General, Solicitor’s Office and Legal Services

Justin Holliday
Commissioner for Revenue and Customs, Chief Finance Officer, Tax Assurance Commissioner and member of the Board

Myrtle Lloyd
Commissioner for Revenue and Customs, Director General Customer Services

James Mitton
Director General for Enterprise Transformation Group

Suzanne Newton
Director General for Change Delivery Group

Andrew Pemberton
Director of Communications and Guidance

Helen Pickles
Chief People Officer

Lucy Pink
Director of HMRC Strategies

Daljit Rehal
Chief Digital Information Officer

Jonathan Russell
Chief Executive of the Valuation Office Agency

Our governance committee structure

HMRC has 2 top-level governance committees, which are HMRC Board and HMRC ExCom. This framework enables ExCom to make decisions effectively and transparently, with appropriate support, challenge, and assurance from our non-executives.

Figure 20: HMRC Committee structure during 2024 to 2025

HMRC Board and sub-committees

HMRC Board

The Board has been chaired by the Exchequer Secretary to the Treasury since September 2024. Between April 2024 and March 2025 it met 7 times, with 3 of those meetings taking place under the leadership of the minister. Over the past year the Board has focused on the delivery of HMRC’s priorities: improving customer service performance, closing the tax gap and the reform and modernisation of HMRC. It has monitored HMRC and VOA finance and performance and considered key strategic risks such as Technical Health and Cyber Security. The Board has also advised and challenged the department on its strategy and vision, for example through its reviews of HMRC’s Business Plan.

Board effectiveness

The Board conducted its annual effectiveness review through a Cabinet Office questionnaire. The review enabled the Board to ensure there is continuous improvement in the Board’s effectiveness and impact. The review found that the Board is performing well, aligning with the Ministerial priorities and that the Board and its sub-committees have a clear set of objectives. The Board agreed that to further improve its effectiveness it would: periodically scrutinise and review it and its sub-committees forward look and the secretariat would provide structured ongoing training for non-executive directors.

HMRC Board sub-committees

Audit and Risk Committee

The Audit and Risk Committee (ARC) provides assurance to the Board and Accounting Officer on the integrity of the financial statements, and the comprehensiveness and reliability of assurances across HMRC on governance, risk management and the control environment. Since October 2024 it has also provided oversight of the VOA proportionate to its purpose and risk. These new arrangements have been embedded across the year and will continue to adapt as is required. The committee received assurance from the VOA’s Audit Risk and Assurance Committee until the change in governance arrangements in October 2024, and subsequently from VOA’s Risk and Assurance Committee.

In 2024 to 2025 it oversaw production and assured the integrity of HMRC’s April 2024 to March 2025 Annual Report and Accounts. The committee also assured the integrity of the 2023 to 2024 and 2024 to 2025 accounts for the VOA, National Insurance Fund for Great Britain, the National Insurance Fund for Northern Ireland, and the Account of Duties Collected in the Isle of Man. The committee provided advice and assurance on the annual assessments of risk, controls and governance made by ExCom. The committee also monitored the integrity of the financial statements and assured the adequacy of governance, risk management, and control frameworks alongside assurance from Internal Audit. The sub-committee is chaired by Michael Hearty and met 7 times from April 2024 to March 2025.

Customer Service Committee

The Customer Service Committee (CSC) focused on improving customer service performance, the development of the department’s transformation plans, and HMRC’s 2025 to 2029 communications strategy and 2025 to 2026 communications annual plan. The sub-committee is chaired by Jennifer Tippin, it first met in October 2024 and met 3 times up to March 2025.

Nominations Committee

The Nominations Committee (NC) scrutinised succession planning and the management of senior-level talent, performance, and reward. The committee is chaired by Jayne-Anne Gadhia and it met once from April 2024 to March 2025.

Closing the Tax Gap Committee

The Closing the Tax Gap Committee (CTGC) focused on assuring work to recruit 5,500 additional compliance officers, assessed key risks and opportunities around the small business tax gap, and tested HMRC’s approach to customer debt collection, as well as fraud and serious non-compliance (including prosecutions). The sub-committee is chaired by Bill Dodwell and first met in November 2024 and met 3 times up to March 2025.

Reform and Modernisation Committee

The Reform and Modernisation Committee (R&MC) focused on how reform and modernisation will help support workforce skills and capabilities, assessed live services such as Self Assessment and Making Tax Digital, and considered HMRC’s future approach to managing commercial vendor spending. The sub-committee was chaired by Mike Bracken and first met in November 2024 and met 3 times up to March 2025.

Executive Committee and sub-committees

Executive Committee (Excom)

HMRC’s ExCom oversaw progress towards the achievement of short- and long-term performance and transformation objectives. ExCom regularly monitored the delivery of major programmes and initiatives, scrutinising delivery plans and ensuring they aligned with strategic priorities. It assessed the department’s most significant risks and agreed mitigating actions. It shaped and refined HMRC’s strategy in line with strategic objectives, plans for digital transformation, and the external environment including public trust of HMRC.

Every month, ExCom considered HMRC’s performance against key performance indicators. From April 2024 to March 2025, ExCom scrutinised and agreed HMRC’s business planning process and spending review strategy. It also reviewed HMRC’s communications and guidance plans, people strategy and commercial strategy.

ExCom sub-committees

Change Investment and Design Committee

The Change Investment and Design Committee approved our most significant business cases. The committee also developed, supported and assured design principles and standards for use across HMRC. It was chaired by Justin Holliday and Jonathan Athow and met 19 times from April 2024 to March 2025.

Making Tax Digital Executive Oversight Group

The Making Tax Digital Executive Oversight Group oversaw and supported the successful delivery of the Making Tax Digital programme. It was chaired by Angela MacDonald and met 6 times from April 2024 to March 2025.

Professional Standards Committee

The Professional Standards Committee discussed a range of topics linking to trust in HMRC, underpinned by themes of fairness, transparency and technology. The committee explored how the Litigation Settlement Strategy can ensure that HMRC approaches tax disputes fairly and even-handedly, work undertaken in Customs to improve customer guidance and processes, and the risks posed by the increasing use of Artificial Intelligence (AI) by third parties. The committee also welcomed external insight on independent advocacy provision and considerations for balancing AI usage with customer safeguards. The committee was chaired by Jonathan Athow and met 4 times from April 2024 to March 2025.

Summaries of this year’s meetings can be found on GOV.UK.

Strategy Committee

The Strategy Committee provided stewardship of HMRC’s strategy and its implementation across the department. In April 2024 to March 2025, the committee steered HMRC’s strategic understanding across the different tax regimes, HMRC’s approach to intermediation in the tax system and reviewed Tax Administration Strategy. It also approved a new approach to strategy assurance and endorsed HMRC’s people strategy. The committee was chaired by Jonathan Athow and met 10 times from April 2024 to March 2025.

Enterprise Data Committee

Enterprise Data Committee (EDC) provided oversight of HMRC’s Data Strategy, assuring effective governance, management, and use of data across HMRC. During 2024 to 2025 the EDC helped shape HMRC’s Spending Review activities, supported development of the Unique Customer Record and the Central Customer Registry. It provided Data Protection oversight as well as considering and championing the development and deployment of AI within HMRC. The committee was chaired by Angela MacDonald and met 10 times from April 2024 to March 2025.

Risk and Control Committee

The Risk and Control Committee focused on the management of key risks by developing and implementing risk treatment strategies and providing assurance to ExCom that risk management and control issues are being managed effectively. The committee was established in April 2024 and set 5 priorities for the year where action was required — business continuity, security, SharePoint and knowledge management controls, segregation of duties and payment controls. Since then, the committee has commissioned a long-term project to evaluate HMRC’s disaster recovery arrangements with a view to improving resilience, as well as steering work to address the risk posed by insider threat. The committee was chaired by Angela MacDonald and met 11 times from April 2024 to March 2025.

Read more about HMRC’s governance on GOV.UK.

Report by Dame Jayne-Anne Gadhia, HMRC’s Lead Non-Executive Director

I have been hugely impressed with how colleagues across HMRC have delivered this year, responding to the government’s priorities of closing the tax gap, improving day-to-day performance and the customer experience and reforming and modernising the tax administration system.

I particularly want to pay tribute to Sir James Harra, who retired in April 2025 after 6 years as First Permanent Secretary and CEO of HMRC. The value of Jim’s contribution to the department during more than 40 years of public service cannot be understated. The department and the Board have benefited hugely from his immense tax knowledge. The constructive relationships he established with me, and the other Board members were much appreciated. I wish Jim a very happy retirement.

I would also like to take this opportunity to welcome JP Marks to HMRC. JP joined the department in April 2025 after building an outstanding track record of operational and policy delivery in senior roles at HM Treasury, the Department for Work and Pensions and as Permanent Secretary to the Scottish Government. I look forward to working with JP and continuing to work with Angela MacDonald in her role as Second Permanent Secretary, on maintaining and further developing the positive, productive and open dynamic between HMRC’s Board and its Executive Committee.

I also welcome the Exchequer Secretary’s leadership in driving forward the government’s priorities and as chair of HMRC’s Board. As the Lead Non-Executive Director, I have been working closely with the Exchequer Secretary to refocus the Board and its sub-committees, so we can most effectively support the department in making progress against its 3 priorities. Our governance statement sets out in more detail the refreshed governance structure that we implemented from October 2024 to scrutinise progress against the 3 priorities.

I’m pleased and proud of the way the Board has continued to provide advice, scrutiny and assurance to the Minister and the Executive throughout the year. During April 2024 to March 2025, the Board’s main areas of focus have been on:

• HMRC’s contribution to the spending review
• HMRC’s People Strategy and Delivery Plan
• HMRC Business Plans
• Implementation of the Autumn 2024 Budget

To support the Exchequer Secretary to the Treasury and assure the Board that there is suitable rigour around HMRC’s performance, this year I set up monthly meetings with my non-executive colleagues, to discuss HMRC’s performance and risk in greater detail, reporting back to the Board.

This year I was also asked by the Exchequer Secretary to support his work in conducting the Zero-Based Review of existing HMRC budgets, as a key part of the Spending Review 2025. We were very thorough, conducting detailed reviews of the department’s business areas.

We welcomed 2 new non-executives to the Board during the year: Bill Dodwell, has brought a deep knowledge of tax administration and now chairs our Closing the Tax Gap sub-committee. I am grateful to Mike Bracken who provided advice to the Board on digital transformation between October and April. His expertise was invaluable in setting up our Reform and Modernisation Committee and putting it on a strong footing for the coming year. My non-executive colleagues on the Board all worked positively with the Executive Committee throughout the year.

We also said farewell to David Cooper and Susie Warran-Smith. I am grateful to David for his support on technical health and cyber security, and to Susie for her insight on small businesses and for her contribution to the Customer Experience Committee.

In accordance with the Code of Good Practice, the Board undertook its annual effectiveness review. We found that the Board and its sub-committees align well with Ministerial priorities, providing strategic clarity, and supporting HMRC’s planning on how future needs and challenges will be met.

Elsewhere, we have sought and received assurance on the organisational health of HMRC through the Nominations Committee, which has supported on succession planning during a period of change for the Board and the Executive. The Audit and Risk Committee continues to focus on strengthening the department’s risk and control environment.

I look forward to continuing to work with the department as it carries out its vital purpose of collecting the money that pays for the UK’s public services and providing financial support to people and businesses. We will see further change at Board-level as several long-standing non-executives depart this year. I will be taking a keen interest in ensuring that future members of the Board get off to the best start possible and continue the professional, supportive and constructive approach that we have established.

Dame Jayne-Anne Gadhia
Lead Non-Executive Director

Table 5a: Board and committee chairs

Board	ARC	NC	CSC	CTGC	R&MC	ExCom
James Murray MP	Michael Hearty	Dame Jayne-Anne Gadhia	Jennifer Tippin	Bill Dodwell	Dame Jayne-Anne Gadhia	John-Paul Marks

Table 5b: Meeting attendance by Chair of the Board

Chair of the Board	Date started or left role	Board (3)	ARC (7)	NC (1)	CSC (3)	CTGC (3)	R&MC (3)
James Murray MP	Chaired first Board October 2024	3	Non-member	Non-member	Non-member	Non-member	Non-member

Table 5c: Meeting attendance by non-executive directors

Non-executive directors	Date started or left role	Board (7)	ARC (7)	NC (1)	CSC (3)	CTGC (3)	R&MC (3)
Dame Jayne-Anne Gadhia		7	Non-member	1	Non-member	Non-member	Non-member
Mike Bracken	April 2025 (left)	2	Non-member	Non-member	Non-member	Non-member	3
David Cooper	September 2024 (left)	4	Non-member	Non-member	Non-member	Non-member	Non-member
Bill Dodwell	October 2024 (joined)	3	Non-member	Non-member	Non-member	3	Non-member
Patricia Gallan		6	Non-member	1	Non-member	Non-member	2
Michael Hearty		6	7	Non-member	3	Non-member	Non-member
Paul Morton		5	6	Non-member	Non-member	3	Non-member
Jennifer Tippin		5	Non-member	Non-member	3	Non-member	Non-member
Susie Warran-Smith	September 2024 (left)	4	Non-member	Non-member	Non-member	Non-member	Non-member

Table 5d: Meeting attendance by members of the Audit and Risk Committee

Member	Date started or left role	Board (7)	ARC (7)	NC (1)	CSC (3)	CTGC (3)	R&MC (3)
Charlotte Moar	September 2024 (joined)	Non-member	3	Non-member	Non-member	Non-member	Non-member
Andre Katz	November 2024 (joined)	Non-member	2	Non-member	Non-member	Non-member	Non-member
Elizabeth Fullerton-Rome	August 2024 (left)	Non-member	4	Non-member	Non-member	Non-member	Non-member
Tom Taylor	August 2024 (left)	Non-member	3	Non-member	Non-member	Non-member	Non-member

Table 5e: Meeting attendance by executive directors

Due to the amount of data presented, only part of the table below is visible. Please use the scrollbar at the bottom of the table to view all the columns.

Executives	Date started or left role	Board (7)	ARC (7)	NC (1)	CSC (3)	CTGC (3)	R&MC (3)	ExCom (23)
Sir Jim Harra KCB	April 2025 (left)	7	2	1	Non-member	Non-member	Non-member	20
Angela MacDonald		7	Non-member	Non-member	Non-member	Non-member	Non-member	20
Jonathan Athow		Non-member	Non-member	Non-member	Non-member	3	Non-member	17
Carol Bristow		Non-member	Non-member	Non-member	Non-member	Non-member	Non-member	20
Penny Ciniewicz		Non-member	Non-member	Non-member	Non-member	3	Non-member	18
Alan Evans		Non-member	Non-member	Non-member	Non-member	3	Non-member	16
Justin Holliday		5	7	Non-member	1	Non-member	Non-member	17
Myrtle Lloyd		Non-member	Non-member	Non-member	3	Non-member	Non-member	19
James Mitton	June 2024 (joined)	Non-member	Non-member	Non-member	Non-member	Non-member	3	18
Suzanne Newton		Non-member	Non-member	Non-member	Non-member	Non-member	3	20
Andrew Pemberton		Non-member	Non-member	Non-member	3	Non-member	Non-member	20
Helen Pickles	January 2025 (joined)	Non-member	Non-member	Non-member	Non-member	2	1	6
Lucy Pink		Non-member	Non-member	Non-member	Non-member	Non-member	Non-member	19
Daljit Rehal		Non-member	Non-member	Non-member	Non-member	Non-member	2	14
Jonathan Russell		Non-member	Non-member	Non-member	Non-member	Non-member	Non-member	16
Esther Wallington	April 2024 (left)	Non-member	Non-member	Non-member	Non-member	Non-member	Non-member	1

Risk management and assurance

Our approach to risk management

HMRC has a well-established culture of managing risks, aligned with HM Treasury’s guidance — ‘The Orange Book’. HMRC’s key risks in 2024 to 2025 section, highlights risks we manage to deliver our key priorities. The Managing climate risk section in the Sustainability Review details the progress made in managing risks relating to climate change. This section outlines our approach to managing risks across HMRC over the reporting period.

We manage 2 main types of risk:

1. Process risks: these are risks to the efficient operation of our processes. We continue to develop our control framework to better manage risks associated with our operational processes. To make sure these process controls are effective, they are regularly reviewed and assured during the reporting period.
2. Strategic risks: these are risks to the management of HMRC and delivery of our strategic objectives. The ExCom and HMRC Board, inclusive of Audit and Risk Committee members scrutinise these risks through regular reporting and participation in deep dive sessions. We manage these risks across all levels of HMRC, from decision making on individual cases to delivering large-scale change and strategic policy making.

Our risk and control framework

We continually review and refine how we manage risk, so we can understand and keep improving the effectiveness of our strategic delivery, processes and controls. This includes identifying and delivering work to bring and keep HMRC’s risk and control framework in line with the current version of the Orange Book.

Our Chief Risk Officer has oversight for management assurance activity including the disciplines of governance, risk, and control. Alignment of these activities across HMRC is helping us to create a unified view of our risks and controls and streamline activity. The Chief Risk Officer, supported by HMRC’s Process, Risk and Control Board, will help ExCom to further improve our risk and control framework, contributing to more effective and efficient processes that support the delivery of our strategic objectives.

Our risk and control framework is based on the ‘Three Lines Model’. This assurance model facilitates the effective management of risk throughout the reporting period, by clearly defining roles and activities for front-line operations, internal assurance, and independent assurance; and by supporting regular monitoring, reviewing and assurance. The front-line operates controls to mitigate risks to delivery and internal assurance provides management with confidence that the controls in place are effective. An independent view of the overall effectiveness of controls including our internal assurance is provided by Internal Audit and external bodies. Crucially, this includes NAO reports which contribute to the overall independent assurance HMRC benefits from. A recent example includes the NAO report on “The administrative cost of the tax system”.

These activities provide the Accounting Officer, ExCom and the Board with assurance about the delivery of HMRC’s overall strategy and objectives.

For more information on actions taken on specific control challenges, please go to pages see the Control challenges in financial year 2024 to 2025 section in the Principal Accounting Officer’s report.

Figure 21: HMRC’s Three Lines Model

Our risk and control framework covers:

• governance: ensuring that authorities and accountabilities are clear, appropriate strategies and plans are in place and our success in operating the control framework is reflected in the annual governance statements
• process management: taking the necessary action to ensure our processes are effective, efficient, well-controlled and easy for our customers and staff to use
• risk management: identifying, assessing, managing and reporting the risks to the delivery of our objectives
• controls: embedding effective controls in our business processes to ensure objectives are met and any risks reduced
• management assurance: assuring the controls in place are sufficient and operating as intended, and taking the necessary action to address any weaknesses
• independent assurance: getting internal and external audit to challenge or confirm the effectiveness of our control framework
• data: ensuring that the data on which our business relies is secure and accurate

The Executive Committee established an Executive Risk and Control Committee chaired by the Second Permanent Secretary in the beginning of 2024 to 2025. The committee focusses on risks and control issues that are enterprise-wide, have wide ranging impacts and have no single natural owner. This cross-cutting approach gives these types of risks and control issues the right level of oversight and management. In support of this committee the Chief Risk Officer chairs the HMRC Process, Risk and Control Board. The Board focuses on improving risk management capability and the underpinning processes of all apects within the risk and control framework.

Our corporate governance arrangements have continued to evolve during the year. An organisation of HMRC’s size and complexity will always have multiple risks to manage at any one time. The governance arrangements in place throughout 2024 to 2025 have been sufficient to continue managing risks effectively.

HMRC’s key risks in 2024 to 2025

Our Executive Committee manages 10 key risks, which helps us to ensure we can deliver on our key priorities: to close the tax gap, improve day-to-day performance and modernise and reform the UK tax and customs system.

Our most significant risks remain in technology, security and data protection. In 2024 to 2025, we made progress in managing these risks by remediating IT and data issues and strengthening key security controls. We have continued to invest in modernising our IT estate, including accelerating our exit from legacy data centres, helping us to improve our overall resilience and equipping our systems with innovative tools.

Customer experience remains a key priority and we have focused on improving our telephone service, while also continuing to develop and improve our digital services and online guidance.

