Non-compliance during pandemic cost HMRC £9bn, says NAO

HMRC’s compliance work generated around £9bn less tax revenue than normal during the pandemic as thousands of staff moved to support Covid-19 schemes according to the National Audit Office (NAO).

The watchdog's report Managing tax compliance following the pandemic found that throughout 2020-21 an average of 1 356 HMRC customer compliance group staff were redeployed to the Covid schemes peaking at 4 396 in May 2020. Recognising the pressures on taxpayers HMRC offered them the opportunity to pause enquiries except in cases where it suspected fraud or criminal activity. HMRC has conducted substantially fewer enquiries into suspected non-compliance since the pandemic began. It closed 29% (103 000) fewer cases in 2020-21 compared with the previous year and opened 32% fewer (114 000).

On tax revenues raised from its compliance activity pre-pandemic these were on average 5.2% of total revenues. This fell to 5%...