A dent in the taxman’s wallet

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HMRC saw a drop of almost £30 billion in tax revenues in the latest financial year because of the pandemic, according to its annual accounts. In its 2020/21 annual report, HMRC reported that it had collected £608.8 billion in tax revenues, which is down from £636.7 billion collected in 2019/20.

HMRC said the drop was due to by the ‘unprecedented economic circumstances caused by COVID-19, and because pandemic restrictions meant HMRC had to reduce its compliance activity’, the result of which was a drop of 18% in the additional tax generated by HMRC’s work tackling avoidance, evasion, and other non-compliance which fell from £36.9 billion to £30.4 billion.

On a related note, HMRC reported that it delivered £60.7 billion in grants through the Coronavirus Job Retention Scheme (CJRS) – but staggeringly they estimate that the level of error and fraud in the CJRS scheme currently stands at £5.3billion. No wonder that the tax gap  – the difference between the amount of tax that should, in theory, be paid to HMRC, and what is actually paid – has increased to 5.3% up from 4.7% last year.

For all manner of taxation advice – personal or corporate – contact our tax teams in Newport, Cardiff and Bristol. 

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