HMRC to tackle debt mountain as Chancellor announces capacity boost for debt management team

In last week’s Autumn Statement, the Chancellor announced a ‘capacity boost’, directing millions into HMRC’s debt management team.

This comes following concerns over a rising “debt mountain”, with the debt balance at the end of March 2023 at £45.9 billion. This figure is £4.3 billion higher than the balance at the end of March 2022 and includes £43.9 billion of tax debt (which equates to 5.4% of revenues) and £2.1 billion of tax credits debt.

At the end of 2022 to 2023, HMRC was managing £5.7 billion of debt through time-to-pay arrangements, in which customers pay off their debt in affordable and sustainable instalments.

Andrew Park, a Partner in Tax at Price Bailey, comments: “In a welcome move given the scale of uncollected debts facing HMRC, it’s positive to see the £163m ‘capacity boost’ directed towards HMRC’s debt management team.

“Increased funding means increased focus and greater productivity; reducing the size of this enormous debt mountain with have a big impact on the UK’s fiscal health.”

In the policy description, HMRC detailed that “additional funding will also enable the acquisition of new data to allow HMRC to provide a more tailored approach to debt collection for companies”. This comes as HMRC undergoes a multi-year transformation project using digital data and technology to better tackle the problem of unmatched payments – payments sent to the department with neither the correct reference number nor customer name.