Read more information about our risk management approach in the Risk management and assurance section in the Governance statement.

Key risk 1: Technical health	Strategic objectives	Risk exposure assessment March 2025	Risk trajectory
There is a risk that HMRC priorities/strategies/decisions result in the HMRC IT estate becoming larger and too complex to securely manage with the resources available, this will result in increased likelihood failure of critical business services, causing considerable harm to the UK.	Close the tax gap, Improve day-to-day performance and the overall customer experience, Support wider government economic aims through HMRC’s work	Red	Improving

We have made significant progress in continuing to develop resilient technology, for example modernising our IT estate and remediating priority IT issues by securing our servers, removing legacy technology, and increasing our bandwidth. Until we have modernised our IT estate, there are significant challenges associated with our aging infrastructure. Although technology transformation has begun to equip HMRC with innovative tools, including generative AI, there is also an increased threat of cyber-attacks through the sophistication of AI available.

In 2024 to 2025, our Technical Health Programme helped keep our systems secure and reliable while preparing for the future. It gave us a clearer picture of our technology, upgraded important services to modern platforms, and strengthened data security by fixing critical issues. This work ensures we can continue to support our customers and colleagues with confidence.

Key risk 2: Data protection	Strategic objectives	Risk exposure assessment March 2025	Risk trajectory
Failing to comply with data protection laws may lead to a legal breach, leaving us unable to protect customer and staff personal data to the legally required level, nor help staff and customers carry out their rights under data protection law.	Improve day-to-day performance and the overall customer experience, Support wider government economic aims through HMRC’s work	Red	Improving

This year our Data Protection Remediation Programme completed its remediation of 82 systems, improving data retention compliance. The programme took steps to improve our ability to delete, suppress or stop processing personal data as required. We have built on this work by taking steps to strengthen governance and retention arrangements for data across the department, including automating deletion of older material in some enterprise-wide systems, and this work continues.

This year saw a sustained significant increase in volumes of Subject Access Requests, which has impacted our response timescales. We have increased resource and taken steps to improve automation of the process, including establishing a temporary senior steering group to oversee this work.

Key risk 3: HMRC Security	Strategic objectives	Risk exposure assessment March 2025	Risk trajectory
There is a risk that business/critical services fail if HMRC does not operate its security processes and controls or manage its infrastructure and vulnerabilities effectively enough to protect HMRC, its people and assets from harm or misuse.	Improve day-to-day performance and the overall customer experience, Support wider government economic aims through HMRC’s work	Red	Stable

We have significantly improved system resiliency, achieving a record year for stability with 99.99% availability. Our cyber defences intercepted and blocked 99% of phishing attacks, and we enhanced our technology, processes, and tooling.

Our fraud prevention and detection controls identified unauthorised attempts to access approximately 100,000 HMRC customer online tax accounts. The attackers aimed to exploit the PAYE system to generate unauthorised repayments from the Exchequer, rather than from individual customers. Revenue losses from this incident are estimated, to date, to be £48.8 million. In response, we have remediated compromised customer accounts and written to affected customers, and we are continuing to improve customer risk profiling and enhance our security controls.

The risk remains stable overall, however heightened geopolitical threats continue to impact all security vectors. We strengthened security controls, improved infrastructure resilience, and enhanced supplier security management. A taskforce was introduced to mitigate insider threats and improve key personnel security. We also completed insider threat risk assessments and improved physical asset security controls. Recovery plans are continuously tested to enhance preparedness and resilience.

Key risk 4: Exploiting information	Strategic objectives	Risk exposure assessment March 2025	Risk trajectory
There is a risk that we fail to effectively exploit our data, resulting in reduced revenue collection, tax gap widening and/or weaker customer service by failing to build capability effectively.	Close the tax gap, Reform and modernisation of tax and customs administration	Red	Stable

HMRC is a data-driven organisation and data is crucial to the delivery of our work. Our Spending Review plans will enable HMRC to access, integrate, and deliver real-time data more efficiently and cost-effectively, without the need for data movement or replication.

We continue working on enhancing various capabilities and integration services for our core platforms, facilitating a transition to modern architecture. Additionally, we have laid the foundational stages of consolidating our customer information, which will be further enhanced through agreed Spending Review funding.

Investment provided at Phase 1 of the Spending Review will enable us to begin building the infrastructure and capability that underpins our ability to improve the quality and mastery of our data sources, deploy and access data at scale, better integrate our data and deliver more flexible analytical tools, and improve interoperability of systems. This trajectory of our exposure to this risk will reduce during 2025 to 2026.

Key risk 5: Improving Customer Experience	Strategic objectives	Risk exposure assessment March 2025	Risk trajectory
Failure to meet Charter and customer service delivery standards could mean customers have a poor experience, trust may erode and HMRC might not achieve its strategic objectives.	Close the tax gap, improve day-to-day performance and the overall customer experience, Build a high-performing organisation with a skilled and engaged workforce	Red	Stable

We have focused on improving customer service, particularly via telephony, by allocating additional resources to reduce call wait times and enhance customer experience. We have also improved our digital services, including the HMRC app, to encourage customers to self-serve online. We remain committed to supporting customers who need extra help and improving communications to increase customer awareness of the help HMRC can provide through different channels.

This year we simplified our guidance, making it more interactive and visible to customers at the point of need. Enhanced guidance on Corporation Tax and Self Assessment registration has made compliance easier for individuals and businesses.

Investment in front line services has enabled HMRC to make improvements in our customer service performance standards for telephony and post, though we know we have more to do. Early signs show improvement in customer satisfaction scores and continued funding for frontline operations will positively impact the risk further during 2025 to 2026.

Key risk 6: Capacity and Capability	Strategic objectives	Risk exposure assessment March 2025	Risk trajectory
There is a risk that HMRC cannot deliver its business objectives or respond to unplanned events if it does not have, or cannot attract, the skilled and/or available workforce it needs in the future.	Close the tax gap, Improve day-to-day performance and the overall customer experience, Build a high-performing organisation with a skilled and engaged workforce	Red	Stable

The maturing operating model design, and delivery of transformational change continues to inform our future workforce plans. We have an emerging picture of the shape and capabilities required of our workforce in the future — for example, we are increasing compliance capacity and specialist capability to meet government priorities around tax gap reduction and improved debt recovery. This includes the expansion of roles in risk profiling, forensic analysis, and digital case working to support more targeted, data-driven compliance interventions and are proactively building the additional skilled resource we need across our strategic locations, growing thriving regional communities.

We have strengthened capacity through the intake of additional compliance, debt and customer service colleagues and streamlined recruitment processes using innovative digital solutions. We continue to grow capability through our learning academies with our Digital Academy embedded within operations and further academies for Tax, Compliance and Customs and Leadership and Management in the pipeline.

We have enhanced our Strategic Workforce Planning capability to improve forecasting accuracy which creates stronger talent pipelines and resource prioritisation and strengthened our leadership and management capability through a suite of enterprise leadership and management programmes.

Key risk 7: Engagement and Culture	Strategic objectives	Risk exposure assessment March 2025	Risk trajectory
There is a risk that HMRC cannot deliver its business objectives or respond to unplanned events if it does not have, or cannot attract, the skilled and/or available workforce its needs in the future.	Close the tax gap, Improve day-to-day performance and the overall customer experience, Build a high-performing organisation with a skilled and engaged workforce	Amber	Stable

HMRC has invested heavily in driving workforce and workplace improvements this year increasing access to a modern estate and providing the right tools for our people to be successful. These improvements have maintained employee engagement levels, and we continue to work towards our strategic ambition to be a Great Place to Work.

As part of a package of mitigation strategies focussing on colleague engagement, we have developed tools to equip our managers to lead colleagues effectively, focussing on performance management, engagement and mental health and wellbeing.

As previously pledged, the continuous Employee Listening programmes have played a central role in fostering a supportive environment whereby employee voices are not only heard but acted upon. We are committed to continue to invest in our colleagues and through workforce transformation initiatives to improve colleague experience, enhance productivity, and modernise our HR processes, leading to a strengthened risk position and employee engagement score in the future.

Key risk 8: Delivering HMRC’s Change Portfolio	Strategic objectives	Risk exposure assessment March 2025	Risk trajectory
There is a risk that the HMRC Change Portfolio, is unable to deliver the outcomes expected and associated benefits within this Spending Review, which in turn, will harm HMRC’s ability to deliver on its Strategic Ambitions and impact the reputation of HMRC to deliver change.	Close the tax gap, Reform and modernisation of tax and customs administration, Build a high-performing organisation with a skilled and engaged workforce, Support wider government economic aims through HMRC’s work.	Amber	Stable

Over the past year, we have successfully reduced the overall level of risk by addressing several issues that were impacting our portfolio’s deliverability. The majority of Spending Review 2021 outcomes have been delivered.

The deliverability of our projects and programmes has significantly improved, thanks to a concerted effort to clarify scope and design earlier in the lifecycle. We have strengthened portfolio change controls and introduced new financial management standards, leading to better financial controls. Delivery Professional recruitment has been centralised to match people to critical roles and accreditation increased. We closely managed the demand for specialist resources, and this will continue into 2025 to 2026.

Our portfolio has now been reset to meet SR25 commitments. We are enhancing our delivery methods to become more agile, with a greater focus on both people and technology-driven change. We are testing several changes to our delivery approach to increase flexibility, innovation, and efficiency. These changes aim to tailor our delivery processes to the scale and nature of the projects we undertake.

Further enhancements to our project and programme controls are planned for 2025 to 2026. We have already driven up adherence to standards and improvements in quality, productivity, and real-time decision-making. We will also actively engage with the wider government and external change profession to understand and adopt best practices.

Key risk 9: Windsor Framework	Strategic objectives	Risk exposure assessment March 2025	Risk trajectory
There is a risk that HMRC is unable to achieve sufficient external systems and business readiness in order to deliver a successful implementation of the new Windsor Framework arrangements for freight and parcels, meaning a slower take up of benefits anticipated under the policy and the risk of associated reputational damage to HMRC and UK Government and the EU, as well as the potential for legal challenge.	Close the tax gap, Reform and modernisation of tax and customs administration, Support wider government economic aims through HMRC’s work	Amber	Improving

The Windsor Framework was agreed in February 2023 and HMRC, as the UK Customs authority, has delivered the new customs arrangements for goods moving from Great Britain to Northern Ireland via parcels and freight. The new arrangements for freight and parcel movements under the Windsor Framework went live on 1 May 2025, following the declarations by the UK and the EU Commission at the Withdrawal Agreement Joint Committee.

HMRC led an extensive readiness programme to ensure businesses were fully prepared for the new arrangements to take effect, including a suite of guidance, targeted communications and webinars. The Trader Support Service, who support the majority of freight movements into Northern Ireland, also led an extensive readiness programme to supplement HMRC activities. Following the new arrangements taking effect, HMRC systems are performing as planned and we remain closely engaged with industry to provide support.

Key risk 10: Efficiency Delivery	Strategic objectives	Risk exposure assessment March 2025	Risk trajectory
Failure to deliver our efficiencies in full will require one off savings to avoid a breach of delegated budgets, adversely impacting departmental performance and slow delivery of our vision.	Close the tax gap, Improve day-to-day performance and the overall customer experience, Build a high-performing organisation with a skilled and engaged workforce. Support wider government economic aims through HMRC’s work,	Green	Improving

We have exceeded our stretching efficiency target of £500 million set at Spending Review 2021, and the vast majority of the additional £219 million savings required to mitigate sustained higher than planned inflation. We have achieved this by delivering process and productivity improvements (for example, tackling compliance risks more effectively and supporting customers to get their tax affairs right at the outset means we require less compliance officer input to deliver the same, or increased, revenues), modernising our IT systems, and by reducing the costs associated with maintaining our physical estate.

This year we have delivered very close to our stretch target, albeit with a slightly greater than planned proportion of savings relating to one-off, rather than sustainable, cost-savings. We closely monitored demand levels and agreed additional resources (funded, wherever possible, through additional savings opportunities) to mitigate impacts on in-year performance against key service standards, and allocated funding to bring forward recruitment needed to help maintain customer service performance levels in 2025 to 2026 and beyond.

Government Functional Standards statement

UK Government Functional Standards set expectations for improved and consistent ways for functions to work across government. This includes the planning, delivery, and assurance of functional work as well as support for continuous improvement and professional development. HMRC fully supports the embedding of functional standards.

In line with HM Treasury/Cabinet Office requirements, over the reporting period 2022 to 2023, all HMRC functional leads completed a self-assessment of how well they were meeting the requirements of their functional standard. Recognising the benefits, HMRC’s Executive Committee commissioned further self-assessments over the reporting period 2024 to 2025.

Following both sets of self-assessments, areas for improvement were identified and have been built into business plans. Looking forwards, there are plans to report on compliance with functional standards as part of the annual business group governance statement returns starting next year. Additionally, Internal Audit are in the fourth year of a rolling programme of assurance to test the adequacy of the self-assessments taken by functional leads, the findings of this assurance work will help to strengthen the self-assessment approach.

Human Rights

We have procedures in place to ensure that all our policies and legislation are compliant with the Human Rights Act. Our approach is underpinned by understanding our customers and their needs, treating everyone with respect, recognising that we have privileged access to information (and need to protect that information), and behaving professionally with integrity.

Our conflict of interest policy

Within our policies on conduct, we have a ‘conflict of interest’ policy which is aligned to the Civil Service Management Code (section 4.3). This applies to all employees and non-executive directors. The policy explains what a conflict of interest is, and provides information on declaring, recording and managing outside interests.

A conflict of interest arises when personal interests, activities or relationships may potentially interfere, or be perceived to interfere, with business decisions, may compromise the ability to remain fair and objective, or may result in a personal gain or advantage.

Individuals are responsible for notifying their managers of any conflicts. The relevant manager or business area must determine whether there is in fact a conflict (actual, potential or perceived) and what mitigating action is to be taken, and the manager is responsible for recording this information. If the individual moves to another team or business area, they must assess whether a new notification needs to be made in relation to the new role.

In high-risk areas, conflicts are recorded on a register, which is maintained at a business unit level.

Senior Civil Service (SCS) colleagues are required to complete an annual declaration of interest via a central register which is held securely by SCS HR team. The information required for the register is a high-level record of the conversations already held with line managers to confirm that declarations of interest are up to date and includes nil returns. All SCS in HMRC were asked to complete their annual declaration of interest in December 2024 and HMRC is fully compliant with the Civil Service HR guidance. The form covers the whole period from 1 April 2024 until 31 March 2025. Therefore, if there are any changes after the form is completed, a new entry must be submitted, which can be completed at any time during the year.

SCS outside remuneration as at 31 March 2025, agreed through the process of declaration and management of outside interests, is reported on GOV.UK in accordance with The Code of Good Practice 2017 para 4.15 and HM Treasury Public Expenditure System (PES) guidance paras 19.4 and 19.8.

Recommendations made by external scrutiny bodies

We monitor the implementation of recommendations by external scrutiny bodies including the National Audit Office (NAO), Public Accounts Committee (PAC) and Infrastructure Projects Authority. In the 2024 to 2025 financial year, we received PAC recommendations from the following inquiries that our Accounting Officer provided evidence to.

Table 6: Committee of Public Accounts inquiries, reports and responses

Inquiry and hearing date	Hearing	Report published	Government response
HMRC Customer Service and Accounts 2023 to 2024	28 November 2024	22 January 2025	Published: 3 April 2025
Tax evasion in the retail sector	16 December 2024	12 February 2025	Published: 3 April 2025
The cost of the tax system	6 March 2025	30 April 2025	Forthcoming. Publication expected: 17 July 2025

We accepted or partially accepted 22 recommendations from NAO value for money reports published after 1 April 2024, and accepted 16 recommendations from the NAO management letter 2023 to 2024, subdivided into 27 sub-components, of which 18 were implemented
by 1 April 2025. We also implemented 77 recommendations from the Infrastructure and Projects Authority.

Further detail on the status of all NAO recommendations the department has accepted since April 2019 can
 be found via the NAO recommendations tracker.

Statement of Accounting Officer’s Responsibilities

How we prepare the accounts

HMRC is responsible for collecting the majority of the UK’s tax revenue, including Income Tax for the Scottish and Welsh governments, and its financial information is reported in 2 separate accounts.

Trust Statement

The Trust Statement reports the revenues, expenditures, assets and liabilities related to the taxes and duties receivable and payable for the financial year. The majority of taxes and duties are accounted for on an accruals basis. As agreed with HM Treasury, some tax elements are accounted for on a partial accruals basis, or cash basis where not enough information is known to accrue fully and reliably for the revenue.

The HM Treasury ‘Accounts Direction’, issued under section 2 of the Exchequer and Audit Departments Act 1921, requires HMRC to prepare the Trust Statement to give a true and fair view of the state of affairs of the collection and allocation of taxes and duties, the revenue and expenditure, and cash flows for the financial year.

Resource Accounts

The Resource Accounts report the costs of running HMRC, including making payments of Child Benefit, corporation tax reliefs, personal tax credits and other payments to customers reportable to Parliament via HMRC’s Supply Estimate. The Valuation Office Agency (VOA) is consolidated into the Resource Accounts. The Resource Accounts are prepared on an accruals basis.

The HM Treasury ‘Accounts Direction’, issued under the Government Resources and Accounts Act (GRAA) 2000, requires HMRC to prepare consolidated Resource Accounts to give a true and fair view of the state of affairs of HMRC and the departmental group and of the income and expenditure, Statement of Financial Position and cash flows of the departmental group for the financial year.

Principal Accounting Officer’s Report

HMRC’s Chief Executive, John-Paul Marks, has been appointed by HM Treasury as Principal Accounting Officer for HMRC. In this report, he reviews the effectiveness of the governance, risk management and internal controls in place for our accounts. This report also contains the elements required for HMRC’s Accounting Officer System Statement.

Financial responsibilities within HMRC

As HMRC’s Principal Accounting Officer, I delegate financial authority to each of HMRC’s directors general through annual letters of delegation (issued by my Chief Finance Officer) to manage the budget for their business areas within agreed financial limits and Managing Public Money guidelines. The directors general are supported by their finance directors and finance business partners. They cascade delegations of the financial authorities within their business areas, at each stage setting the limits of financial authority and our policy requirements.

This Scheme of Delegations is supported by our financial control framework, which ensures that we adhere to financial control standards in all our financial processes. The HMRC Risk and Control Board oversees the development and administration of our control standards, ensuring that financial risks are managed effectively and efficiently through proportionate risk-based controls. The effectiveness of the controls is subject to regular specialist financial control assurance review, and independent review by Internal Audit and the NAO.

Statements and reports made by ExCom members

Each member of ExCom provides an annual governance statement, setting out the control framework arrangements (governance, risk, control, assurance, process and data) in their business areas. These statements are reviewed by Internal Audit Control Board and the Corporate Risk Team, as well as teams that lead on different aspects of our control framework. HMRC’s Audit and Risk Committee draws on the statements, alongside other sources of evidence, to provide overall assurance to the Accounting Officer and the Board.

The Tax Assurance Commissioner prepares a tax assurance report.

Additional Accounting Officers

I receive assurance from HMRC’s Additional Accounting Officers:

• Jonathan Russell has responsibility for VOA administration
• Jonathan Athow has responsibility for the Scottish and Welsh rates of Income Tax
• Justin Holliday has responsibility for the account of duties attributable to the Isle of Man
• Alison Bexfield has responsibility for the administration of R.N. Limited

The VOA provides a separate governance statement and I take assurance from this and from the review which underpins it.

National Insurance funds

There are 2 National Insurance Funds: one for Great Britain and one for Northern Ireland. Each Fund has its own financial statements, including a governance statement, which I sign separately. Many of the activities relating to the transactions of the 2 Funds are carried out by other departments and agencies (for example, Department for Work and Pensions in Great Britain and Department for Communities in Northern Ireland), and I receive letters of assurance from the accounting officers of each of these entities every year.

