This week's opinion: 25 November 2021

As we, fingers crossed, move into the post-Covid period it is clear that we will be dealing with the tax consequences of the pandemic for years to come. 

Two recent developments highlight this. The first is the National Audit Office report on tax debt (tinyurl.com/3yu9z4rn) which reveals a frightening increase in the overall level of tax debt (£16bn in January 2020 to a peak of £67bn in August 2021). Some of this results from policy decisions to defer tax payments and will reverse over time but this still leaves huge amounts which may prove difficult or impossible to collect. HMRC had to make some tough judgments between supporting taxpayers by suspending most debt collection activity and not allowing people to walk away from paying tax which was due. Time will tell whether the right balance was struck.

The other matter is growing evidence of fraud in the operation of the support schemes, a matter highlighted in a recent BBC Radio 4 File on 4 programme ‘Furlough fraud’ (tinyurl.com/43na9k3u). It was inevitable that there would be abuse of the schemes (the initial costings assumed 5% to 10% of claims would be wrong because of fraud or error) but I suspect that if and when the final figures are known it will be significantly higher. 

The furlough scheme protected thousands of businesses and averted economic disaster so perhaps this level of fraud was a price worth paying. But hearing recordings of business owners appearing to suggest to employees that they should pretend that they are working voluntarily to protect their mental health, or discovering that dummy companies with fake payrolls were being set up to make fraudulent claims is depressing even if it they do not come as too much of a surprise.