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This publication is available at https://www.gov.uk/government/publications/hmrc-issue-briefing-how-hmrc-will-continue-to-support-customers-and-the-economy/covid-19-how-hmrc-will-continue-to-support-customers-and-the-economy
Throughout the pandemic, HMRC’s priority has been to deliver the government support to protect people’s livelihoods and help businesses get through this difficult time financially. As the UK begins to emerge from COVID-19, the country will face serious economic challenges. We will support businesses and individuals to adapt to a changing economy, while continuing to help fund our public services.
It will take time for the UK to recover and rebuild the economy. Our purpose is to collect the money that pays for our public services and pay out the correct financial support to those in need. We will carry out this vital work in a way that is sensitive to any customers’ altered needs and capabilities.
This issue briefing sets out how we will work with our customers and stakeholders over the coming months. We are committed to being as open and as transparent as possible when we make any changes.
Support schemes and policy changes
HMRC’s work has been at the centre of the government’s response to COVID-19. Whether that’s by administering the new support schemes, changing our operational approach or through more than 80 other policy changes.
Through the Coronavirus Job Retention Scheme (CJRS) and the Self-Employment Income Support Scheme (SEISS), we have supported millions of people. We have a dedicated GOV.UK page with more statistics on the Coronavirus Job Retention Scheme, the Self-Employment Income Support Scheme, Eat Out to Help Out and the VAT payments deferral scheme.
HMRC’s priority in administering the support schemes has been to get money to the people who need it as quickly as possible. For the Coronavirus Job Retention Scheme and the Self-Employment Income Support Scheme, customers went from making a claim to having the money in their accounts in 6 working days.
While doing this, we must also protect the schemes against abuse from organised criminal attacks, inflated claims and other non-compliance. We designed these schemes in a way that reduced the likelihood of mistakes happening, and removed opportunities for fraud.
Where honest mistakes happen, we’re helping customers put it right, but are taking tougher action on deliberate fraudulent behaviour. Our analysts are using multiple data sources to quickly identify discrepancies. We are seeing clear patterns that make fraud easier to spot.
In the Budget, the government announced it was investing £100 million to expand the scope of our compliance work.
The Taxpayer Protection Taskforce will see us commit around 1,200 people to recovering money paid out to incorrect and fraudulent claims. We have opened 10,000 inquiries into COVID support scheme claims so far and have another 5,000 in the pipeline. The £100 million investment will see us double the number of inquiries to at least 30,000.
We continue to encourage businesses and individuals to come forward and self-correct if they have made a mistake in their claim. Where people have made an honest mistake, we want to help people correct them.
No one who has tried to do the right thing but made an honest mistake has any need to be concerned, as long as they work with us to put it right. Where customers don’t take the opportunity to correct and don’t respond to our prompts, we will carry out investigations into their affairs.
As well as these support schemes, we have implemented more than 80 other temporary policy changes or clarifications to respond to the impact of COVID-19, including letting taxpayers defer payments of Income Tax and VAT.
Providing this support has been resource intensive and this has had some implications for our day-to-day operation. We have strived to maintain our levels of customer service, and customer satisfaction has remained high; however, we have had to ask for our customers’ ongoing patience while waiting to get through to our tax helplines.
The quickest way to contact us is through our digital channels: customers can use their personal or business tax account, the HMRC App, or webchat. In 2020 to 2021, around 85% of those who used our digital services were satisfied. See more information about how we have performed against our customer service targets.
Many of the operational policy changes have flexible end-dates as they depend on the easing of public health interventions. These will be withdrawn when we are confident that they are no longer required. Some easements provide an opportunity for modernisation, so wherever possible we’ll make these positive changes permanent.
Reforming the tax system
COVID-19 has emphasised the need for the tax system to be more adaptable, resilient and responsive. The government has announced a 10-year strategy for building a trusted, modern tax administration system.
These reforms will offer greater flexibility and scope to provide targeted support to people and businesses in the face of future national crises and will increase the resilience of the tax system. Modern digital systems and real-time information will help people to get their tax right first time and make it much harder for people to avoid paying the tax due.
HMRC is consulting on how the tax administration framework could be reformed to support a trusted, modern tax administration system.
Principles for the next steps
Over time, as the threat of the virus recedes, the country will slowly return to a steady state – a ‘new normal’ – and HMRC’s activities are no different. We will of course keep the situation under constant review to ensure we aren’t moving too quickly or doing anything which could unnecessarily jeopardise the nation’s economic recovery as we continue to adapt to the impact of the pandemic.
We will follow some key principles to make sure we continue to support the individuals and businesses of the United Kingdom, while protecting the tax system and bringing in the money to fund the country’s vital public services.