Quality assurance

HMRC has a departmental framework and central guidance to underpin quality assurance of business-critical analytical models (BCMs). BCMs are our most important analytical models. They affect HMRC or government decisions of significant financial scale, play a key role in fulfilling HMRC’s business plan, or underpin high profile publications. We maintain a register of these models, consistent with recommendations from the 2013 MacPherson review. We have over 100 BCMs on the register. This number changes because the register is regularly updated.

Management and quality assurance of the analytical models are monitored in our annual review of BCMs, which is assessed by the Audit and Risk Committee. The quality assurance framework is promoted through regular training. We have a team which independently reviews a sample of BCMs, to provide assurance and share best practice. We have also improved model and quality assurance documentation.

We continue to develop our assurance of BCMs by strengthening governance and more clearly defining quality assurance standards in our guidance.

Read the MacPherson Review of quality assurance of government models on GOV.UK.

Internal audit

Overall opinion by The Director of Internal Audit: The overall opinion is limited assurance that HMRC has an adequate and effective framework for governance, risk management and internal control. HMRC’s risk exposure has remained high throughout 2024-25, both operationally and in change delivery.

HMRC introduced changes to its governance during the year. For some changes it is too early to provide a view on their effectiveness. However, my opinion is that governance of HMRC remains broadly effective, with over three quarters of audits providing a positive governance opinion, albeit with some deterioration at assignment level. This has included a deterioration in results for ‘accountability and ownership’ and ‘monitoring and assurance’.

Governance changes introduced to transformation have impacted the outcomes of some audits as the changes embed. Enterprise understanding and reporting of second line assurance remains largely linear, with opportunities for better alignment, efficiency and coverage yet to be realised. There is also the opportunity to better clarify some accountabilities, particularly for areas of the control framework that cross organisational boundaries. HMRC should ensure that accountability for operation and assurance of controls is overtly clear for all key components of its control framework, particularly given its ambitions around agile delivery and regime ownership.

Risk management has seen a small deterioration in audit results compared to 2023 to 2024. Importantly however, there have been improvements made to corporate risk management arrangements. Further progress is needed, however, to enable HMRC to confidently report an aggregated picture of risk below its top tier, which would benefit from use of a single risk tool. Similarly, risk appetite remains a work in progress. Assignment level opinions for risk management are generally positive, with three quarters of audits providing a positive opinion, albeit a five-percentage point drop on last year.

While risks are largely understood, and risk management arrangements are generally sufficient to support HMRC to deliver, at business group level, maturity, local arrangements and compliance with standards differs. This impacts on the adequacy of ‘risk identification’ in some areas, with audits showing a decline in positive results compared to 2023 to 2024. Overall risk exposure is unlikely to reduce significantly in the short term. Significant risks to efficiency, modernisation of IT and security systems, and delivering change require highly effective risk management arrangements. Capacity pressures will continue to be an issue requiring close management and there is a need for HMRC to further exploit efficiency opportunities.

My opinion on the adequacy of internal control is one of continued and significant challenge in delivering an effective control framework, but with some progress. For a number of the control themes, remediation is on a much slower track and in relation to technical health, security and data will take a number of years. Weaknesses in some security controls are of concern. At Departmental level, overall positive audit results for ‘control effectiveness’ fell from last year, with over a quarter of audits providing a limited control opinion and for half of our follow-up reviews we issued overall repeat limited opinions.

There remain significant control weaknesses to address, some of which require longer-term fixes or system changes. Delivery of improved control against many of these has been slow because they are either cross-cutting, difficult and / or legacy issues for which there are no easy fixes. In particular, parts of the IT estate are adversely impacted by long-standing issues, with a commensurate impact on control design, efficiency and effectiveness. Reprioritisation decisions against a number of these issues has pushed remediation to the right.

Personal data-related incidents

All government departments are required to publish information about any serious data-related incidents, which must be reported to the Information Commissioner’s Office (ICO). A summary of these incidents is shown in Table 7.

Table 7: Summary of protected personal data-related incidents reported to the Information Commissioner’s Office

Nature of incident	Number of breaches 2024-25	Number of breaches 2023-24
Personal information used to make changes to customer records on HMRC systems without authorisation	6	6
Loss of inadequately protected electronic equipment, devices or paper documents from secured government premises	1	3
Loss of inadequately protected electronic equipment, devices or paper documents from outside secured government premises	1	2
Insecure disposal of inadequately protected electronic equipment, devices or paper documents	0	0
Unauthorised disclosure	11	14
Other	1	4

We have notified the ICO of 20 instances of personal data breaches affecting individual customers during 2024 to 2025 (2023 to 2024: 29). The number of customers potentially affected by these ICO notifiable incidents is 6,503 (2023 to 2024: 35,645). This figure could still change over time, as new information becomes available as a result of further enquiries and ongoing security incident investigations.

The number of personal data breaches reported to the ICO decreased in 2024 to 2025 due to ongoing data security training and enhanced General Data Protection Regulation (GDPR) awareness across the department. Security controls are always improving as lessons are learned from previous incidents. We take all these incidents seriously and are acting to address them (for more information on these actions see the Protecting customer data section in Reforming and modernising Tax and Customs administration).

Our fraud prevention and detection controls identified unauthorised attempts to access approximately 100,000 HMRC customer online tax accounts, representing around 0.22% of our customer base. These attempts were enabled by organised criminal groups using personal data obtained from external sources, including phishing campaigns and other cyber-enabled crime. Their objective was to exploit the PAYE system to generate unauthorised repayments from the Exchequer, rather than from individual customers. No customers experienced financial loss in respect of their tax affairs.

The ICO was notified in 2023 to 2024 and has been kept informed of the number of potentially affected customers. These incidents were detected by our customer protection monitoring systems, which triggered immediate action to prevent further unauthorised access.

We continue to apply lessons learned to strengthen our identity and authentication controls. Protecting customer data remains a priority, and we are delivering enhanced data security, governance and reporting across HMRC.

Other protected personal data-related incidents

Incidents which did not require reporting to the Information Commissioner are recorded centrally within HMRC. The overall number of centrally recorded incidents remains low and the number of customers affected has reduced from last year.

The number of centrally managed security incidents impacting on protected personal data in HMRC increased from 1 (2023 to 2024) to 2 in 2024 to 2025. The number of customers potentially affected by these incidents was 3 (2023 to 2024:10). The figures quoted for the number of customers affected can change over time, as new information becomes available due to further enquiries and ongoing security incident investigations.

For more information on how we manage our data, please go to the Protecting customer data section in Reforming and modernising Tax and Customs administration.

Business Appointment Rules

In compliance with Business Appointment Rules (BAR), the department is transparent in the advice given to individual applications for senior staff. Advice regarding specific business appointments is published on a quarterly basis on GOV.UK. Since 2022, the BAR Governance Panel has provided central oversight of full Senior Civil Service (SCS) BAR applications and is responsible for assessing and reaching a decision on all full SCS BAR applications. A quarterly paper on the BAR is provided to the Audit and Risk Committee to support them in their role monitoring HMRC’s application of the rules.

In 2022, HMRC introduced a new BAR assurance tool to help the SCS community to identify whether a full BAR application is needed when leaving HMRC. In 2023 a supplementary tool was launched for delegated grades, which helps colleagues identify where a BAR application must be made and makes it easier for BAR applications to be associated with their central employee record.

Statistics cover the period 1 April 2024 to 31 March 2025:

Table 8: Statistics on the application of business appointment rules

	SCS1 Population	SCS2 Population	For AA-G6 population
Number of exits from Crown Service (civil servants and special advisers)	36	8	4,665
Number of exits where BAR applications were submitted	0	2	45
Number of BAR applications approved	0	2	45
Number of BAR applications where conditions were set	0	2	6
Number of BAR applications that were found to be unsuitable for the applicant to take up the new role	0	0	0
Number of breaches of the rules	0	0	No detail available

Read advice regarding specific business appointments on GOV.UK.

Control challenges in financial year 2024 to 2025

Over the past year, we have actively managed the following issues that posed a risk to delivery of our core work.

Tax credits error and fraud

The Comptroller and Auditor General has qualified his opinion on HMRC’s Resource Account for payments that we make that are not in accordance with Parliamentary intent, due to overpayments as a result of error and fraud in personal tax credits.

The error and fraud overpayment rate has reduced from the high levels of 8.9% seen in financial year 2008 to 2009, hitting an all-time low central estimate of 4.2% (£85 million) of paid entitlement in financial year 2024 to 2025. Although not a statistically significant decrease from the 2023 to 2024 estimate of 4.7% (£365 million), the change is likely to be due to a large proportion of higher risk awards leaving the tax credits population between 2023 to 2024 and 2024 to 2025. HMRC had previously maintained levels of error and fraud within an established range of 4.4% to 5.5% between 2012 and 2024.

We estimate a tax credits underpayment rate of 0.8% (£15 million) for 2024 to 2025, the same as 0.8% (£60 million) in 2023 to 2024.

Estimates from 2022 to 2023 onwards are derived using a new projection methodology following the decision to cease the error and fraud random enquiry programme as tax credits caseloads reduced. Our last sample-based estimate of the error and fraud overpayment rate for 2021 to 2022 is 4.5% (£480 million).

HMRC has continued compliance activity throughout the closure of tax credits. Compliance activity in 2024 to 2025 focused mainly on checks to ensure that the few remaining awards were finalised correctly before they migrated to Universal Credit.

HMRC’s accounts have been qualified since the inception of tax credits. As tax credits have now closed, and have been replaced by Universal Credit, administered by the Department for Work and Pensions, this will be the last year that the accounts are qualified for levels of error and fraud in personal tax credits.

Corporation Tax research and development tax relief error and fraud

The Comptroller and Auditor General has qualified his opinion on HMRC’s Resource Account to include error and fraud in Corporation Tax research and development (R&D) tax reliefs. This is the third year the estimate for claims from small and medium enterprises (SME) has been prepared using the results of a random enquiry programme. The first illustrative estimate for 2022 to 2023 has been revised due to the introduction of random enquiry data relating to 2022 to 2023. [See the delivering financial support section in Supporting wider government economic aims through HMRC’s work for more detail.]

The overall estimate of the level of error and fraud in 2022 to 2023 is 9.9% (£759 million) of the estimated cost of the reliefs. The level of error and fraud in 2022 to 2023 is 14.7% (£652 million) for the SME scheme and 3.3% (£107 million) for the Research and Development Expenditure Credit (RDEC) scheme. The overall rate of error and fraud in total R&D expenditure across the SME and RDEC schemes for 2022 to 2023 is lower than estimates for 2020 to 2021 and 2021 to 2022 reflecting legislative and operational changes to tackle error and fraud, notably the mandation of digital claims.

This estimate is lower than the previously published illustrative estimate for 2022 to 2023. For illustrative purposes, we have considered the possible error and fraud position for 2023 to 2024 and 2024 to 2025 expenditure to take account of legislative changes and operational measures. The legislative changes include rate changes, extending relief to data and cloud computing costs and the mandation of digital claims requiring additional information (including pre-notification of some claims). New information requirements have enabled HMRC to better identify and target risk and we have increased our compliance activity, increasing the number of staff working on R&D compliance to over 500 in 2024 to 2025 compared to 100 in 2021 to 2022. We estimate that the policy and operational measures that have been implemented have reduced error and fraud for expenditure in 2023 to 2024 and 2024 to 2025 to overall levels of 6.5% and 5.9% respectively.

Child Benefit error and fraud

The Comptroller and Auditor General has qualified his opinion on HMRC’s Resource Account for payments that we make that are not in accordance with Parliamentary intent, due to error and fraud in Child Benefit. This is the second year that HMRC’s Resource Account has been qualified due to levels of error and fraud in Child Benefit, and the second year that the estimate has been produced under improved methodology using monthly samples of Child Benefit data.

The central estimate of the error and fraud overpayment rate is 2.0% (£270 million) compared to 1.6% (£200 million) for 2023 to 2024. While there is an observed increase in error and fraud compared to 2023 to 2024, it is not statistically significant. As this is only the second error and fraud estimate prepared under the improved methodology, it is too early to say that there is a trend of increasing Child Benefit error and fraud. The main reasons for error and fraud are broadly consistent with the 2023 to 2024 assessment.

HMRC has strong controls for restricting error and fraud for new claims. Our compliance strategy is primarily focused on addressing subsequent changes in circumstance that go unreported. To improve the detection of changes, we have acquired 3 additional data sources in the last 12 months:

• data from the Home Office to identify customers who are no longer resident in the UK
• data from the Department for Work and Pensions to identify when older children claim benefits in their own right
• data from Student Finance England to detect changes in the young person’s further education status

To support these interventions, HMRC is investing in 180 new compliance staff as announced in the Autumn Budget 2024. In addition, HMRC are exploiting the new Child Benefit digital service to ensure timely interaction with customers and increased customer self-reporting.

Cabinet Office Spend Controls

As a central government body, HMRC is required to comply with the Cabinet Office Spend Controls. These state that all central government organisations, including departments and the bodies they sponsor, must obtain approval from the Cabinet Office when they want to spend money on specified activities. The specified activities include commercial spend on all contracts with a value greater than £20 million. HMRC spends around £2.5 billion per annum with suppliers.

During 2025 HMRC identified an administrative error that had led to a contract continuing to spend money without the requisite Cabinet Office approvals. Although the contract spend has been entirely within HMRC budgetary approvals, the administrative error meant that the initial Cabinet Office approval was not renewed when the contract was extended. This has led to an overspend beyond Cabinet Office approvals of £36 million. The contract has since been given retrospective approval by the Cabinet Office.

As a result of this instance we have reviewed all other current contracts to confirm that Cabinet Office approval has been correctly sought and received. This comprehensive review has identified a further 2 existing contracts with similar administrative errors. Together these comprise an overspend beyond current Cabinet Office approvals of £26.6 million and £23.5 million respectively. Both contracts remain within HMRC budgetary controls and both contracts have since received retrospective approval from the Cabinet Office.

We have reviewed the controls within our systems that led to these administrative errors and have implemented changes to our procedures to strengthen controls and prevent any further recurrences.

Accountability relationships with arm’s length bodies

HMRC has 2 arm’s length bodies: VOA, an executive agency of HMRC, and R.N. Limited. I am satisfied that each of these has systems in place which meet appropriate standards of governance, decision-making and financial management.

Figure 22: HMRC accountability system

Valuation Office Agency (VOA)

The VOA is an executive agency of HMRC and provides valuations and property advice to the government and local authorities in England, Scotland and Wales. The VOA receives its funding to undertake valuations for local taxation and benefits purposes from HMRC through the Parliamentary supply process. It also recovers elements of its expenditure from other government departments where it has provided valuation services. In April 2025 the government announced that the VOA will be brought into HMRC by April 2026 and will cease to be an executive agency.

Performance monitoring

Jonathan Russell is the VOA’s Chief Executive and Accounting Officer. He is also a member of HMRC’s Executive Committee (ExCom).

In October 2024, new governance arrangements were introduced for the agency. HMRC’s Board now provides strategic oversight of the VOA and replaced the VOA’s Board. Additionally, HMRC’s Audit and Risk Committee has replaced the VOA’s Audit Risk and Assurance Committee. HMRC’s Board provides advice, scrutiny, and challenge to both HMRC and the VOA, and is chaired by the Exchequer Secretary to the Treasury. HMRC’s ExCom performance hub and transformation performance pack includes VOA data and VOA performance is included in the Delivery Report to the HMRC Board.

HMRC’s performance teams work closely with VOA on reporting, and HMRC has a dedicated sponsor team for the VOA and ExCom sponsor, Justin Holliday. The teams have a good understanding of the VOA and I am content that our oversight is working well. I hold quarterly Business Reviews with Jonathan Russell, and he attends the HMRC Board at least twice a year and other specific meetings upon request.

Accountability for spending

Jonathan Russell is accountable to Parliament for the propriety and regularity of the public finance within his charge, meeting the requirements of Managing Public Money, HM Treasury and Cabinet Office guidance, Public Accounts Committee and other Parliamentary select committees or authorities. As Principal Accounting Officer, I am accountable for ensuring a high standard of financial management by strategic oversight of the VOA.

R.N. Ltd

R.N. Ltd is a private company limited by shares held by the Treasury Solicitor on trust for the HMRC Commissioners. R.N. Ltd acts as a nominee for the commissioners and the company holds charges over assets that secure tax debts owing to HMRC. It holds registered title over assets assigned to HMRC in settlement of tax liabilities. R.N. Ltd had 4 directors on 31 March 2025. The Accounting Officer is Alison Bexfield, HMRC Chief Risk Officer, who has authority delegated by the HMRC Commissioners to give directions to the Treasury Solicitor on the shareholding of R.N. Ltd.

There is a formal agreement between HMRC and R.N. Ltd and ExCom-level sponsorship from Justin Holliday. R.N. Ltd has no employees. The Accounting Assurance and Reporting Team within HMRC’s Risk, Control and Financial Accounting directorate provides case work administration, accounts production and secretarial services. The running costs of R.N. Ltd are met by HMRC.

Performance monitoring

The R.N. Ltd Board meets quarterly. All Board meetings discuss strategy and monitor the success of R.N.’s strategies as well as any associated risks. The Accounting Assurance and Reporting team monitors the risks and provides regular updates to the R.N. Ltd Board.

Accountability for spending

R.N. Ltd has no specific budget. The value of the assets over which the company holds charges and has title assigned amounts to £10.3 million (Voluntary Legal Charges £7.3 million and Funding Bonds/ Shares £3.0 million). These assets are excluded from the R.N. Ltd balance sheet, as the company holds these in a nominee capacity. In addition to preparing the accounts for R.N. Ltd, the HMRC Accounting Assurance and Reporting team also keeps a register for R.N. Ltd where all controls are listed and monitored.

Other organisations

Entrust is an organisation that regulates the Landfill Communities Fund (a tax credit scheme enabling landfill operators to fund environmental bodies to undertake specified environmental projects). A levy on contributions to environmental bodies, set annually by HMRC and announced at Budget, funds Entrust. Entrust is not an arm’s length body of HMRC but has a close relationship with HMRC similar to other bodies.

Accountability for major contracts and outsourced services

The scope of this section is limited to major contracts and outsourced services. In 2024 to 2025, HMRC provided grant schemes in accordance with relevant guidelines to the Voluntary and Community Sector who provide advice and assistance to vulnerable clients on their tax affairs, operated by third parties.

IT contracts

HMRC has several major contracts that are significant in ensuring that it can deliver its core services. Our IT services are supported through contracts with suppliers valued approximately at £1.6 billion in total, each year. HMRC continues to deliver better value from using well-established performance measures and competing work on a regular basis using a variety of different routes to market.

To support this a new bespoke framework for Digital and Legacy Application Services (DALAS) has been developed jointly by HMRC and Crown Commercial Services (CCS). It is designed to support HMRC’s digital transformation by enabling more agile, outcome-focused procurement of application services. DALAS facilitates the transition away from legacy service integrators by offering a structured, multi-lot approach that encourages competition, innovation and Small and Medium Enterprises participation.

Our digital transformation continues which will facilitate a move to lower cost and highly resilient cloud data storage services.

Facilities Management and Security Contracts

HMRC’s 6 regional Facilities Management contracts expired on 30 April 2025 and were replaced by 2 national contracts (East and West), covering all of our facilities management needs. These contracts have been awarded on a 5-year term, with a combined value of £150 million, both of which are now running live.

The contract for physical security services across our premises is delivered through a single national agreement, which commenced in June 2024. The 5-year contract is valued at £14 million per year.

These contracts are essential to supporting our operations across Regional Centres and Specialist Sites (including VOA locations), ensuring contractual resilience across the UK.

Conclusion

Based on the review outlined above, I conclude that HMRC has a sound system of governance, risk management and internal control that supports the department’s aims and objectives for 2024 to 2025.

We are clear on the areas we need to focus on to improve risk and control. We have challenges and areas to improve, as Internal Audit has identified. I have considered Internal Audit’s opinion with my Executive leadership team to determine how best to address the findings. I am confident that with determinded leadership we can and will deliver our planned mitigations and reduce our risk exposure as we go forwards. We have secured the investment to do so as part of the latest Spending Review.

