The Public Accounts Committee has called on HMRC to explain why some self employed people have not received any financial help during the Covid pandemic.
The Committee issued a report on Wednesday saying HMRC should, within six weeks of this report, publish an explanation of why it can’t help those freelancers and other groups that have been excluded from receiving any support, and set out steps it can take to overcome those obstacles.
The report notes, however, the “huge strain” the pandemic has put on HMRC’s day to day operations, with a significant impact on HMRC’s performance evident in falling tax revenues, poorer customer service, reduced compliance activity and increased debt balances. Even without Covid, it was facing strategic challenges in its plans and progress transforming the tax system and its preparations for the end of the transition period following the UK’s exit from the EU, said the report.
It stated, however, that HMRC spends too much patching up out of date and potentially risky IT systems rather than modernising them and “too often struggles to provide the reliable and timely financial estimates upon which good financial and operational planning depends”. It noted, for instance, “basic errors” in financial forecasting and uncertainty over its estimate of what fraud and error from tax credits and the furlough scheme should be.
Meg Hillier, Chair of the Public Accounts Committee, said: “Obviously, the national system of revenue collection underpins all public spending and services. As public spending balloons to unprecedented levels in response to the pandemic, out-of-date tax systems are one of the barriers to getting help to a significant number of struggling taxpayers who should be entitled to support. And the system is going to struggle, and in many cases fail, to capture or deal with those wrongly claiming it.
“HMRC needs to redress the balance in its spending and use of tech, and get ahead on the basic financial and economic metrics that we need to adapt and respond to this pandemic in real time. There is also a huge question about how our customs and revenue technology at the borders is coping, and will cope in the months and years to come. There isn’t really any breathing space – HMRC’s out of date systems need to catch up fast.”