Our approach will be to collect the tax due in a way that recognises the very real needs and challenges that businesses and individuals face.
We will communicate openly and transparently, to give people as much certainty as possible.
It is more important than ever that we are professional, fair and even-handed in the way we interact with our customers.
Where we have introduced temporary administrative arrangements that have improved the customer experience or created operational improvements, we will try to build on these changes to deliver long-term sustainable solutions.
We will continue to prioritise tackling serious fraud and criminal attacks on the tax system, while increasing wider activity to make sure individuals and businesses pay the right tax.
It is important that businesses plan ahead and we are encouraging our customers to go digital to make this easier, by using services such as Making Tax Digital.
Tax collection and benefit payments
Taxpayers and claimants should continue to file their tax returns and claim forms or renewals on time. Coronavirus support payments, including the Coronavirus Job Retention Scheme and the Self-Employment Income Support Scheme, paid to businesses should be included in tax returns.
While we appreciate there will be many competing priorities for businesses as the economy continues to adapt, customers should prepare now to meet their future tax obligations.
We are issuing penalty notices to businesses and individuals who have not met their obligations, but we’ll take a sympathetic approach to those who are struggling to pay their tax or file their returns on time. We will accept the impacts of COVID-19 as a reasonable excuse and offering longer periods to request a review or appeal the decision. As time goes on, we would expect more customers to meet the deadlines and we will be looking more closely at the appeals where COVID-19 has been cited as a reasonable excuse.
It is vital that people contact us if they can’t meet the deadlines; these penalties are sometimes automated, so we will only know if a customer has a reasonable excuse if they inform us.
A ‘compliance check’ allows us to investigate someone’s tax affairs if we think they may not be paying the right amount of tax. Our approach is to do this in a way that recognises the very real needs and challenges that businesses and individuals may be facing.
Where there are existing ongoing compliance checks we will continue to take a customer-first approach and work or pause cases as circumstances dictate. This means that during this period, we will usually only open a new enquiry into those badly affected by COVID-19 or those leading the fight against the virus if we think they can engage and resolve the enquiry. We will give these customers enough time to focus on more urgent priorities, whether keeping their business afloat or keeping the country safe and well.
However, in some specific situations, we will open tax enquiries even if a customer has been severely affected.
These situations are:
- where we suspect criminal activity, fraud or significant deliberate non-compliance, including avoidance
- where not doing so would mean missing a deadline preventing us from ever collecting the unpaid tax
- where we are protecting their employees (for example the National Minimum Wage)
- for a mandatory check
We know people may not be able to respond immediately, so we will make it clear that they will not be penalised for any delay as a result of the outbreak, although interest will still apply on any unpaid tax.
It will be difficult for us to identify all customers severely affected and we may not always get this right, but we will consider individual circumstances when taxpayers share these with us.
Some of our work to make sure people are paying the right tax takes place on a one-to-many basis. Contrasting with our one-on-one interventions, one-to-many activity is where we communicate with a number of people at once about the same issue. This activity may sometimes cover those who we have said we won’t contact, but we will handle these checks sensitively and in line with these principles outlined above.
One of our vital roles is to make sure that businesses who pay the right tax aren’t disadvantaged or undercut by competitors cheating the system, or who make errors and pay less tax as a result. This is particularly important as those businesses try to adapt and recover from the impact of the pandemic.
It is vital that we continue to take robust action to protect customers and the tax system from harm, so we will continue to prioritise tackling fraud and other tax crime, and open enquiries into customers who can engage.
As the UK begins to emerge from COVID-19, we are taking a compassionate and common-sense approach to dealing with people with tax debts and those who are concerned about their ability to meet tax obligations.
We will continue to support customers with debts who get in touch with us for further support, for example by offering them payment plans, or helping them to access services such as our Self Assessment Self Service Time to Pay, or New Payment Scheme for VAT.
These services have already helped thousands of customers spread millions of pounds of deferred payments over up to a year. We are mindful that some customers will remain in uncertain financial circumstances for a period of time, and we are ready to provide them with support. We want to work with those who have been affected to find an affordable way for them to pay the tax they owe.
We have tailored our customer communication to reflect the current exceptional circumstances and are signposting the extra support available.
Tax debts incur interest, so we encourage people to get in touch if they don’t think they will be able to pay. We want to support people out of debt to help them get back on track with their tax affairs, and avoid debts getting bigger. We understand that a large tax bill can be stressful at any time, particularly if customers are worried about whether they can pay it.
We do not want people to worry: we are always ready to help those who want to settle their affairs, and we will be understanding and sympathetic. If customers are worried about payment, they should call the dedicated Payment Support Service as soon as possible.