Our transformation plans set out how we will transform over the Spending Review 2025 period, outlining how we plan to modernise and reform tax and customs administration — as a digital-first organisation. As we do this, we will be taking the opportunities it presents to reduce our risk exposure. One area we will be particularly focusing on is Cyber Security. Our Board considered Cyber Security at its meeting in June to challenge and assure itself of our management of this risk, the Board is also due to review our business resilience and disaster recovery response at its meeting in September.

John-Paul Marks
Accounting Officer
15 July 2025

HMRC Charter

Our Charter sits at the heart of what we do, setting out the standards of service and behaviours that customers should always expect from us. We are fully committed to our Charter because the experience our customers have is central to our vision of being a trusted, modern tax and customs department.

Our Charter standards are:

• getting things right
• making things easy
• being responsive
• treating you fairly
• being aware of your personal situation
• recognising that someone can represent you
• keeping your data secure

[Further detail on our Charter standards are shown within the Charter Stakeholder assessment.]

“In last year’s Charter Annual Report, while acknowledging good progress, I commented on the need for HMRC to quickly improve the service performance to its customers. Therefore, I was pleased to see improved service levels this year, through both increased resources and enhancements to HMRC’s digital offering.

HMRC has also committed to further improving its customers’ experiences. As a committee, we will challenge and support HMRC to achieve this across all channels.

We are working closely with HMRC as they develop their transformation plans, which have had extensive input from various stakeholders, including considerable input and challenge from the Board. Listening to Intermediaries and a broader range of external stakeholders, is key to continued progress towards the department’s ambitions. HMRC must continue to seek a wide variety of both customer and stakeholder feedback and be able to respond to this swiftly. It is reassuring that HMRC will regularly and transparently report on progress, and we look forward to receiving updates on improvements made.

I am pleased to see a continued increase this year in the number of online customer interactions and customers self-serving, with the HMRC app now having more than 5.9 million users. Furthermore, HMRC has established processes for providing extra support to customers who may experience difficulties. I challenge HMRC to continuously review these processes and continue investing in digital services and focusing on the end-to-end journey experience across all channels, which are critical for HMRC to deliver its Charter standards.

To accelerate a future-fit customer experience culture at HMRC, we continued to emphasise the importance of efforts on internal training, education and comms, around the HMRC Charter and customer excellence across the organisation.

I would like to thank my fellow Customer Service Committee members for their support.”

Jen Tippin
Chair of the Customer Service Committee (CSC)

Assessment from the Independent Adjudicator

Mike McMahon, CSC member and the Independent Adjudicator for HMRC and the VOA:

My office has always welcomed the opportunity to contribute to HMRC’s assessment of how well it embraces and embeds the Charter. We are, and will remain, a critical friend for HMRC — acknowledging what HMRC does well and challenging it where it can improve.

Year on year we have emphasised the importance of the Charter to all that HMRC does. I am hopeful that this coming year will see real change.

But context is important. HMRC is a huge and complex department. Whilst I and many others would like to see real-world improvements for HMRC’s customers to come quicker, I also appreciate that change takes time.

But there is cause for hope. Since the summer of 2024, HMRC has improved its customer facing performance, and that has largely sustained. I am hopeful that this is the springboard for continued improvement so that HMRC can say with confidence, that it is trusted by the people who interact with it.

I see a lot of cases where guidance and policy appear to me to conflict with the intention of the Charter. I also have first-hand experience of HMRC’s staff being unsure how they are meant to use the Charter in their decision-making. Therein lies an opportunity for HMRC which I believe would be transformative.

In my view, when you distil the Charter to its fundamental purpose, it’s really about fairness — fairness for the people who interact with HMRC, fairness for the citizens of this country who rely on HMRC to collect the tax that pays for the services we all need; fairness for the people who work in HMRC.

Other sectors have similar commitments as those set out in the Charter. In the financial sector, those commitments are largely embodied in legislation. Legislation requires HMRC to have a Charter, but it is less clear what its obligations are to use it effectively.

I believe it would transform HMRC if it made a clear, unequivocal statement, for its people and customers, setting out what the Charter means. By that, I specifically mean, what its standing is. In doing so, I firmly believe I would see fairer, more customer focused decision-making and increased trust in HMRC. My personal view is that the Charter should normally be the first consideration in all that HMRC does.

I also believe better use of the Charter would significantly improve compliance. Many customers I deal with are confused or worried or both, so avoid contact with HMRC. The stereotype of a determined tax avoider is the exception rather than the rule in my experience.

I can see that HMRC are trying to improve in an incredibly complex environment. I am listened to, and action is taken when I raise concerns about how Charter focused its decision-making is. This year is an opportunity to provide real clarity about what the Charter means and to fully implement that in a way that its people can use, building on the improved picture we have seen since the summer.

In doing so, HMRC will go a long way to being the trusted tax authority it aspires to and which I truly believe it can be.

The Charter Stakeholder Group

The Charter Stakeholder Group’s membership includes external tax representative bodies whose role is to assist the Customer Service Committee in evaluating the extent to which we have demonstrated the Charter standards.

The Charter Stakeholder Group’s 2024 to 2025 review of our performance against the Charter:

We have considered HMRC’s performance in 2024 to 2025 against its Charter. To provide evidence-based feedback, we undertook a survey of agents and taxpayers over a five-week period predominantly in April 2025. We received 551 responses in total, including 387 from agents and 134 from individual and business taxpayers.

The survey repeated the previous years’ questions, scoring between 1 and 10 for HMRC’s performance against each of the Charter standards, and allowed freeform comments. We have shared the full results with HMRC.

Like previous years, complaints about HMRC’s service dominate the feedback and heavily influence the scores and freeform comments, although there is some improvement over last year’s scores. ‘Being responsive’ again scored the lowest of the Charter standards, at just 3.0 out of 10 on average. ‘Making things easy’ and ‘getting things right’ also scored poorly at 3.3 and 4.1 respectively. Like last year, these 3 standards are the lowest scoring, which is disappointing as between them they represent the ‘health’ of the tax system.

82% of respondents do not think that HMRC is held sufficiently accountable for its performance against the Charter, with only 7% considering they are (the remainder unsure).

Getting things right — We’ll give you accurate, consistent and clear information. This will help you meet your obligations, and understand your rights and what you can claim. When we ask for information, we rely on you to give us full, accurate and timely answers. If you disagree with us, we’ll tell you about options available to you and work with you to reach an appropriate outcome quickly and simply.

HMRC received 4.1 out of 10 (3.5 last year), with agents scoring HMRC lower (3.8) than taxpayers (4.4). The score that received the most votes was 1 out of 10, given by almost one-fifth of all respondents, and more than one-quarter of taxpayers.

Many respondents commented that, while HMRC helpline staff may be ‘polite’ and ‘trying to help’, they are often lacking the training and expertise to assist agents or taxpayers with their queries. Concerns were raised that HMRC make too many basic errors. Respondents felt that HMRC lack accountability, since poor customer service can prevent agents and taxpayers from resolving these errors, resulting in the taxpayer being penalised.

Making things easy — We’ll provide services that are designed around what you need to do, and are accessible, easy and quick to use, minimising the cost to you.

This was the second worst performing area with an average score of 3.3 out of 10 (2.8 last year), with agents scoring HMRC lower (3.0) than taxpayers (3.8). Nearly two-thirds of respondents scored HMRC 3 out of 10 or less, and over a quarter scored 1 out of 10.

There was frustration at the continued direction to the use of online tools, when all avenues have already been exhausted and online tools are not fit for purpose. The following quote captures the general feeling: “They [HMRC] are very patchy. Some parts are excellent, but some seem to be actively working against the charter… HMRC’s ability to carry out basic administration in a timely manner is having a serious negative impact on day-to-day business… Most of this could be done by the taxpayer or agent in a fraction of the time, if HMRC didn’t act as gatekeeper.”

Being responsive — When you get in touch with us, we’ll make sure that the people you deal with have the right level of expertise. We’ll answer your questions and resolve things first time, or as quickly as we can. We’ll also explain what happens next and when you can expect a response from us. If we make a mistake, we’ll put it right as soon as possible. If you’re not satisfied with the service you’ve received, we’ll explain how you can make a complaint.

Like last year, this was the lowest scoring Charter standard, with an average of 3.0 out of 10, a slight increase from 2.4, with agents scoring HMRC lower (2.7) than taxpayers (3.6). Just under 40% of respondents scored HMRC just 1 out of 10.

Agents voiced their displeasure with the time taken to start initial contact and then receive a response from HMRC, regardless of the communication method used. “The wait time on calls is unacceptable, as is the response to letters”. Many of the taxpayer respondents agreed. “Slow to respond to both written and telephone submissions” was a typical sentiment expressed.

Treating you fairly — We’ll work within the law to make sure everyone pays the right amount of tax and gets their benefits and other entitlements. We’ll assume you’re telling the truth, unless we’ve good reason to think you’re not.

HMRC scored an average of 5.3 out of 10 (5.0 last year), with agents and taxpayers scoring HMRC about the same.

While the average score is only marginally higher this year, it masks a marked increase in taxpayer satisfaction compared to last year. This would suggest that the work within HMRC’s Customer Compliance Group (CCG) to embed and apply its Compliance Professional Standards is having a beneficial impact on taxpayers’ perception of their treatment. However, agents dealing with more complex taxpayer cases continue to raise concerns with the quality and understanding of tax knowledge displayed by some compliance officers and the objectivity and consistency in their application.

Being aware of your personal situation — We’ll listen to your worries and answer any questions clearly and concisely. We’ll be mindful of your wider personal situation, and will give you extra support if you need it.

HMRC scored an average of 4.5 out of 10 (4.1 last year). The improvement from last year comes from personal and business taxpayers; the percentage scoring a one dropped from 43% to 25%, which is still high, but shows improvement.

Some common themes include:

• HMRC not providing timescales — busy agents get frustrated when their workload and planning are not respected, or when HMRC stipulates timescales they don’t adhere to themselves
• ‘Hiding behind a computer’ or using a script — can interfere with the customers query being understood or resolved

Recognising that someone can represent you — We’ll respect your wish to have someone else deal with us on your behalf, such as an accountant, friend or a relative. We’ll only deal with them if you have authorised them to represent you. To protect you, HMRC works with professional bodies to set the standard expected of professional tax advisers who support you to meet your tax obligations. We can refuse to work with professional tax advisers who fail to adhere to this standard.

HMRC scored an average of 6.0 out of 10 (5.7 last year). In contrast to the previous two years, this year agents scored HMRC lower (5.9) than taxpayers (6.2).

Agents reiterate that they cannot access all the information that their clients can see — or do everything that their clients can do online. Agents would like to use digital options but because of gaps in the digital services available for agents, they must call HMRC. Long delays on the Agent Dedicated Line were a significant issue.

Keeping your data secure — We’ll protect information we hold about you and treat it as private and confidential. We’ll always use that information fairly and lawfully.

Taxpayers and agents generally consider that HMRC is meeting this Charter standard, scoring an average of 7.0 out of 10 (6.8 last year), with agents and taxpayers scoring HMRC about the same.

However, respondents mentioned concerns over confidentiality arising from being able to hear household activity in the background when contact centre staff are working from home. Concerns were also expressed over the number of security breaches of online HMRC accounts and it being extremely difficult to resolve fraudulent filings.

Mutual respect — We take any threats, intimidation or harassment very seriously and will take appropriate action against any behaviour of this type. We’ll always treat you in line with our values of respect, professionalism and integrity. Our employees are people too and we expect you to treat them in the same way.

HMRC scored an average of 6.0 (5.6 last year), and agents scored HMRC marginally higher (6.0) than taxpayers themselves (5.8). Respondents mentioned the unequal relationship between HMRC and taxpayers and agents, and standards not being balanced or fair. HMRC sets deadlines for taxpayers that do not match its own response times. Some respondents said that HMRC’s attitude towards taxpayers and their representatives can be dismissive and unprofessional, with phone calls cut off abruptly and no real mechanism for escalating issues.

Charter Stakeholder Group membership

The members of the group are listed below:

• Institute of Chartered Accountants in England and Wales
• Low Incomes Tax Reform Group
• Association of Chartered Certified Accountants
• Chartered Institute of Payroll Professionals
• Admin Burdens Advisory Board
• Institute of Chartered Accountants of Scotland
• The Association of Taxation Technicians
• The Chartered Institute of Taxation
• Institute of Financial Accountants

HMRC’s assessment of our performance against the Charter

We remain fully committed to the Charter and our customers’ experience is central to our vision of being a trusted, modern tax and customs department. During 2024 to 2025 we considered stakeholder feedback from last year’s Charter report as well as listening and working more closely with external stakeholders to improve services.

2024 to 2025 remained a challenging year as our customer base continued to grow and the number of customers with complex needs increased. While traditional phone and post services weren’t where we would like them to be, services improved as the year progressed. We also saw more customers successfully using online services than in the previous year.

This report references many ways that we have delivered on our Charter standards in the last year. In response to last year’s feedback, we have also:

• expanded the use of online digital assistants to help customers quickly find the information they need or link them to a webchat adviser
• created a GOV.UK interactive guidance tool bringing together guidance to make it easier for customers to understand the compliance process — customers now have accurate information to help meet their obligations and understand their rights
• improved our guidance and delivered training to our compliance workforce so they can better support customers who need extra help
• extended the digital child benefit claims service, with parents also now able to use familiar payment platforms to pay for Tax-Free Childcare
• enhanced the Time to Pay service so more customers can manage their debt online. Customers can now top up their National Insurance contributions online and both services are designed to be accessible, easy to use and reduce costs
• trained around 1,600 new compliance colleagues in Customer Compliance Group to embed the Charter through the Compliance Professional standards
• taken action to address the cyclical nature of complaints. This includes regular root cause analysis to identify trends, resolving customer issues at first contact and using insight to reduce complaints and improve services

The Customer Service subcommittee, the Adjudicator, external stakeholders and our customers rightly continue to challenge us on our delivery of the Charter. There is still more to do to embed the Charter; we are committed to being a customer centric organisation that has the Charter at its heart. We expect to deliver the step change needed during 2025 to 2026 and the Customer Service Committee, the Adjudicator and the external Charter Stakeholder Group will hold us to account to deliver. We are very grateful to colleagues for their leadership, advice, challenge and support.

Tax Assurance Commissioner’s report

Foreword

When I reflect on the 2024 to 2025 financial year, I am proud of HMRC’s ongoing work to ensure we resolve tax disputes fairly, efficiently and consistently. As the Tax Assurance Commissioner, I aim to provide confidence to the public that robust scrutiny and challenge is provided on HMRC’s largest tax disputes and that HMRC is fair and consistent in its treatment of all customers. I chair a panel of 3 Commissioners to make decisions on the largest and most significant tax cases and a sample of smaller cases in accordance with our Code of Governance.

This year, we have continued to work on improving the customer compliance journey, including training and upskilling events for caseworkers and managers to help get things right first time. We are involving taxpayers and their representatives in this training, for example, we delivered a masterclass for trainees on providing timely response to customers in collaboration with taxpayer representatives.

We have launched a new framework to provide a clear structure for managers to oversee risks and operate controls within our compliance processes. This will help to ensure a consistent approach across our work and gives managers the tools and knowledge to check the standard of casework and professionalism of staff. We have also introduced a new interactive training programme to strengthen decision making capability, ensuring caseworkers are able to apply judgment and discretion consistently in resolving cases.

We have maintained capability and consistency in the application of the Litigation and Settlement Strategy, including supporting case teams on more complex enquiries. This year we’ve updated the remit of the Contentious Issues Panel and the Anti-Avoidance Board on GOV.UK. We have launched a consultation looking at how to improve HMRC’s approach to dispute resolution, including statutory review and Alternative Dispute Resolution.

The results from the Tax Assurance Settlement Programme demonstrate that we have maintained overall compliance at a consistent level of performance during the past 3 years against our policy, legal and customer standards. Feedback has been provided to senior leaders and managers on areas for improvement.

I look forward to provide continuing assurance on how HMRC manages its disputes and the measures we’ve taken to improve standards. This is a contribution to building trust in HMRC’s administration of the tax system.

Read the remit for Anti-Avoidance Board (AAB) and Contentious Issues Panel (CIP) on GOV.UK.

Justin Holliday
Tax Assurance Commissioner and Chief Finance Officer

Our approach to tax disputes

HMRC’s framework for resolving tax disputes

We aim to support our customers to get their tax right from the outset by designing a framework of policy and guidance to help them navigate the tax system. Where they need additional help to meet their tax obligations we aim to resolve issues at first contact, whether using digital or traditional channels.

The HMRC Charter defines the standard of service and behaviour that customers should expect when dealing with us. It explains how we aim to get things right, make things easy for customers and be fair, responsive and aware of their personal situations. We are committed to meeting our Charter commitments and improving our customer experience.

There are occasions where we need to conduct a compliance check because there is a risk that a customer’s tax returns are not correct. Our Compliance Professional Standards, which are based on the HMRC Charter, set out how we will behave and act when conducting any form of compliance activity. We closely monitor performance against our standards and take steps to implement further improvements where necessary. We aim to continue to improve the quality of our compliance casework, including strengthening our controls and assurance activities.

This is underpinned by our Litigation and Settlement Strategy (LSS), the framework within which we resolve tax disputes through civil law processes and procedures. It applies whether the dispute is resolved by agreement with the customer or through litigation. We aim to apply the law fairly and consistently to secure the best practicable return for the Exchequer.

Read HMRC’s Charter on GOV.UK.

Read HMRC’s Litigation and Settlement Strategy on GOV.UK.

Read HMRC’s Compliance Professional Standards on GOV.UK.

Our collaborative approach to handling and resolving tax disputes

We aim to work collaboratively with customers and their agents to establish the correct tax position. We resolve most tax disputes by agreement with customers. We seek to resolve any dispute as quickly and cost-effectively as possible, in accordance with the law, our LSS and our ‘Code of Governance for resolving tax disputes’. However, we know there will be occasions where HMRC and our customers continue to disagree on the amount of tax that is due.

Where we cannot reach an agreement, there are several options that a customer or HMRC can take to agree a resolution, including mediation through Alternative Dispute Resolution, a statutory review of the matter and/or litigation, where an independent tax tribunal is asked to determine the dispute.

We consider a number of factors when deciding whether to pursue a tax dispute but generally, we will only pursue disputes where we believe that we will secure the best practicable return for the Exchequer and that we will likely be successful in litigation. We ensure that both the substance of any decision leading to resolution of the dispute and the way that resolution is put into effect are fully in accordance with the law.

Read HMRC’s Code of governance for resolving tax disputes on GOV.UK.

Our approach to dealing with fraud

HMRC’s approach is to support the vast majority who try to get their tax right through guidance, educational material and responsive customer service. However, we will respond robustly to those who try to cheat or attack the tax system. Our approach to dealing with fraud is to use a range of responses, including our civil compliance penalties for deliberate misconduct through to our criminal investigation powers for cases:

• where HMRC needs to send a strong deterrent message
• where only a criminal sanction is appropriate
• where a civil compliance approach will not be effective

Read HMRC’s criminal investigation policy on GOV.UK.

How we resolve tax disputes

We aim to support customers to resolve disputes with us collaboratively and by agreement where possible. During a compliance check, we call or write to customers or their agent if they have one, to say what we want to check and why. Customers can authorise someone else to deal with the matter on their behalf throughout the check, such as an accountant, friend or a relative. During the check, we may request for customers to send us any information or documents that we need or to meet with us to discuss their tax affairs.

We provide extra support to customers who may have a health condition or personal circumstances that make it difficult for them to deal with the compliance check. If our checks reveal that an incorrect amount of tax has been paid, we issue an assessment or amend the return to collect any unpaid tax. We reach resolution with customers in the majority of disputes by agreement but, if a customer does not agree with our decision, they can appeal against the assessment, apply for statutory review or Alternative Dispute Resolution.

Alternative Dispute Resolution (ADR)

ADR in HMRC is a flexible resolution process which can be used by HMRC and customers at any stage of a compliance check. It involves an impartial and neutral HMRC mediator actively assisting parties to work towards resolving a tax dispute outside of the tribunal or court. In some cases, ADR can be used to progress a case by assisting the parties during the course of an enquiry to overcome an area of disagreement which is inhibiting progress.

