The Chancellor is to give HMRC £1.6bn to hire compliance and debt management staff, raising an additional £4.7bn in 2029-30
With the tax gap standing at £39.8bn, extra funding is being allocated to HMRC to combat this, recruiting 5,000 additional compliance officers over five years, as well as 1,800 debt management officer. The recruitment will begin with 200 compliance officers starting in November.
A government spokesperson said: ‘The government is investing over £1.6 billion over the next five years for HMRC to recruit 5,000 additional compliance staff – with the first 200 starting training in November – and to fund 1,800 debt management staff.
‘This will raise an additional £4.7 billion in 2029-30, ensuring more of the tax that should be paid is paid.’
There are currently around 27,200 compliance officers at HMRC, with the addition taking this number up to 32,000 by March 2030, with recruitment periods taking eight weeks to process. There will be a minimum of two recruitment drives a year, dependent on the success rate of individuals.
New recruits will be expected to complete 18 months of training, with some having to complete three years of training.
The training will develop the essential tax knowledge of new staff with skills they will be required to have to help deliver an increased compliance yield and interact with taxpayers correctly.
It will include self-led learning as well as facilitated virtual learning. HMRC has also stated it expects ‘a blend of applications from both internal and external candidates.
The current turnover of staff at HMRC hit 8.3% according to HMRC’s latest annual report, falling to 61,186 in 2023/24. In just one year 5,154 staff members left, with only 3,564 new members of staff being recruited. If the turnover of staff continues at the same rate, the 5,000 additional compliance officers would not show an increase in staff levels.
In addition, short-term contractors are still being employed at HMRC, some of which have been on these contracts which pay an average of £245 a day, for four years. There were 1,785 contractors in total.
Due to the shockingly low levels of customer service at HMRC, it had already been given an extra £51m in May in an attempt to get phonelines up to 85% of the calls being answered.
Ellen Milner, director of public policy at the Chartered Institute of Taxation said: ‘This is a bold, billion pound bet on tackling the tax gap, but the additional revenue estimates are ambitious, and taxpayers can be forgiven for wondering whether they will be delivered.
‘In recent years the tax gap has grown in absolute terms, and the illegal behaviours which HMRC define as evasion, hidden economy and criminal attacks have proven difficult to tackle. This investment is a clear indicator that the government will not tolerate this sort of non-compliance.
HMRC is predicted to be able to recover an extra £2.7bn every year with the additional compliance officers, which is roughly 7% of the tax gap.
Additionally, there will be £262m for HMRC to fund 1,800 debt management staff, with 1,200 of these staff internally promoted and 600 will be recruited externally. Together with the increase in the interest rate on unpaid tax, is expected to raise almost £9bn over the next five years.
Glen Collins, head of policy, technical and strategic engagement at ACCA said: ‘It is difficult to overstate levels of concern and frustration being experienced by a substantial proportion of ACCA members in their contact with HMRC.
‘This includes significant delays by HMRC which cost taxpayers, agents and HMRC time as well as failures from HMRC in dealing with basic processing requests, like VAT registration, through to more complex areas like dealing with R&D tax credit enquiries.
‘The poor communication significantly impacts productivity in the professional services sector.
‘Clarity from the Chancellor on how this HMRC investment will help to tackle the issues that small businesses and taxpayers are facing, such as poor customer service and response times, would be welcomed by small businesses, taxpayers, and accountants.’
The additional HMRC funding is expected to raise up to £6.4bn for the Exchequer by the end of the parliament. In the remainder of this year the move is expected to pull in an extra £10m, increasing to £165m in 2025/26. By 2026/27 as more staff are recruited and trained this is expected to rise to £540m, then to £1.2bn in 2027/28.
Milner said: ‘However, almost half of the tax gap relates to taxpayers not getting things right through what HMRC categorise as either error or a failure to take reasonable care. And there appears to be little in the Budget to address this.’
There will also be an additional 180 welfare counter-fraud staff with to deal with child benefit fraud, and tax-free childcare from April 2025.
The Department for Work and Pensions is also receiving funding to recruit 3,000 extra staff to combat fraud and error. This is expected to raise £2.2bn over the next five years.
The above is the P.R. stuff they want us to believe…..they will be deploying significant numbers to carry out further compliance and investigation work to recover the shortfall in taxes. All of us need to be aware of the implications of these changes and be aware and ensure that we have obtained and collated all our records properly and accounted for every transaction correctly! 😊
About Adrian Chiles