Tax debt rises to £45.7bn as numbers of taxpayers on instalment plans fall
The latest performance update from HMRC shows that overall tax debt rose slightly to £45.7bn in the last quarter of 2023 versus the previous quarter while the numbers of taxpayers in Time to Pay instalment arrangements fell.
While the tax debt figure was up by just 0.4% in the quarter ending 31 Dec 2023 versus the previous quarter, it was the second consecutive quarterly rise in tax debt. This was despite new investments being made in HMRC’s debt management team.
Meanwhile the number of taxpayers in Time to Pay arrangements dropped 9% on a quarter-by-quarter basis to 808,025.
HMRC also reported a significant increase in compliance yield when comparing the 9-month period to the end of December 2003 versus the same period for the previous year. In total, the compliance yield – the total revenues resulting from compliance activity – rose by over £5bn during the period. That was despite falling success rates for its statutory reviews* (down to 70% from 77% in the previous year) and litigation (which dropped to 85% from 93% in the previous year).
Dawn Register, head of tax dispute resolution at BDO said: “Over the last two quarters, we have seen tax debt levels slowly ticking up while instalment plans have declined. Worryingly, both measures are going in the wrong direction. This is despite an extra £163m investment in HMRC’s debt management team announced at the Autumn Statement. Indeed, tax debt remains above the eye-watering level of £45bn.
“Times are tough for many and HMRC should be doing much more to publicise Time to Pay arrangements to individuals and businesses who are struggling to pay their bills on time.
“If you’re struggling to pay an income tax bill, provided your debt is below £30,000, you can apply online for a Time to Pay arrangement.
“Many businesses are also struggling with cashflow. Indeed, the latest quarterly figures show that company insolvencies are up 14% year-on-year. Businesses are able to set up instalment plans for certain taxes online such as VAT and employers payroll liabilities and we hope, in time, these online self-service facilities will be extended to other business taxes.”