Figure 23: ADR Process in HMRC

Most ADR applications are submitted once we have made a decision on the amount of tax due and the customer has appealed – but it is possible to consider ADR at any point during a compliance check. Customers can apply for ADR via telephone or online through GOV.UK. We have set up an internal route for HMRC caseworkers to apply directly for ADR which will only be accepted with the customer’s agreement. The mediator will decide within 30 days of receiving the application whether the case is suitable for ADR.

The types of case which are out of scope for ADR can be found in the published ADR guidance on GOV.UK. These are usually cases where ADR cannot add value to the dispute because, for example, legal precedent is set and there is no apparent scope for HMRC to amend the decision. If the mediator has concerns about whether the case is suitable for ADR or whether ADR can add value, the case is referred to an internal governance panel for consideration.

Read HMRC’s ADR Guidance on GOV.UK.

If we agree to enter into ADR, the mediator will work with the HMRC caseworker and the customer to try to resolve the dispute. The mediator will aim to conclude the process within 4 months. The parties in dispute have ultimate control over the decision on whether to settle.

ADR continues to have a positive impact on 89% of the cases which are accepted into the process. In this instance, positive impact means that the case has been progressed, either by fully or partially resolving the dispute, or by clarifying both sides’ positions and enabling them to make an informed decision on how to move forward. The majority of mediations take place via video which helps provide greater operational flexibility and reduce costs.

Table 9: Alternative dispute referrals

	2024-25	2023-24
Total applications for ADR (either side can propose ADR)	1,653	1,309
Cases accepted into ADR	663	512
Cases rejected by governance panels	434	334
Cases rejected as being Out of Scope	191	326
Cases withdrawn by applicant	213	66
Cases awaiting triage decision	246	71
Total	1,653	1,309
Cases closed	521 (note)	367
Of which: Cases resolved	462 (note)	307
Percentage of cases resolved	88.7%	83.7%
Live cases	253	225

Note: This figure includes applications from a previous tax year.

Reviews and appeals

If a customer disputes an appealable tax decision, they can request a statutory review of the decision and/or appeal to the independent tax tribunal. Reviews usually settle disputes and are quicker and more cost-effective than appeals. It can therefore be beneficial to customers to seek a review in the first instance. If a customer requests a review and does not agree with the outcome, they can still make an appeal to the tribunal.

Reviews

All HMRC reviews are principally overseen by tax, legal or accountancy professionals working in our Legal group. To ensure an objective and impartial review service, HMRC ensures that these officers were not involved in the original decision.

The statutory review process provides an additional opportunity to resolve disputes without the need for tribunal proceedings. The statutory review process checks whether the decision is in line with legislation and technical guidance, policy, and practice. The review is also an opportunity to provide feedback internally to HMRC caseworkers and improve decision making.

We carry out the review ensuring:

• a transparent review of decisions
• quality and consistency in our review conclusions
• even-handed dealing with taxpayers at review
• as many disputes as possible are resolved without tribunal proceedings

Table 10: Overview of outcomes of reviews

Statutory reviews of automated penalties and default surcharge (note)	2024-25	2023-24
Dealt with in the year	69,341	50,881
HMRC original decision upheld	22,786	13,245
HMRC decision varied	289	1,760
HMRC decision cancelled	46,266	35,876
Percentage where original HMRC decision was upheld	33%	26%
All other reviews
Dealt with in the year	5,834	5,226
HMRC original decision upheld	4,246	3,729
HMRC decision varied	900	930
HMRC decision cancelled	688	567
Percentage where original HMRC decision was upheld	73%	71%
All Statutory Reviews
Dealt with in the year	75,175	56,107
HMRC original decision upheld	27,032	16,974
HMRC decision varied	1,189	2,690
HMRC decision cancelled	46,954	36,443
Percentage where original HMRC decision was upheld	36%	30%

Note: In 2024 to 2025, HMRC issued 9,070,279 automated penalties, penalty points and default surcharges (2023 to 2024: 8,186,378).

The figures in this report show an increase in the volume of automated penalties which is due to reforms made to the penalty process. Following penalty reform, customers receive a penalty point each time they miss a submission deadline which accrue towards a threshold. Once the points threshold is exceeded, customers are issued with a financial penalty. There is now the facility for customers to appeal both late submission penalties and points as well as late payment penalties online through their Online Account. This makes the process easier, and more likely that customers will use the service. As more customers move into penalty reform, an increase in the overall volume of appeals and statutory reviews is likely while customers become accustomed to their new obligations.

Appeals

Where a customer chooses to appeal a tax decision it will normally be to the First-tier Tribunal (FTT). Where a customer disputes the lawfulness of a decision then they may also request a Judicial Review (JR). A request for JR will normally be made to the High Court. Most appeals are settled between the customer and HMRC without requiring the tribunal or court to hear the appeal but where agreement cannot be reached the tribunal, or court will schedule a hearing to listen to both sides of the argument before issuing their judgment. If either the customer or HMRC are dissatisfied with the judgment, then they can seek to appeal against it to a higher jurisdiction. The tribunals and courts are independent of both HMRC and the customer.

Table 11: Overview of tax appeals (Note)

	2024-25	2023-24
New appeals made to the FTT	9,093	12,668
Appeals in progress	48,500	47,250
Of which have been stood over	41,500	41,750
Settled appeals (by formal hearing or by agreement before the hearing)	7,276	7,885
Tax protected	£6.4bn	£3.3bn
Decided appeals	2,082	1,590
Success rate for decided appeals	92.6%	87.4%

Note: Please note there is a difference between FTT appeals recorded by Ministry of Justice and the statistics reported here. These differences relate to the timing of when appeals are counted and whether or not HMRC is a party to the proceedings.

For appeals that were stood over 41,500 (2023 to 2024: 41,750), this was generally, where HMRC and the customer have agreed to put the appeal on hold while waiting for a decision in a related lead case that is being litigated.

Tax protected is an estimate of the tax at risk in litigation where HMRC has successfully defended its decisions. This will vary from year to year depending on the timing and nature of the litigation. If a specific appeal is challenging an aspect of law that would have implications for a large number of cases, then the tax protected figure will include an estimate of this wider tax at risk. Tax protected in any year is usually a reflection of a small number of cases that have a large amount of tax at stake.

HMRC’s success rate recorded in table 12 below is calculated as the percentage of hearings where the decision is in our favour or substantive elements of our case succeeded.

Table 12: Data relating to decided appeals

Due to the amount of data presented, only part of the table below is visible. Please use the scrollbar at the bottom of the table to view all the columns.

	First-tier Tribunal (2024-25)	Upper Tribunal (2024-25)	High Court (2024-25)	Court of Appeal (2024-25)	Supreme Court (2024-25)	First-tier Tribunal (2023-24)	Upper Tribunal (2023-24)	High Court (2023-24)	Court of Appeal (2023-24)	Supreme Court (2023-24)
Total	1,997	58	4	19	4	1,500	57	12	16	5
Decision for HMRC	1,766	36	4	14	3	1,219	42	10	12	3
Decision where substantive elements of HMRC’s case succeeded	99	5	0	0	0	99	4	0	0	0
Decision for customer	132	17	0	5	1	182	11	2	4	2
HMRC success rate	93%	71%	100%	74%	75%	88%	81%	83%	75%	60%

Governance for resolving tax disputes

Governing the resolution of disputes

The role of the Tax Assurance Commissioner (TAC) was first introduced in 2012, as part of a package of measures to strengthen HMRC’s governance and assurance of tax disputes. The TAC has ultimate responsibility for civil dispute governance across HMRC, and for the Litigation and Settlement Strategy. They provide assurance and transparency to Parliament and the public that HMRC handles disputes in a fair and even-handed manner.

The TAC has no involvement in the management of the tax affairs of specific customers and no line management responsibility for caseworkers, maintaining a clear separation of responsibilities. The TAC chairs a panel of 3 HMRC Commissioners who make decisions on the largest and most sensitive cases, as well as a sample of smaller cases. A sample of cases is checked through our Tax Settlement Assurance Programme to assure how cases are managed and disputes resolved.

Read HMRC’s Litigation and Settlement Strategy on GOV.UK.

In line with our code of governance for resolving tax disputes, the majority of case resolution decisions are taken by caseworkers with the oversight of their managers and, where relevant, advise from specialists. Where tax at risk on a dispute exceeds £5 million (non-Large Business customers) or £15 million (Large Business customers), referral to a dispute resolution board is required as set out in HMRC’s code of governance for resolving tax disputes.

Read HMRC’s Code of governance for resolving tax disputes on GOV.UK.

Figure 24: Summary of TAC oversight dispute resolution governance

Table 13: HMRC Commissioners: outcome of referrals

	2024-25	2023-24
Total number of meetings held (including via correspondence)	15	17
Total referrals to the Commissioners	46 (note 1)	48
Reason for referrals
£100m plus tax or £500m adjustment	30	31
Decisions on sensitive case or risk	1	4
Decisions on sample cases	11	11
Penalty only referrals	4	2
Director referral	0	0
Director re-referral following remittance for further work	0	0
Outcome of referral (note 2)
Taxpayer’s filed position accepted	9	3
Taxpayer’s revised proposal accepted	12	15
Taxpayer’s position rejected	20	28
Remitted for further work	1	0

Notes:

1. Referrals from CIP/AAB are not included within these figures.
2. Outcome of referral does not include penalty only referrals.

Table 14: Tax Dispute Resolution Board — outcome of referrals

	2024-25	2023-24
Total referrals to TDRB	44	46
Referred to Commissioners
Taxpayer’s filed position accepted	7	2
Taxpayer’s revised proposal accepted	10	13
Taxpayer’s position rejected	20	22
Penalty only referral	3	3
Total referred to Commissioners	36	40
Not referred
Remitted for further work	3	3
Guidance provided	1	0
Decision taken by TDRB under its remit	4	3
Total not referred to Commissioners	8	6

Table 15: The Customer Compliance Group Dispute Resolution Board: outcome of the total referrals to the CCG DRB

	2024-25	2023-24
Total referrals to CCG DRB	113	92
Taxpayer’s filed position accepted	13	13
Taxpayer’s revised proposal accepted	29	24
Taxpayer’s position rejected	50	38
Penalty only referral	14	13
Board remitted for further work before re-referral	7	4
Total	113	92
Of which: Sample cases referred to commissioners	11	12

Issues governance

We have governance processes in place to determine our approach to issues that affect multiple taxpayers to ensure they are treated in a consistent and even-handed manner. In general, policy and compliance teams refer avoidance issues to the Anti-Avoidance Board (AAB) and any other issues involving points of law or practice to the Contentious Issues Panel (CIP). Both these bodies include senior operational, legal and policy experts.

During 2024 to 2025:

• the CIP met on 5 occasions and considered 7 issues (6 occasions and 8 issues in 2023 to 2024) involving Personal tax and Business tax
• the AAB met on 7 occasions and considered 10 issues (7 occasions and 10 issues in 2023 to 2024)

No issues were referred to the commissioners from the CIP (no issues were referred to the commissioners in 2023 to 2024). No issues were referred to the commissioners from the AAB (no issues referred to the commissioners in 2023 to 2024).

General Anti-Abuse Rule (GAAR) and GAAR Advisory Panel

The purpose of the GAAR is to discourage taxpayers from entering into abusive arrangements, and to deter the promotion and enabling of such arrangements. The GAAR Advisory Panel is an independent body made up of experts with legal, accountancy and commercial backgrounds. It provides an opinion on whether tax arrangements are unreasonable.

We are legally required to consider the opinions issued by the advisory panel in reaching a final decision on whether to use the GAAR to address the tax advantage arising from the arrangements, or whether to apply penalties to enablers who facilitated the use of those arrangements. Courts must also take into account the panel’s opinion if the tax arrangements are considered by them. The panel’s opinions are published on GOV.UK to help taxpayers recognise abusive tax avoidance schemes. An opinion can relate to arrangements used by multiple taxpayers leading to the issue of opinion notices.

In 2024 to 2025 the panel provided an opinion in 3 cases (1 in financial year 2023 to 2024). In each of the cases considered, the opinion of the panel was that entering into and carrying out the arrangements was not a reasonable course of action.

Since 2018, we have issued over 5,700 GAAR opinion notices (applying GAAR Advisory Panel opinions) to taxpayers who have used these arrangements. Taxpayers have the right to appeal against any adjustments made under the GAAR and any penalties that may be due if their case is settled under the GAAR.

Read more about the GAAR on GOV.UK.

Ensuring a standard approach to penalties for inaccuracy and failure to notify chargeability

We charge our customers inaccuracy penalties when we find that they have filed an inaccurate tax return, claim or document, and the inaccuracy occurred because of careless or deliberate behaviour on their part. We charge our customers failure to notify penalties when we find that they have not told HMRC about a new liability to tax or other duties, and do not have a reasonable excuse for not doing so.

We work hard to ensure consistency in our decisions to charge these penalties. We do this by maintaining effective controls to make sure decisions are considered and authorised at the appropriate level, taking into account both the size and complexity of the tax at stake and the corresponding penalty.

We control penalty decision-making through operational guidance, line manager authorisation checks and specific governance boards for the most complex cases. We use networks of senior tax professionals to support our caseworkers with advice and assurance. The government recently consulted on opinions to simplify and strengthen HMRC’s behavioural inaccuracy and failure to notify penalties. The consultation closed for feedback in June 2025 and the government will respond in due course.

Tax Settlement Assurance Programme

Since 2013, under the Tax Settlement Assurance Programme (TSAP), a specialist team independent of operational casework has reviewed a sample of settled civil compliance cases. The purpose is to assess whether we have met our internal case quality standards and appropriately governed decisions relating to disputes. This includes evaluating adherence to the Charter standards and core internal processes.

The Compliance Professional Standards (CPS) underpin training and capability development and are used to assess the quality of performance, including responsiveness to customers. Since 2021 to 2022, casework has been tested against the CPS in parallel with TSAP as part of our broader assurance programme, aimed at identifying areas for improvement in our management of tax administration and disputes.

In 2024 to 2025, the TSAP reviewed 400 settled cases. The cases provide robust evidence of the quality of compliance casework across each directorate and tax regime. Internal Audit has positively validated the Assurance Team’s methodology and findings.

We test 9 standards in our case sample, and the chart below presents average results by theme for 2024 to 2025, compared with the previous 2 years. The themes reflect the lifecycle of a case, including the financial impact for both the customer and HMRC. A composite indicator is derived from the average across all themes. Compared to 2023 to 2024, the results show improvement in 3 themes, no change in 1, and a decline in 5. Overall, performance declined by 3 percentage points. While the 3-year comparison indicates variability in outcomes, the overall performance remains broadly consistent, averaging at 85%.

Figure 25: Three-year summary of theme scoring for 2022 to 2023 to 2024 to 2025

The following summary shows the results at individual case level. These do not equate to the overall percentage compliance rate shown above due to the averaging both within and across the 9 themes:

• overall, 27% (107/400) of the cases reviewed met or exceeded all our required governance and quality standards
• 70% (282/400) fell short of HMRC’s internal governance and quality standards, however with no financial impact on the customer
• 3% (11/400) fell short of our governance and quality standards with a customer financial impact. Of the 11 cases, 3 were identified where the customer had been charged too much tax. Corrective actions have been initiated, and we check to ensure appropriate actions are completed. This represents an improvement from 2023 to 2024

These results show HMRC has an overall stable level of performance, but we acknowledge the need to further improve the accuracy of our casework as well as the standards that have a direct impact on customer experience. For instance, although some progress has been made in reducing delays, this remains a significant issue. Addressing the cause of delay continues to be a priority, and further measures are being implemented through our established work programme, to reduce case resolution times. We’re investing in training in our new recruits to make clear the importance of responsiveness in a compliance check, bringing insight from representative bodies about the impact it has on our customers. We have also introduced enhanced training across our compliance teams to address shortcomings in data protection practices, such as ensuring explicit consent is obtained before using email for customer communication. We will continue, through our work programme, to improve awareness of caseworker’s responsibilities to help them get this right.

During 2024 to 2025 we designed a framework to further strengthen our approach to assuring our work, placing greater focus on the essential elements of casework that have the greatest impact on customers; protecting customer data, making customers aware of their rights and safeguards available to them, and being financially accurate in all our calculations of tax liability. In 2025 to 2026 we will be running this framework alongside the existing methodology, with the intention of publishing further case-level data in a future annual report.

For the small number of the largest risks, which require governance at a Dispute Resolution Board (the remits of the Dispute Resolution Boards are summarised in the relevant section of the TAC report), the TSAP monitors whether the appropriate governance procedures have been followed. Where cases do not require a referral to a formal case governance board, the TSAP confirms whether the settlement was authorised at the appropriate level. For 2024 to 2025, our checks have revealed that 100% (6/6 cases) were referred to the relevant board at the appropriate time.

Table 16: Three-year annual comparison of governance and authorisation

Year	2022-23	2023-24	2024-25
Settlement authorised at appropriate level	91% (116 out of 128 cases)	94% (88 out of 94 cases)	86% (90 out of 105 cases)
Dispute Resolution Board governance followed, where required	80% (4 out of 5 cases)	100% (8 out of 8 cases)	100% (6 out of 6 cases)

Remuneration and staff report

This report provides details on the size and shape of our workforce, the cost of our staff and leadership team and how we manage their health, safety and wellbeing.

HMRC is proud to reflect the nation we serve. As the UK’s third largest government department we employ almost 66,000 full-time equivalent (FTE) employees from all backgrounds, working in towns and cities across the UK. In our workplaces you can expect to find customer service advisers and compliance caseworkers, but also experts in data, digital technology, policy, finance, and the law, along with other highly skilled professionals who make up our corporate service teams.

Remuneration report for Senior Civil Servants

The government is committed to building a Senior Civil Service (SCS) that reflects the nation it serves, can recruit and retain specialist skills and continue growing its capabilities. This report contains information about HMRC’s senior employees and covers our policies on salaries, bonuses and benefits in kind, as well as performance assessment and contract termination.

Remuneration policy

The Senior Civil Service is made up of senior leaders employed across government, with a common framework of terms and conditions. SCS pay and conditions are not delegated to individual departments. Our SCS performance management system is governed by the Cabinet Office and recommendations on SCS pay are provided by the Independent Review Body on Senior Salaries in an annual report to the Prime Minister. The government responds to its recommendations, and the Cabinet Office sets out the approach departments must follow in SCS pay guidance. In line with Cabinet Office guidance, SCS pay and non-consolidated awards at HMRC are then decided by the Executive Committee.

SCS employee numbers and approved posts

As of the 31 March 2025, we have 558 SCS employees made up of 536 HMRC and 22 VOA SCS employees. The total number of SCS approved posts was 570, made up of 548 HMRC and 22 VOA SCS posts. This figure includes both filled, vacant and job shared posts.

	Number at 31 March 2025	Number at 31 March 2024	Percentage change
Permanent Secretary	2	2	0%
SCS3	10	9	11%
SCS2	69	70	-1%
SCS1	447	429	4%
On loan/ secondment	8	13	-38%
Total	536	523	2%

SCS structure and recruitment

There are 3 levels of SCS below the posts of Permanent Secretary: Director General, Director and Deputy Director. These are underpinned by a job evaluation which assesses the demands of each job relative to others. A total of 51 HMRC and VOA SCS posts were advertised last year. Qualified individuals from both within and outside the Civil Service were appointed through level moves and promotions.

SCS performance

The performance of deputy directors and directors is moderated by directors general and the Executive Committee signs-off the overall departmental year-end performance group distribution. Performance for directors general is moderated by the Permanent Secretaries with advice from an independent observer. Performance and pay arrangements for Permanent Secretaries are managed by Cabinet Office.

Senior Civil Service base pay awards

The SCS Pay 2024 Practitioner Guidance sets out the Senior Civil Service (SCS) pay framework and award for 2024 to 2025. SCS pay is set centrally and is determined on an annual cycle through the Senior Salaries Review Body, an advisory independent pay review body.

