Partner Article

HMRC faces a cash crisis as debt levels soar to £39 billion

The Covid 19 pandemic caused problems not just for the business community….it has also created a major headache for HMRC.

According to a report from the Committee of Public Accounts, the pre-pandemic level of tax debt was £16 billion - but that figure has now gone up to a staggering £39 billion.

And according to Sheffield financial experts Ryan Holdworth, the problem facing HMRC will be how to tackle the issue fairly without harming the nation’s economic recovery.

The committee’s report points out that the number of taxpayers in debt increased by 2.4 million to around 6.2 million over the past two years.

The committee is not satisfied that HMRC has a clear plan to tackle the mountain of tax debt which has built up during the pandemic and it suggests that within the next six months, HMRC should develop a plan to manage the increased levels of debt back down to pre-pandemic levels within a specific time frame.

“The real concern is that HMRC is not being ambitious enough in bringing down debt levels and securing the necessary resources this will require,” said Ryan, an Insolvency Practitioner with Sheffield insolvency and business turnaround specialists Graywoods

“There is also the issue of rogue companies exploiting the pandemic to profit at the expense of taxpayers.

“The committee stated that HMRC should be prepared to bring the full force of the law to bear on those who defraud the Exchequer, and report publicly and regularly to Parliament on the numbers prosecuted.

“It’s clear from some of the directors that we have spoken to, though, that HMRC have not been actively pursuing outstanding tax.

“Clearly this report reflects those comments, and it will be interesting to see what response is received by the committee from HMRC in the next six months.

“This could signal a change in the attitude we have seen in recent times, with a tightening up of the approach towards tax debt.

“That’s why the best thing to do if you are concerned about your level of payment is to face reality and seek the advice that could stop a cash crisis turning into a financial disaster.”

This was posted in Bdaily's Members' News section by John Highfield .