This meant that from 1 April 2024, we implemented the following elements, as set out in the Cabinet Office guidance:

• an across-the-board base pay increase for all SCS of 5%
• increase to the minimum salary for all SCS pay ranges: £76,000 (2023 to 2024: £75,000) (SCS1); £98,000 (2023 to 2024: £97,000) (SCS2); and £128,000 (2023 to 2024: £127,000) (SCS3)
• in-year non-consolidated performance bonuses for exceptional performance during 2024 to 2025 to colleagues in accordance with the criteria set out in the Cabinet Office guidance

Senior Civil Service non-consolidated performance awards

Exceptional performance against objectives is rewarded through non-consolidated end-of-year and in-year performance awards. In line with Cabinet Office guidance, non-consolidated end of year and in-year performance awards are funded from an agreed allocation of 3.3% of the SCS basic paybill and subject to a pay control limit of £17,500.

178 awards were paid to ‘Exceeding/High-Performing’ colleagues on 1 April 2024, for the 2023 to 2024 performance year:

• end of year non-consolidated performance awards of £8,100/£6,100 (SCS1 Exceeding/High Performing), £10,100/£8,100 (SCS2 Exceeding/High Performing), and £13,100/£11,000 (SCS3 Exceeding/High Performing)
• in-year awards ranging from £450 to £3,000 have been paid to 319 SCS members based on performance from April 2024 to the end of March 2025
• awards that are above and beyond the control limit of £17,500 are agreed in non-standard contracts, in line with the HM Treasury senior pay approval process. Non-consolidated performance award decisions are monitored to guard against bias or discrimination

Policy on notice periods and termination payments for the Senior Civil Service

We follow standard policy for SCS notice periods and termination payments in the Civil Service Management Code.

Service contracts

There is a legal requirement that all Civil Service appointments must be made on merit, and on the basis of fair and open competition. Recruitment principles published by the Civil Service Commission explain the limited circumstances when other appointments can be made. Executive members hold open-ended appointments, unless otherwise stated in the governance statement. Early termination, other than for misconduct, would result in the individual receiving compensation as set out in the Civil Service Compensation Scheme. No compensation payments were made to Executive Committee members during 2024 to 2025.

Read Civil Service Commission recruitment principles on GOV.UK.

Executive Committee (ExCom) and non-executive members remuneration and pension benefits

The following table provides details of salaries and pension entitlements of the department’s most senior officials.

[Details of job roles and terms of appointment can be found in HMRC Executive Committee members (end of March 2025) section and Table 5e: Meeting attendance by executive directors in the Governance statement.]

Table 18: Senior officials’ single total figure of remuneration and pension benefits

Due to the amount of data presented, only part of the table below is visible. Please use the scrollbar at the bottom of the table to view all the columns.

Senior officials	Salary (full year equivalent) (£000) 2024-25	Salary (full year equivalent) (£000) 2023-24	Bonus payments (£000) 2024-25	Bonus payments (£000) 2023-24	Benefits in kind (to the nearest £100) 2024-25	Benefits in kind (to the nearest £100) 2023-24	Pension benefits (to the nearest £000) 2024-25	Pension benefits (to the nearest £000) 2023-24	Total (£000) 2024-25	Total (£000) 2023-24 (note 1)
Jim Harra KCB	205-210	195-200	-	5-10	100	300	80	55	285-290	260-265
Angela MacDonald	175-180	165-170	-	-	-	-	67	64	240-245	230-235
Alan Evans	155-160	150-155	10-15	5-10	100	-	123	118	295-300	275-280
Andrew Pemberton	145-150	135-140	5-10	5-10	-	-	57	54	210-215	200-205
Carol Bristow	145-150	135-140	-	0-5	100	300	100	137	245-250	275-280
Daljit Rehal	215-220	210-215	60-65	50-55	-	-	80	80	360-365	345-350
Esther Wallington (note 2)	10-15 (125-130)	110-115	-	-	-	100	-4	45	5-10	155-160
Helen Pickles	30-35 (150-155)	-	-	-	-	-	45	-	75-80	-
James Mitton	120-125 (140-145)	-	-	-	-	-	5	-	125-130	-
Jonathan Athow	145-150	135-140	15-20	5-10	100	200	-	-	160-165	145-150
Jonathan Russell	145-150	135-140	10-15	0-5	-	-	57	19	215-220	160-165
Justin Holliday	185-190	175-180	0-5	-	100	200	156	121	345-350	300-305
Lucy Pink	110-115	105-110	5-10	5-10	100	100	64	37	185-190	150-155
Myrtle Lloyd	145-150	135-140	10-15	-	-	-	108	56	265-270	195-200
Penny Ciniewicz	155-160	150-155	0-5	0-5	100	300	-	-	160-165	150-155
Suzanne Newton	145-150	135-140	-	10-15	200	300	93	213	235-240	360-365

Notes:

1. Figures have been restated where appropriate to include 2023 to 2024 pension figures which were unavailable when previous accounts were published.
2. The full-time equivalent salary is £155,000 to £160,000 (2023 to 2024: £145,000 to £150,000). Worked part-time hours of 0.8 FTE until she left the department in April 2024.

Pension figures show pension earned in PCSPS or CSOPS (alpha) as appropriate. Where the official has benefits in both PCSPS and alpha the figure is the combined value of benefits in the 2 schemes — but part of the pension may be payable from different ages. The accrued pension is the pension the member is entitled to receive when they reach pension age, or immediately on ceasing to be an active member of the scheme if they are already at or over pension age.

Due to the amount of data presented, only part of the table below is visible. Please use the scrollbar at the bottom of the table to view all the columns.

Senior officials	Scheme	Accrued annual pension at pension age and related lump sum (£000) as at 31 March 2025	Real increase in pension and related lump sum at pension age (£000)	Cash Equivalent Transfer Value (CETV) (to the nearest £000) as at 31 March 2025	Cash Equivalent Transfer Value (CETV) (to the nearest £000) as at 31 March 2024	Cash Equivalent Transfer Value (CETV) (to the nearest £000) Real increase	Employer contribution to partnership pension account (to the nearest £100)
Jim Harra KCB	alpha	5-10	2.5-5	140	55	65	- (note 1)
Angela MacDonald	alpha	55-60	2.5-5	927	803	46	-
Alan Evans	alpha	95-100	5-7.5	2,002	1,802	108	-
Andrew Pemberton	alpha	10-15	2.5-5	183	124	39	-
Carol Bristow	alpha	75-80	5-7.5	1,653	1,496	90	-
Daljit Rehal	alpha	20-25	2.5-5	396	291	62	-
Esther Wallington	alpha	45-50	-	679	640	-3	-
Helen Pickles	alpha	55-60	0-2.5	1,011	950	39	-
James Mitton	alpha	45-50	0-2.5	688	656	1	-
Jonathan Athow	partnership pension scheme	-	-	-	-	-	21,600 (note 2)
Jonathan Russell	alpha	0-5	2.5-5	78	19	46	- (note 3)
Justin Holliday	alpha	100-105	7.5-10	2,072	1,850	139	-
Lucy Pink	alpha	35-40 plus a lump sum of 85-90	2.5-5 plus a lump sum of 2.5-5	686	612	43	-
Myrtle Lloyd	alpha	55-60	5-7.5	1,117	983	87	-
Penny Ciniewicz	- (note 4)	-	-	-	-	-	-
Suzanne Newton	alpha	65-70	5-7.5	1,234	1,112	72	-

Notes:

1. An employer contribution of £7,300 was made into the partnership pension account for the period 1 April 2023 to 30 June 2023. Jim joined the alpha scheme from 1 July 2023.
2. An employer contribution of £20,600 was made into the partnership pension account for 2023 to 2024.
3. An employer contribution of £14,400 was made into the partnership pension account for the period 1 April 2023 to 31 October 2023. Joined the alpha scheme from 1 November 2023.
4. Opted out of pension scheme.

Explanatory notes for tables 18 and 19

Salary

Salary covers both pensionable and non-pensionable amounts and includes gross salary, overtime, recruitment and retention allowances, reserved rights to other allowances and any other allowance that is subject to UK taxation.

Bonus payments

Bonus payments are paid while serving on ExCom for exceptional work in the performance year. Year-end performance awards are based on performance achieved in post(s) held in the previous year and are made as part of the performance and pay award process. Bonus payments are considered non-consolidated pay awards.

Benefits in kind

The monetary value of benefits in kind covers any benefits provided by HMRC and treated
as taxable, such as hospitality provided at external development events.

Pension benefits

Pension benefits are calculated by MyCSP on behalf of HMRC in accordance with their interpretation of the FREM. The values supplied by MyCSP for the remuneration statement are different and higher than the amounts supplied to individual employees for them to calculate their remuneration for tax purposes.

Pension Benefits accrued are calculated as follows:

Real increase in pension x 20

add Real increase in any lump sum

less Contributions made by the individual

= The value of pension benefits accrued during the period

The real increases exclude increases due to inflation or any increases or decreases due to the transfer of pension rights. The value of pension benefits can vary from year to year, due to things like the date that an individual joined or left, or an individual receiving a higher pay increase in one year to another.

Accrued pension benefits included in table 18 for any individual affected by the Public Service Pensions Remedy have been calculated based on their inclusion in the legacy scheme for the period between 1 April 2015 and 31 March 2022, following the McCloud judgment. The Public Service Pensions Remedy applies to individuals that were members, or eligible to be members, of a public service pension scheme on 31 March 2012 and were members of a public service pension scheme between 1 April 2015 and 31 March 2022.

The basis for the calculation reflects the legal position that impacted members have been rolled back into the relevant legacy scheme for the remedy period and that this will apply unless the member actively exercises their entitlement on retirement to decide instead to receive benefits calculated under the terms of the alpha scheme for the period from 1 April 2015 to 31 March 2022.

Cash equivalent transfer values

The Cash Equivalent Transfer Value (CETV) is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a point in time. The benefits valued are the member’s accrued benefits and any contingent spouse’s pension payable from the scheme.

A CETV payment is made by a pension scheme (or arrangement) when a member leaves a scheme and chooses to transfer the pension benefit they have accrued in that scheme to secure pension benefits in another pension scheme (or arrangement).

The value shown relates to the benefits the individual has accrued because of their membership of the pension scheme, not just their service in a senior capacity. CETVs are calculated in accordance with the Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 and do not take account of any actual or potential reduction to benefits resulting from Lifetime Allowance Tax, which may be due when pension benefits are taken.

Real increase in CETV

This reflects the increase in CETV that is funded by the employer. It does not include the increase in accrued pension due to inflation, contributions paid by the employee (including the value of any benefits transferred from another pension scheme or arrangement) and uses common market valuation factors for the start and end of the period.

Non-executive directors’ single total figure of remuneration

The fees of the external appointees, which include any other allowance that is subject to UK taxation, are detailed below.

[Details of job roles and terms of appointment can be found in HMRC’s non-executive directors (end of March 2025), Non-executive and sub-committee members (end of March 2025) sections and Table 5c: Meeting attendance by non-executive directors and Table 5d: Meeting attendance by members of the Audit and Risk Committee in the Governance statement.]

Table 19: Non-executive directors’ single total figure of remuneration

Senior officials	Fees (full year equivalent) (£000) 2024-25	Fees (full year equivalent) (£000) 2023-24	Benefits in kind (to the nearest £100) 2024-25	Benefits in kind (to the nearest £100) 2023-24	Total (£000) 2024-25	Total (£000) 2023-24
Dame Jayne-Anne Gadhia	25-30	25-30	–	–	25-30	25-30
David Cooper (note 1)	10-15 (15-20)	20-25	–	–	10-15	20-25
Patricia Gallan	20-25	20-25	–	–	20-25	20-25
Michael Hearty	25-30	25-30	–	–	25-30	25-30
Susie Warran-Smith (note 1)	10-15 (15-20)	10-15 (20-25)	–	–	10-15	10-15
Paul Morton	15-20	15-20	–	–	15-20	15-20
Elizabeth Fullerton-Rome (note 2)	5-10 (15-20)	15-20	–	–	5-10	15-20
Thomas Taylor (note 2)	5-10 (15-20)	15-20	–	–	5-10	15-20
Jennifer Tippin	20-25	20-25	–	–	20-25	20-25
Mike Bracken (note 3)	10-15 (20-25)	–	–	–	10-15	–
Bill Dodwell (note 3)	10-15 (20-25)	–	–	–	10-15	–
Andre Katz (note 4)	5-10 (15-20)	–	–	–	5-10	–
Charlotte Moar (note 5)	5-10 (15-20)	–	–	–	5-10	–

Notes:

1. Left the department September 2024.
2. Left the department August 2024.
3. Joined the department October 2024.
4. Joined the department November 2024.
5. Joined the department September 2024.

Fair pay

Reporting bodies are required to disclose the relationship between the remuneration of the highest-paid director in their organisation and the lower quartile, median and upper quartile remuneration of the organisation’s workforce.

The banded remuneration of the highest-paid director in HMRC and VOA in the financial year 2024 to 2025 was £280,000 to £285,000 (2023 to 2024, £265,000 to £270,000) [(table 18 on page 136).] This was 7.77 times (2023 to 2024, 7.31) the median remuneration of the workforce, which was £36,345 (2023 to 2024, £36,612).

In 2023 to 2024 and 2024 to 2025 no employees received remuneration in excess of the highest paid director. Remuneration ranged from £25,730 to £285,000 (2023 to 2024 £24,247 to £270,000).

Total remuneration includes salary, non-consolidated performance-related pay and benefits-in-kind. It does not include severance payments, employer pension contributions and the cash equivalent transfer value of pensions.

Table 20a: Pay ratio

	2024-25	2023-24
25th percentile pay ratio	9.58	10.32
Median pay ratio	7.77	7.31
75th percentile pay ratio	6.17	5.90

Table 20b: Total pay and benefits and salary component for the employees at the 25th percentile, median and 75th percentile

	2024-25	2023-24
25th percentile pay — Total pay and benefits	£29,475	£25,910
25th percentile pay — Salary components	£29,475	£24,330
Median pay — Total pay and benefits	£36,345	£36,612
Median pay — Salary component	£36,320	£35,092
75th percentile pay — Total pay and benefits	£45,759	£45,349
75th percentile pay — Salary component	£45,759	£42,898

In 2024 to 2025 the average value of the base pay award was 5% in accordance with the Civil Service Pay guidance 2024 for delegated grades, and the Senior Civil Service pay guidance 2024. In 2024 to 2025 the highest paid directors’ total remuneration increased by 5.68%. These factors have resulted in the ratio between the 75th percentile and the highest paid director increasing slightly during 2024 to 2025.

HMRC and VOA operate primarily with a directly employed, UK-based workforce. As of 31 March 2025, the majority of staff were employed under standard Civil Service contracts of service. There has been no significant increase in the proportion of staff employed to work wholly or mainly outside the UK, nor a material shift in the proportion of the workforce engaged under alternative employment models (such as contingent labour, secondees, or contractors).

Where contingent labour is used, it is typically to meet short-term project needs, specialist skills requirements, or cover for absences. The use of such arrangements remained broadly consistent with previous years and did not materially affect workforce composition or remuneration quartiles.

Median Pay Ratio and Consistency with Pay and Reward Policies

The ratio between the highest-paid director and the median employee remuneration increased to 7.77 in 2024 to 2025 from 7.31 in the prior year.

This increase reflects a number of structural and pay-related developments:

• targeted promotions: over 3,600 promotions across a broad range of grades (particularly AO, EO, and HEO) contributed significantly to overall pay growth and impacted the distribution of salaries across quartiles. Promotions into higher grades carry salary uplifts that are materially larger than the annual pay award and therefore affect the pay ratio
• base pay progression: in line with the 2024 Civil Service Pay Guidance, most employees received average base pay increases of approximately 5%. While this maintained the competitiveness of remuneration and supported retention, it had a modest impact on the median remuneration compared with more substantial increases at the upper end of the pay scale
• senior pay uplifts: the total remuneration of the highest-paid director increased by 5.68%, reflecting contractual entitlements and pay framework allowances for performance and retention. This contributed to the upward shift in the Fair Pay Ratio

The observed pay ratio is not indicative of pay disparity but rather reflects a levelling of median pay movement relative to higher-band promotions and director-level adjustments. The pay system aligns with the Civil Pay Guidance to ensure public value and supports fairness, transparency, and progression opportunities, particularly at operational and mid-management levels.

Table 20c: Annual percentage change in remuneration of directors and employees from prior year

2023-24 to 2024-25	Salary and allowances	Performance pay and bonus payable	Total remuneration
Highest paid director	2.4%	19%	5.6%
Employees	1.4%	8.2%	1.4%

The table above shows the percentage change in both the highest paid director and employees salary and allowances, performance pay and bonuses payable and non-cash benefits between 2023 to 2024 and 2024 to 2025.

Staff numbers

As an operational department, we need the right number of people in the right places to serve our customers and deliver our objectives.

Our departmental group, including the Valuation Office Agency (VOA), had 65,987 full-time equivalent (FTE) employees at the end of financial year 2024 to 2025. This included 62,224 in HMRC and 3,763 in VOA. These figures exclude contingent labour, which was 1,924 for HMRC and 93 for VOA as of 31 March 2025.

Recruitment

This year we recruited 6,408 full-time equivalent roles to ensure we have the skills we need in our key strategic locations by replacing people who leave and facilitating organisational growth. This included 5,990 in HMRC, and 418 in VOA (Valuation Office Agency). We recruited 798 FTE from other government departments. This included 706 in HMRC and 92 in VOA.

Leavers and exits

In 2024 to 2025, 5,385 full-time equivalent employees either left HMRC’s departmental group, transferred to other government departments, or retired. This included 4,967 (8.1% of staff) in HMRC, and 300 (8.0% of staff) in VOA.

Average number of full-time equivalent persons employed

The table below gives the average number of FTE for 2024 to 2025.

Table 21: Average number of full-time equivalent persons employed

Due to the amount of data presented, only part of the table below is visible. Please use the scrollbar at the bottom of the table to view all the columns.

	Permanently employed staff — Operational	Permanently employed staff — Capital (note 1)	Others – Operational	Others — Capital (note 1)	Total 2024-25	Total 2023-24
Core department	59,950	790	398	-	61,138	62,174
Valuation Office Agency	3,548	-	182	-	3,730	3,679
Departmental group total	63,498	790	580	-	64,868	65,853

Note:

1. Capital relates to staff building capital assets.

Staff costs

Our staff costs figures only include officials. The salary of the minister who has responsibility for HM Revenue and Customs is paid out of central funds and can be found in the Resource Accounts of HM Treasury.

Table 22: The costs of people employed during the year and reconciliation from total net costs to ‘Staff and Related’ costs in the SoCNE (£m)

	Permanently employed staff	Others	2024-25 £m	2023-24 £m
Wages and salaries	2,500.1	20.7	2,520.8	2,611.2
Social security costs (note 1)	282.4	1.3	283.7	282.4
Other pension costs	717.3	4.4	721.7	654.6
Sub Total	3,499.8	26.4	3,526.2	3,548.2
Less recoveries in respect of outward secondments	(3.5)	-	(3.5)	(4.6)
Total net costs	3,496.3	26.4	3,522.7	3,543.6
Recoveries in respect of outward secondments			3.5	4.6
Less net costs charged to capital budgets			(62.5)	(69.5)
Travel, subsistence and hospitality			44.7	40.4
Recruitment and training			26.9	28.7
Early severance schemes			(0.1)	3.8
Staff and related costs in Consolidated Statement of Comprehensive Net Expenditure			3,535.2	3,551.6

Note:

1. Social security costs include the Apprenticeship Levy which is £13 million for 2024 to 2025 (2023 to 2024: £13 million).

Civil Service Pensions

Alongside their salary, a Civil Service pension is one of the most important benefits available to HMRC employees. It provides financial security and options when an employee retires, as well as benefits for their family and loved ones.

HMRC group

Pension benefits are provided through the Civil Service pension arrangements. The Principal Civil Service Pension Scheme (PCSPS) and the Civil Servant and Other Pension Scheme (CSOPS), known as ‘alpha’, are unfunded multi-employer defined benefit schemes. Our share of underlying assets and liabilities is not identifiable. The scheme actuary valued the PCSPS as at 31 March 2020. More details are in the resource accounts of the Cabinet Office.

Read more on Civil Service pension arrangements on GOV.UK.

For 2024 to 2025, employers’ contributions of £716.2 million were payable to the PCSPS (2023 to 2024: £649.2 million). Following the transition of all active members to alpha on 1 April 2022, it has been agreed that the previous salary-based structure was no longer appropriate. A flat rate employer contribution of 28.97% has therefore been introduced.

Accrued pension benefits for any individual affected by the Public Service Pension Remedy have been calculated based on their inclusion in the legacy scheme for the period between 1 April 2015 and 31 March 2022, following the McCloud judgment. The Public Service Pension Remedy applies to individuals that were members, or eligible to be members, of a public service pension scheme on 31 March 2012 and were members of a public service pension scheme between 1 April 2015 and 31 March 2022.

The basis for the calculation reflects the legal position that impacted members have been rolled back into the relevant legacy scheme for the remedy period and that this will apply unless the member actively exercises their entitlement on retirement to decide instead to receive benefits calculated under the terms of the alpha scheme for the period from 1 April 2015 to 31 March 2022.

The scheme actuary usually reviews the rate of employer contributions every 4 years, following a full scheme valuation (excluding 2020 due to the public service pension schemes consultation). Contribution rates are set to meet the cost of benefits accruing during 2024 to 2025, which will be paid when the member retires — it does not represent the cost of benefits paid during this period to existing pensioners. Pensions payable under classic, premium, classic plus, nuvos and alpha are increased annually in line with pensions increase legislation.

Partnership Pensions

Employees can open a partnership pension account, which is a stakeholder pension with an employer contribution. Employer contributions of £5.1 million (£5 million in 2023 to 2024) were paid to one or more of the 3 appointed stakeholder pension providers. The size of employer contributions depends on the age of the employee/member and ranged from 8% to 14.75% of pensionable earnings.

Employers also match the rate of employee contributions up to a maximum of 3% of their pensionable earnings. In addition, employer contributions of £0.2 million (2023 to 2024: £0.2 million), 0.5% of pensionable pay, were payable to the PCSPS to cover the future cost of providing lump sum benefits on death in service or ill health retirement of these employees. Contributions due to the partnership pension provider at the reporting date were nil. Contributions prepaid at that date were nil.

In 2024 to 2025, 44 individuals (2023 to 2024: 47 individuals) retired early on ill-health grounds; the total additional accrued pension liabilities in the year amounted to £0.3 million (2023 to 2024: £0.3 million).

Valuation Office Agency

A number of Valuation Office Agency’s (VOA’s) employees are members of the London Pensions Fund Authority (LPFA) which is a Local Government Pension Scheme. Contributions into this scheme for 2024 to 2025 were £0.3 million (2023 to 2024: £0.3 million).

Read full information about the VOA employee contributions in the VOA annual report and accounts on GOV.UK.

[Read details of the salary and pension benefits for HMRC’s Executive Committee starting on page 133.]

Exit packages

We pay redundancy and other departure costs in accordance with the provisions of the Civil Service Compensation Scheme, a statutory scheme under the Superannuation Act 1972. Exit costs are accounted for in full in the year in which the obligation becomes binding on HMRC.

Where the department has agreed early retirements, those costs in excess of obligations usually met by the Civil Service Pension Scheme, are met by the department. Ill-health retirement costs are met by the pension scheme and are not included in the table.

The cost of early retirements reflects the excess cost of any payment due to the individual on retirement and, in certain circumstances, the cost associated with the increase in future liability to pay pension.

Read full details about the VOA staff exit packages in the VOA annual report and accounts on GOV.UK.

Table 23: Exit packages 2024 to 2025 (note 1)

Due to the amount of data presented, only part of the table below is visible. Please use the scrollbar at the bottom of the table to view all the columns.

Exit package cost band	Number of compulsory redundancies 2024-25	Number of compulsory redundancies 2023-24	Number of other departures agreed 2024-25	Number of other departures agreed 2023-24	Total number of exit packages by cost band 2024-25	Total number of exit packages by cost band 2023-24
<£10,000	-	-	3	8	3	8
£10,000 - £25,000	-	-	3	5	3	5
£25,000 - £50,000	-	-	3	8	3	8
£50,000 - £100,000	-	-	-	5	-	5
£100,000+	-	-	1	1	1	1
Total number of exit packages by type	-	-	10	27	10	27
Of which:
Core department and agency	-	-	10	27	10	27
Total resource cost (£000s)	-	-	287	822	287	822

Note:

1. The prior year figures have been updated to account for instances where individuals’ final costs changed from the original estimate.

People off-payroll

HMRC has reviewed all relevant off-payroll engagements during the financial year 2024 to 2025. Where engagements have been within the scope of the off-payroll (IR35) legislation, both worker and the paying agency have been advised of this determination meaning appropriate deductions are made at source from payments made in respect of the engagement. We confirm that no tax liabilities have been incurred, or penalties imposed due to any failure to comply with IR35 legislation.

The tables below provide details of the off-payroll engagements for 2024 to 2025, including those from the VOA.

Table 24: Temporary off-payroll worker engagements as of 31 March 2025, earning £245 a day or greater (note)

	HMRC	VOA
Number of existing engagements as of 31 March 2025	302	5
Of which:
Number that have existed for less than 1 year at time of reporting	87	3
Number that have existed for between 1 and 2 years at time of reporting	94	2
Number that have existed for between 2 and 3 years at time of reporting	36	-
Number that have existed for between 3 and 4 years at time of reporting	24	-
Number that have existed for 4 or more years at time of reporting	61	-

Note: Including engagements through umbrella companies.

Table 25: All temporary off-payroll workers engaged at any point during the year ended 31 March 2025, earning £245 per day or greater (note)

	HMRC	VOA
Number of off-payroll workers engaged during the year ended 31 March 2025	496	8
Of which:
Not subject to off-payroll legislation	472	8
Subject to off-payroll legislation and determined as in-scope of IR35	24	-
Subject to off-payroll legislation and determined as out-of-scope of IR35	-	-
Number of engagements reassessed for compliance or assurance purposes during the year	488	-
Of which: Number of engagements that saw a change to IR35 status following review	-	-

Note: Including engagements through umbrella companies.

Table 26: Board members and/or senior officials with significant financial responsibility, between 1 April 2024 and 31 March 2025

	HMRC	VOA
Number of off-payroll engagements of board members, and/or, senior officials with significant financial responsibility, during the financial year	-	-
Total number of such individuals, including both on payroll and off-payroll engagements	93	7

Consultancy and temporary employees

We engage agency workers to support demand peaks of operational work and contingent labour to resolve other temporary specialist capacity gaps (together these are temporary employees). We only use professional service providers to help with specialist work, including consultancy. We limit this to when we do not have the necessary skills internally, or where
an independent external expert opinion on a complex issue is required. For 2024 to 2025, external consultancy has supported a requirement to analyse and benchmark contracts
to establish viable opportunities to deliver commercial efficiencies and savings.

HMRC robustly controls expenditure on consultancy via Government Commercial Spend Controls as mandated by Cabinet Office Governance Procedures, which has decreased from £7.5 million (excluding VOA) in financial year 2023 to 2024 to £0.2 million (excluding VOA)
in financial year 2024 to 2025. The department continues to follow Cabinet Office guidelines
to reduce the use of consultancy across central government.

Table 27: Consultancy and contingent labour expenditure in accordance with HM Treasury definitions (£m) (note 1)

	Consultancy 2024-25	Contingent labour 2024-25	Consultancy 2023-24	Contingent labour 2023-24
HMRC	0.2	133.1	7.5	152.3
VOA	0.0	2.5	0.02 (note 2)	1.3

Notes:

1. HMRC report contingent labour as part of contracted out services.
2. Following a review of VOA spend reported as Consultancy it was identified that the majority of the spend for 2024 to 2025 and 2023 to 2024 should be classified as contracted out services, due to the underlying nature of the services not being mostly advisory.

Trade Union Facility Time allocation

Trade Union Facility Time is time off for employees who are Trade Union (TU) representatives to carry out their TU roles. TU roles may be duties or activities. Representatives are entitled to paid time off to carry out TU duties. They are not entitled to paid time off for TU activities — but an employer can choose to pay for time off for those activities.

HMRC recognises the Public and Commercial Services Union (PCS) and the Association of Revenue and Customs (ARC, a specialist section of the FDA specifically for HMRC) for collective bargaining and staff representation. VOA recognises Prospect and the PCS.

Table 28: Total number of employees who were relevant union officials during 2024 to 2025

	Core department and agencies total
Relevant union officials
Number of Trade Union representatives employed	776
Percentage of time spent on facility time
Working hours each representative spent on facility time
0% of working hours	177
1-50% of working hours	594
51-99% of working hours (note)	4
100% of working hours (note)	1
Percentage of paybill spent on facility time
Paybill refers to the total number of employees, not union representatives only
Total cost of facility time (£)	£2,290,590
Total paybill (£)	£3,600,566,403
Facility time as a % of paybill	0.06%

Note: In exceptional circumstances HMRC will allow more than 50% of working hours for facility time.

We have nothing to disclose or report in respect of the proportion of facility time spent on paid trade union activities.

Further disclosure required for the Trade Union (Facility Time Publication Requirements) Regulations 2017 will be submitted by 31 July 2025 on GOV.UK.

How we manage health, safety and wellbeing

Recognising that colleague wellbeing also depends on having effective health and safety arrangements in place, we continued providing access to practical learning, specialist support and advice. This year, we used insight from the central database of incident reports and learning completion to keep managers, colleagues and trade union safety representatives informed, using real-time health and safety performance information. We introduced and embedded a Regional Co-ordinator role to improve the management of DSE Assessments in our key locations.

We launched an initiative to protect our frontline colleagues from abusive interactions. This includes partnering with other government departments to combat hate crimes and personal security and safety issues. This approach provides vital support for handling abusive and vulnerable customers, and we streamlined guidance, reporting processes and enhanced IT systems. By refining the customer journey, we aim to reduce conflict and ensure a smoother customer experience, boosting staff morale and fostering a safer work environment.

Our modern estate continues to expand to provide class leading workplaces. Annually updated Occupied Building Risk Assessments are key to ensuring buildings remain safe and Fire Risk Assessments are in place to manage fire safety risks. An assurance programme provides management-level oversight of all safety activities across all of our buildings. 1 May 2025 saw the introduction of improved third-party contracts providing both ‘hard’ facilities management services (such as building maintenance) and ‘soft’ services (such as cleaning). We have carried out extensive preparation to ensure a smooth transition to the new providers.

We encourage colleagues to report all accidents and instances of work-related ill health. As an employer, we report incidents in specific categories to the Health and Safety Executive (HSE), under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR).

We monitor incident reports and in 2024 to 2025 we reported 15 incidents to HSE (compared to 31 in 2023 to 2024). The number of non-RIDDOR incidents reported increased to 1,732 (compared to 1,594 last year).

Sickness absence data

Sickness absence levels are measured using Average Working Days Lost (AWDL), which is the total number of days lost to sickness absence over a 12-month period divided by our current full-time equivalent (FTE) employees.

In line with the general working age population, we have a prevalence of mental health and stress as our top 2 absence reasons for more than a third of our absences. Our Wellbeing Strategy for 2025 to 2030 will seek to support colleagues in managing their attendance to maximise delivery to our customers.

Figure 26: Sick absence data

Year	Average Working Days Lost
2020-21	5.78
2021-22	8.26
2022-23	8.75
2023-24	8.47
2024-25	9.05

Workforce diversity characteristics

We publish workforce diversity data and equality information in our report on compliance with the public sector equality duties on GOV.UK.

Table 29: Workforce diversity characteristics

Characteristic and grade	2020-21	2021-22	2022-23	2023-24	2024-25
Ethnic Minority (note 1): all staff	15%	17%	18%	19%	21%
Ethnic Minority (note 1): SCS	11%	11%	10%	10%	11%
Disability: all staff	14%	13%	14%	14%	14%
Disability: SCS	6%	6%	7%	8%	7%
Woman: all staff	53%	52%	52%	52%	52%
Woman:SCS	45%	47%	47%	46%	44%
Sexual orientation (note 2): all staff	6%	6%	7%	7%	5%
Sexual orientation (note 2): SCS	7%	7%	8%	7%	6%

Notes:

1. The term ethnic minority includes colleagues who declared their ethnicity as Black, Asian, Chinese or mixed ethnic background. White ethnic minority backgrounds are not included in this data category.
2. This chart shows the percentage of people who declare their sexual orientation as gay man, gay woman/lesbian, bisexual or other.

Read HMRC’s equality objectives and gender pay gap report on GOV.UK.

Our approach to whistleblowing

We aim to provide our colleagues with an environment where they feel able to speak up if they believe that something is not right. Over the last year HMRC has:

• implemented a recommendation from the 2023 “investigation into whistleblowing in the Civil Service” National Audit Office report, to gather insight on colleague experiences of the whistleblowing process by developing and promoting an anonymous survey for whistleblowers
• appeared before the Public Accounts Committee on whistleblowing in the Civil Service, to share its approach to best practice
• continued promoting the work of our nominated officers, who offer advice and support to our colleagues on whistleblowing concerns

Whistleblowing case numbers increased in 2024 to 2025, continuing a trend that has seen a steady rise since 2022, following a sharp fall during the pandemic.

Table 30: Whistleblowing cases

Financial year	2024-25	2023-24
Total cases	98	65
Number categorised
as whistleblowing	22 (note 1)	21 (note 2)

Notes:

1. As reported cases are still being processed this figure may increase.
2. The number has changed from 20 reported in the 2023 to 2024 Annual Report and Accounts due to cases still being processed and therefore retrospectively updated.

John-Paul Marks
Accounting Officer
15 July 2025

Parliamentary Accountability

Consolidated Statement of Outturn Against Parliamentary Supply (SOPS)

In addition to the primary statements prepared under International Financial Reporting Standards (IFRS), the Government Financial Reporting Manual requires us to prepare a Statement of Outturn against Parliamentary Supply (SOPS) and supporting notes.

The SOPS is a key accountability statement that shows, in detail, how an entity has spent against their Supply Estimate. Supply is the monetary provision (for resource and capital purposes) and cash (drawn primarily from the Consolidated Fund), that Parliament gives statutory authority for entities to utilise. The Estimate details supply and is voted on by Parliament at the start of the financial year.

Should an entity exceed the limits set by their Supply Estimate, called control limits, their accounts will receive a qualified opinion.

The format of the SOPS mirrors the Supply Estimates, published on GOV.UK, to enable comparability between what Parliament approves and the final outturn.

The SOPS contain a summary table, detailing performance against the control limits that Parliament have voted on, cash spent (budgets are compiled on an accruals basis and so outturn won’t exactly tie to cash spent) and administration.

The supporting notes detail the following: Outturn by Estimate line, providing a more detailed breakdown (note 1); a reconciliation of outturn to net operating expenditure in the Consolidated Statement of Comprehensive Net Expenditure (CSoCNE), to tie the SOPS to the financial statements (note 2); correlation between budgetary outturn and that presented in the CSoCNE (note 2.1); a reconciliation of outturn to net cash requirement (note 3); and, an analysis of income payable to the Consolidated Fund (note 4).

The SOPS and estimates are compiled against the budgeting framework, which is similar to IFRS. An understanding of the budgeting framework and an explanation of key terms is provided in the financial review section of the Annual Report. Further information on the Public Spending Framework and the reasons why budgeting rules are different to IFRS can also be found in chapter 1 of the Consolidated Budgeting Guidance, available on GOV.UK.

The SOPS provides a detailed view of financial performance, in a form that is voted on and recognised by Parliament. The financial review, in the Performance Analysis section of the Annual Report, provides a summarised discussion of outturn against Estimate and functions as an introduction to the SOPS disclosures.

Table 31: Summary of Resource and Capital outturn

Due to the amount of data presented, only part of the table below is visible. Please use the scrollbar at the bottom of the table to view all the columns.

Type of spend	SOPS note	Estimate Voted (note 1) (2024-25) £000	Estimate Non-voted (2024-25) £000	Estimate Total (2024-25) £000	Outturn Voted (note 1) (2024-25) £000	Outturn Non-voted (2024-25) £000	Outturn Total (2024-25) £000	Outturn vs. Estimate, saving Voted (note 1) (2024-25) £000	Outturn vs. Estimate, saving Total (2024-25) £000	Outturn vs. Estimate, Total Outturn (2023-24) £000
Departmental Expenditure Limit
– Resource	1.1	5,819095	233,000	6,052,095	5,559,356	274,510	5,833,866	259,739	218,229	6,501,736
– Capital	1.2	742,709	–	742,709	728,071	–	728,071	14,638	14,638	725,117
Total		6,561,804	233,000	6,794,804	6,287,427	274,510	6,561937	274,377	232,867	7,226,853
Annually Managed Expenditure
– Resource	1.1	15,939,448	15,782,860	31,722,308	14,977,867	12,797,392	27,775,259	961,581	3,947,049	33,274,461
– Capital	1.2	261	–	261	2	–	2	259	259	2
Total		15,939,709	15,782,860	31,722,569	14,977,869	12,797,392	27,775,261	961,840	3,947,308	33,274,463
Total		22,501,513	16,015,860	38,517,373	21,265,296	13,071,902	34,337,198	1,236,217	4,180,175	40,501,316
Of which:
Total resource	1.1	21,758,543	16,015,860	37,774,403	20,537,223	13,071,902	33,609,125	1,221,320	4,165,278	39,776,197
Total capital	1.2	742,970	–	742,970	728,073	–	728,073	14,897	14,897	725,119
Total budget expenditure		22,501,513	16,015,860	38,517,373	21,265,296	13,071,902	34,337,198	1,236,217	4,180,175	40,501,316

Some figures cover the voted control limits voted by Parliament. Refer to the Supply Estimates guidance manual, available on GOV.UK, for detail on the control limits voted by Parliament.

	SOPS note	Estimate	Outturn	Outturn vs Estimate, saving 2024-25 £000	Total Outturn 2023-24 £000
Net cash requirement	3	22,032,919	20,652,885	1,308,034	20,628,323
	SOPS note	Estimate	Outturn	Outturn vs Estimate, saving 2024-25 £000	Total Outturn 2023-24 £000
Administration costs	1.1	1,140,483	1,066,756	73,727	982,812

Although not a separate voted limit, any breach of the administration budget will also result in an excess vote.

Notes to the Statement of Outturn against Parliamentary Supply

SOPS 1. Outturn detail, by Estimate Line

We are required to ensure that our expenditure remains within the voted limits set by Parliament. This note provides details of how we performed against each line of the Estimate.

Voted expenditure includes the costs of running HMRC as well as Cost of Living Payments. It also includes payments to individuals for social benefits, payments in lieu of tax relief and certain rates payments, shown as line L, made by the Valuation Office Agency.

HMRC also makes payments for which the funding is not subject to the vote system. This non-voted expenditure mainly relates to certain corporation tax reliefs, other reliefs including personal tax credits and our costs related to the National Insurance Fund.

HM Treasury requires us to further analyse our income and expenditure between administration, which relates to running the department (for example: human resources, finance, estates management) and programme, which relates to delivering our frontline services (for example: parts of HMRC that interact directly with our customers).

The following tables record our actual outturn expenditure for Departmental Expenditure Limit (DEL) and Annually Managed Expenditure (AME), voted and non-voted, against the limits set by Parliament for each line of the Estimate. SOPS 1.1 (table 32) provides analysis of resource expenditure and SOPS 1.2 (table 33) capital expenditure.

Full information about the Valuation Office Agency activities can be found within their accounts.

SOPS 1.1 Analysis of resource outturn by Estimate line

Table 32: Analysis of resource outturn by Estimate line

Due to the amount of data presented, only part of the table below is visible. Please use the scrollbar at the bottom of the table to view all the columns.

Type of spend (Resource)	Estimate Net Total (2024-25) £000	Outturn Administration Gross (2024-25) £000	Outturn Administration Income (2024-25) £000	Outturn Administration Net (2024-25) £000	Outturn Programme Gross (2024-25) £000	Outturn Programme Income (2043-25) £000	Outturn Programme Net (2024-25) £000	Outturn Net Total (2024-25) £000	Outturn vs Estimate: saving/(excess) (2024-25) £000	Outturn Total (2024-25) £000
Spending in Departmental Expenditure Limit
Voted:
A HMRC administration	5,590,264	1,120,455	(117,781)	1,002,674	4,619,023	(266,796)	4,352,227	5,354,901	235,363	5,271,201
B VOA administration	208,830	–	–	–	262,855	(61,147)	201,708	201,708	7,122	183,309
C Utilised provisions	20,000	–	–	–	7,995	–	7,995	7,995	12,005	10,004
D Cost of Living [Note 1]	1	–	–	–	(5,248)	–	(5,248)	(5,248)	5,249	760,000
Total voted	5,819,095	1,120,455	(117,781)	1,002,674	4,884,625	(327,943)	4,556,682	5,559,356	259,739	6,224,514
Non-voted:
E National Insurance Fund	233,000	64,082	–	64,082	210,428	–	210,428	274,510	(41,510)	277,222
Total non-voted	233,000	64,082	–	64,082	210,428	–	210,248	274,510	(41,510)	277,222
Total spending in Departmental Expenditure Limit	6,052,095	1,184,537	(117,781)	1,066,756	5,095,053	(327,943)	4,767,110	5,833,866	218,229	6,501,736
Spending in Annually Managed Expenditure
Voted:
F Child Benefit	14,341,842	–	–	–	13,302,821	–	13,302,821	13,302,821	1,039,021	12,510,146
G Tax-Free Childcare	659,573	–	–	–	617,876	–	617,876	617,876	41,697	635,340
H Providing payments in lieu of tax relief to certain bodies	193,485	–	–	–	192,610	–	192,610	192,610	875	173,626
I Lifetime ISA	598,234	–	–	–	624,403	–	624,403	624,403	(26,169)	499,125
J Help to Save	64,749	–	–	–	45,031	–	45,031	45,031	19,718	51,654
K HMRC administration	9,460	–	–	–	120,587	–	120,587	120,587	(111,127)	(3,987)
L VOA payments of Local Authority rates	90,500	–	–	–	87,735	(4,957)	82,778	82,778	7,722	83,738
M VOA administration	1,500	–	–	–	898	–	898	898	602	853
N Utilised provisions	(20,000)	–	–	–	(7,997)	–	(7,997)	(7,997)	(12,003)	(14,730)
O COVID-19 (Note 2)	105	–	–	–	(1,140)	–	(1,140)	(1,140)	1,245	(21,800)
Total voted	15,939,448	–	–	–	14,982,824	(4,957)	14,977,867	14,977,867	961,581	13,918,965
Non-voted:
P Personal tax credits	3,793,805	–	–	–	2,669,737	-	2,669,737	2,669,737	1,124,068	7,307,214
Q Other reliefs and allowances	11,989,055	–	–	–	10,127,655	-	10,127,655	10,127,655	1,861,400	12,053,282
Total non-voted	15,782,860	–	–	–	12,797,392	–	12,797,392	12,797,392	2,985,468	19,360,496
Total spending in Annually Managed Expenditure	31,722,308	–	–	–	27,780,216	(4,957)	27,775,259	27,775,259	3,947,049	33,274,461
Total voted	21,758,543	1,120,455	(117,781)	1,002,674	19,867,449	(332,900)	19,534,549	20,537,223	1,221,320	20,138,479
Total non-voted	16,015,860	64,082	–	64,082	13,007,820	-	13,007,820	13,007,820	2,943,958	19,637,718
Total	37,774,403	1,184,537	(117,781)	1,066,765	32,875,269	(332,900)	32,542,369	33,609,125	4,165,278	39,776,197

Some figures are the amounts that comprise the Group’s consolidation position but have been separately identified in alignment with the Estimate and Internal Governance.

Note 1: The balance of Cost of Living payments due from 2023 to 2024, payable in 2024 to 2025 was lower than anticipated. The release of the underutilised accrual has resulted in a credit balance in 2024 to 2025.

Note 2: Repayments of COVID-19 support schemes payments received and reported in the Resource Accounts exceeded expenditure for the financial year 2023 to 2024 and 2024 to 2025.

Find full information about VOA payments of local authority rates.

SOPS 1.2 Analysis of capital outturn by Estimate line

Table 33: Analysis of capital outturn by Estimate line

Due to the amount of data presented, only part of the table below is visible. Please use the scrollbar at the bottom of the table to view all the columns.

Type of spend (Capital)	Estimate Net Total (2024-25) £000	Outturn Gross (2024-25) £000	Outturn Income (2024-25) £000	Outturn Net Total (2024-25) £000	Outturn vs Estimate: saving/(excess) (2024-25) £000	Outturn Total (2023-24) £000
Spending in Departmental Expenditure Limit
Voted:
A HMRC administration	698,185	708,322	(21,960)	686,362	11,823	695,753
B VOA administration	44,524	42,622	(913)	41,709	2,815	29,364
C Utilised provisions	–	–	–	–	–	–
D Cost of Living	–	–	–	–	–	–
Total voted	742,709	750,944	(22,873)	728,071	14,638	725,117
Non-voted:
E National Insurance Fund	–	–	–	–	–	–
Total non-voted	–	–	–	–	–	–
Total spending in Departmental Expenditure Limit	742,709	750,944	(22,873)	728,071	14,638	725,117
Spending in Annually Managed Expenditure
Voted:
F Child Benefit	11	2	–	2	9	2
G Tax-Free Childcare	–	–	–	–	–	–
H Providing payments in lieu of tax relief to certain bodies	–	–	–	–	–	–
I Lifetime ISA	–	–	–	–	–	–
J Help to Save	–	–	–	–	–	–
K HMRC administration	–	–	–	–	–	–
L VOA payments of Local Authority rates	–	–	–	–	–	–
M VOA administration	250	–	–	–	250	–
N Utilised provisions	–	–	–	–	–	–
O COVID-19	–	–	–	–	–	–
Total voted	261	2	–	2	259	2
Non-voted:
P Personal tax credits (Note 1)	–	411,948	(411,948)	–	–	–
Q Other reliefs and allowances	–	–	–	–	–	–
Total non-voted	–	411,950	(411,948)	2	259	2
Total spending in Annually Managed Expenditure	261	411,950	(411,948)	2	259	2
Total voted	742,970	750,946	(22,873)	728,073	14,897	725,119
Total non-voted	–	411,948	(411,948)	–	–	–
Total	742,970	1,162,894	(434,821)	728,073	14,897	725,119

Some figures are the amounts that comprise the Group’s consolidation position but have been separately identified in alignment with the Estimate and Internal Governance.

Note 1: The transfer of personal tax credit receivables balance to Department for Work and Pensions (DWP) results in capital grant in kind entries that net to nil.

SOPS 2. Reconciliation of outturn to net operating expenditure

As noted in the introduction to the SOPS, outturn and the Estimates are compiled against the budgeting framework, which is similar to, but different from, IFRS. Therefore, this reconciliation bridges the resource outturn to net operating expenditure, linking the SOPS to the financial statements.

Table 34: Reconciliation of net resource outturn to net operating expenditure

		Reference	Outturn (2024-25) £000	Outturn (2023-24) £000
Statement of Parliamentary Supply: Total resource outturn
Departmental Expenditure Limit		SOPS 1.1	5,833,866	6,501,736
Annually Managed Expenditure		SOPS 1.1	27,775,259	33,274,461
			33,609,125	39,776,197
Excluded from SOPS total resource outturn:
Expenditure:
Transfer of personal tax credits receivables to DWP			411,948	166,679
Expenditure meeting ESA10 R&D Criteria			1,497	2,057
Adjustments for ESA10 capitalisations			4,000	–
Child Benefit (Child Trust Fund)		SOPS 1.2	2	2
Non-current asset costs outside of budgeting			304	5,287
Income:
Grant capital income and non-current assets received			(5,740)	(49,292)
Payable to the Consolidated Fund		SOPS 4	(872)	(850)
			411,139	123,883
Excluded from Consolidated Statement of Comprehensive Net Expenditure (CSoCNE) net operating expenditure:
Expenditure:
Service concession arrangements liability repayment			(4,736)	(6,877)
Financing income and expenditure			(11,952)	(16,402)
			(£16,688)	(£23,279)
Consolidated Statement of Comprehensive Net Expenditure: Net operating expenditure			34,003,576	39,876,801

Explanation of reconciling items

Transfer of personal tax credits receivables to Department for Work and Pensions (DWP)

The receivables balance relating to customers who have made a valid claim to Universal Credit, now administered by DWP. Detail is presented in Resource Accounts note 4.1.2.

Expenditure meeting ESA10 R&D Criteria

This represents expenditure that does not meet the criteria for capitalisation under IFRS but satisfies the ESA10 definition of R&D and is therefore treated as expenditure in the Statement of Comprehensive Net Expenditure, but as capital within budgets. The adjustment of £4 million represents historic values previously added to non‑current assets which have been removed in 2024 to 2025 following reassessment.

Non-current asset costs outside of budgeting and service concession arrangements

The department has capitalised certain properties that were sold to private sector contractors and subsequently leased back under a Private Finance Initiative (PFI) contract as leases under IFRIC 12 Service Concession Arrangements. Budgetary treatment for these arrangements is determined in accordance with national accounts methodology to ensure that budgets reflect the fiscal impacts of the transactions.

Grant capital income and non-current assets received

Value recorded in 2024 to 2025 represents the value of leases provided on a peppercorn basis. The comparative relates to the value of a non-current asset received from Department for Transport by way of a capital grant in kind. This relates to the provision of a unified shared service across HMRC, Department for Transport and Ministry of Housing, Communities and Local Government.

Income payable to the Consolidated Fund

Income that is either in excess of limits included in the voted estimates or is outside the scope of what is allowed to be retained. For these reasons, this income is excluded from the SOPS.

SOPS 2.1 SOPS aligned to SOCNE

SOPS 2.1 has been included to provide further transparency on the correlation between budgeting, as shown in the Statement of Parliamentary Supply, and expenditure, as shown in the Statement of Consolidated Net Expenditure.

Table 35: SOPS aligned to SOCNE

	Note	Annually Managed Expenditure	Departmental Expenditure Limit	Non-budget	Departmental group 2024-25 £ million	Annually Managed Expenditure	Departmental Expenditure Limit	Non-budget	Departmental group 2023-24 £ million
Cash items:
Child Benefit		13,307.1	–	–	13,307.1	12,514.4	–	–	12,514.4
Corporation tax reliefs	4.1.4	10,123.3	–	–	10,123.3	12,049.1	–	–	12,049.1
Personal tax credits	4.1.1	2,460.4	–	–	2,460.4	7,305.5	–	–	7,305.5
Tax-Free Childcare		617.9	–	–	617.9	635.3	–	–	635.3
Lifetime ISA		624.4	–	–	624.4	499.1	–	–	499.1
Payments in lieu of tax relief and rates		280.3	–	–	280.3	262.6	–	–	262.6
Help to Save		45.0	–	–	45.0	51.7	–	–	51.7
COVID-19 support schemes		(1.1)	–	–	(1.1)	(22.0)	–	–	(22.0)
Cost of Living Payment		–	(5.2)	–	(5.2)	–	760.0	–	760.0
Staff and related costs		–	3,535.2	–	3,535.2	–	3,551.6	–	3,551.6
Goods and services		–	1,580.6	(45.5)	1,535.1	–	1,543.1	2.1	1,545.2
Service charges		–	137.1	–	137.1	–	100.0	–	100.0
Other cash expenditure		–	302.9	(15.4)	287.5	–	266.6	–	266.6
Non-cash items:
Transfer of personal tax credit receivables to DWP		–	–	412.0	412.0	–	–	166.7	166.7
Amortisation	7	–	470.8	–	470.8	–	392.3	–	392.3
Depreciation	6 and 8.1	11.6	124.8	5.9	142.3	12.2	126.3	8.9	147.4
Personal tax credit provisions		209.3	–	–	209.3	1.7	–	–	1.7
Other Provisions	13	109.6	2.6	–	112.2	(15.9)	(0.1)	–	(16.0)
Other		0.3	105.3	(1.5)	104.1	0.6	33.1	(3.6)	30.1
Total expenditure		27,788.1	6,254.1	355.5	34,397.7	33,294.3	6,772.9	174.1	40,241.3
Total operating income		(5.0)	(445.6)	56.5	(394.1)	(5.2)	(309.2)	(50.1)	(364.5)
Net operating expenditure		27,783.1	5,808.5	412.0	34,003.6	33,289.1	6,463.7	124.0	39,876.8
Finance income		–	(0.8)	–	(0.8)	–	(0.8)	–	(0.8)
Finance expense		–	12.7	–	12.7	–	17.2	–	17.2
Net expenditure for the year		27,783.1	5,820.4	412.0	34,015.5	33,289.1	6,480.1	124.0	39,893.2

Reconciliation to SOPS 1.1 and SOPS 2 (Note 1)	AME	DEL	Non-budget	no data	AME	DEL	Non-budget
SoCNE Net expenditure for the year	27,783.1	5,820.4	412.0	no data	33,289.1	6,480.1	124.0
Service concession arrangements liability repayment	–	4.7	–	no data	–	6.9	–
Provision utilisation	(8.0)	8.0	–	no data	(14.7)	14.7	–
SOPS 1.1 (£ million)	27,775.1	5,833.1	–	no data	33,274.4	6,501.7	–
SOPS 2 Excluded from SOPS total resource outturn (£ million)	no data	no data	412.0	no data	no data	no data	124.0

Note 1: The totals may differ to the information in the Statement of Parliamentary Supply due to rounding

SOPS 3. Reconciliation of net resource outturn to net cash requirement

As noted in the introduction to the SOPS, the outturn and Estimates are compiled against the budgeting framework, not on a cash basis. Therefore, this statement reconciles the resource and capital outturn to the net cash requirement.

Table 36: Reconciliation of net resource outturn to net cash requirement

	SOPS note	Estimate £000	Outturn £000	Outturn compared to Estimate: saving/ (excess) £000
Resource outturn	1.1	37,774,403	33,609,125	4,165,278
Capital outturn	1.2	742,970	728,073	14,897
Accruals to cash adjustments:
Remove non-cash items:
Depreciation and amortisation		(846,307)	(607,285)	(239,022)
New provisions and adjustments to existing provisions		(10,960)	(112,217)	101,257
Other non-cash items		–	(105,687)	105,687
Reflect movement in working balances:
Increase/(decrease) in inventories		581	–	581
Increase/(decrease) in receivables		85,000	37,465	47,535
(Increase)/decrease in payables		283,092	85,676	197,416
Use of provisions		20,000	7,997	12,003
Other adjustments:
Remove non-voted budget items:
Funded outside the vote (Note 1)		(16,015,860)	(13,071,902)	(2,943,958)
Lease liability repayment		–	72,003	(72,003)
Other		–	9,637	(9,637)
Net cash requirement		22,032,919	20,652,885	1,380,034

Note 1: Of the outturn included in SOPS 3, this represents the extent of non-voted expenditure for which funding has, or will be, obtained from the associated sources (the Trust statement and National Insurance Fund). The resulting net cash requirement therefore only relates to voted expenditure.

SOPS 4. Income payable to the Consolidated Fund

SOPS 4.1 Analysis of income payable to the Consolidated Fund

In addition to income retained by us, the following income is payable to the Consolidated Fund. This is income which is outside the ambit of the Supply Estimate and is required to be paid over to HM Treasury.

Table 37: Analysis of income payable to the Consolidated Fund

	Reference	Outturn 2024-25 Accruals £000	Outturn 2024-25 Cash basis £000	Outturn 2023-24 Accruals £000	Outturn 2023-24 Cash basis £000
Income outside the ambit of the Estimate	SOPS 2	872	872	850	850
[Excess] cash surrenderable to the Consolidated Fund		–	–	–	–
Total amount payable to the Consolidated Fund	(in section Consolidated Statement of Changes in Taxpayers’ Equity)	872	872	850	850

SOPS 4.2 Consolidated Fund income

Consolidated Fund income shown in SOPS note 4.1 above does not include any amounts collected by the department where it was acting as agent of the Consolidated Fund rather than as principal. Full details of income collected as agent for the Consolidated Fund are in the department’s Trust Statement.

Losses and special payments

These losses and special payments relate to the running of the departmental group, including benefits and credits paid from the department’s budget. Full details on revenue losses can be found in HMRC’s Trust Statement.

Losses statement

Losses are made up of remissions and write-offs. Remissions are generated by the process used to identify and treat as foregone money owed to HMRC which we have decided not to pursue – for example, on the grounds of value for money. Write-offs is the term used to describe money owed to HMRC that is considered to be irrecoverable – for example, because there are no practical means for pursuing it.

Table 38: Losses statement

	2024-25 Departmental group cases	2024-25 Departmental group £ million	2023-24 Departmental group cases	2023-24 Departmental group £ million
Personal tax credits remissions and write-offs	671,782	360.5	619,591	352.6
Child Benefit remissions and write-offs	71,929	18.2	49,975	8.7
Exchange rate losses (notes 1 and 2)	30	–	21	–
Others (note 2)	185	3.5	363	–
Total	743,926	382.2	669,950	361.3

In 2024 to 2025 £360.5 million of personal tax credit debt was remitted/written off as it was uncollectable (2023 to 2024 £352.6 million). For further information see the Resource Accounts (notes 4.1.1 and 4.1.2). In 2024 to 2025 the department wrote off £18.2 million of Child Benefit debt that was uncollectable (2023 to 2024 £8.7 million).

There were no individual cases of more than £300,000.

Notes:

1. The monetary sum of the cases in 2023 to 2024 and 2024 to 2025 is immaterial.

2. The monetary sum of comparative totals in 2023 to 2024 was immaterial.

Special payments

These include compensation and ex-gratia payments in respect of personal injury, damage to property and those which result from the department’s redress policy. For further information on reporting requirements please see guidance in Managing Public Money, Annex 4.13.

Table 39 Special payments

	Departmental group cases (2024-25)	Departmental group £ million (2024-25)	Departmental group cases (2023-24)	Departmental group £ million (2023-24)
Payments and accruals	18,918	4.2	16,656	3.2

Severance payments are included within special payments shown above. These are paid under certain circumstances to employees, contractors, and others outside of normal statutory or contractual requirements, when leaving employment in the public service, whether they resign, are dismissed, or reach an agreed termination of contract. For 2024 to 2025 we made 9 payments totalling £85,535 (2023 to 2024 6 payments totalling £63,750) in respect of severance cases. The highest payment was £25,000 (2023 to 2024 £23,000) and the lowest payment was £35 (2023 to 2024 £3,000). The median payment was £6,000 (2023 to 2024 £9,375). There were no individual cases of more than £300,000.

Remote contingent liabilities

In addition to contingent liabilities reported within the meaning of IAS 37, the department also reports liabilities for which the likelihood of a transfer of economic benefit in settlement is too remote to meet the definition of contingent liability.

The department has the following quantifiable remote contingent liabilities.

Table 40: Indemnities

	1 April 2024 £ million	Increase in year £ million	Liabilities crystallised in year £ million	Obligation expired in year £ million	31 March 2025	Amount reported to Parliament by departmental minute £ million
Indemnities	33.8	0.1	–	(7.1)	26.8	–

Managing Public Money requires that the full potential costs of indemnified contracts be reported to Parliament.

Reconciliation of contingent liabilities included in the supply estimate to the Resource Accounts

Quantifiable contingent liabilities:

Description of Contingent Liabilities	Supply Estimate (£000)	Amount disclosed in Resource Accounts (£000)	Variance (Estimate vs amount disclosed in Resource Accounts, £000)
Legal claims	140,700	132,500	8,200
Guaranteed costs	600	600	–
Other	62,500	80,400	(17,900)
Valuation Office Agency – legal claims	720	300	420
Valuation Office Agency – dilapidations	700	700	–

Unquantifiable contingent liabilities: The department has unquantifiable contingent liabilities relating to some legal claims.

The department has no remote unquantifiable contingent liabilities.

John-Paul Marks Accounting Officer
15 July 2025