Corporate report

HMRC's annual report and accounts 2022 to 2023: our accounts and annexes

Published 17 July 2023

Trust Statement

Statement of Revenue, Other Income and Expenditure

For the year ended 31 March	Note	2023 £bn	2022 £bn
Taxes and duties
Income Tax	2.1	258.0	233.4
Value Added Tax	2.2	166.9	148.8
Corporation Tax	2.3	80.5	68.3
Hydrocarbon oils duties	2.4	25.0	25.8
Stamp taxes	2.5	19.0	18.7
Capital Gains Tax	2.6	17.0	15.8
Alcohol duties	2.7	12.3	13.1
Tobacco duties	2.8	9.4	10.2
Other taxes and duties	2.9	43.8	33.3
Total taxes and duties		631.9	567.4
Other revenue and income
National Insurance Contributions	3.1	175.8	158.3
Student Loan recoveries	3.3	4.0	3.2
Fines and penalties	3.4	2.3	2.2
Total other revenue and income		182.1	163.7
Total revenue		814.0	731.1
Less expenditure
Impairment charges	4.5	(8.2)	(2.5)
Provisions in-year expenditure movement	6.1	5.5	(1.8)
Total expenditure		(2.7)	(4.3)
Less disbursements
National Insurance Contributions paid and payable to the National
Insurance Funds and National Health Services	3.1	(174.8)	(158.3)
Appropriation of revenue to Resource Account	3.2	(21.1)	(21.9)
Student Loan recoveries paid and payable to the Department for Education	3.3	(4.0)	(3.2)
Taxation paid to the Isle of Man	3.5	(0.3)	(0.3)
Total disbursements		(200.2)	(183.7)
Total expenditure and disbursements		(202.9)	(188.0)
Net revenue for the Consolidated Fund		611.1	543.1

There were no recognised gains or losses accounted for outside the above Statement of Revenue, Other Income and Expenditure.

The notes to the Trust Statement form part of these accounts.

Statement of Financial Position

As at 31 March	Note	2023 £bn	2022 £bn
Non-current assets
Receivables falling due after one year	4	2.1	1.8
Current assets
Receivables	4	38.7	35.0
Accrued revenue receivable	4	131.1	120.7
Total current assets		169.8	155.7
Total assets		171.9	157.5
Current liabilities
Payables	5	(25.8)	(22.5)
Accrued revenue payable	5	(45.6)	(44.5)
Deferred revenue	5	(2.9)	(2.7)
Cash and cash equivalents	5.4	(1.4)	(1.6)
Total current liabilities		(75.7)	(71.3)
Assets less current liabilities		96.2	86.2
Non-current liabilities
Provision for liabilities	6	(7.5)	(13.6)
Total assets less total liabilities		88.7	72.6
Balance on Consolidated Fund Account	7	88.7	72.6

Jim Harra
Accounting Officer
6 July 2023

The notes to the Trust Statement form part of these accounts.

Statement of Cash Flows

For the year ended 31 March	2023 £bn	2022 £bn
Net revenue for the Consolidated Fund	611.1	543.1
(Increase) / decrease in non-cash assets	(14.4)	(13.9)
Increase / (decrease) in non-cash current liabilities	4.6	8.7
Increase / (decrease) in provision for liabilities	(6.1)	0.7
Net cash flow from operating activities	595.2	538.6
Less: Cash paid to the Consolidated Fund	(595.0)	(538.6)
Increase/(decrease) in cash and cash equivalents in this period	0.2	–
Net funds as at 1 April (opening cash and cash equivalents balance)	(1.6)	(1.6)
Net funds as at 31 March (closing cash and cash equivalents balance)	(1.4)	(1.6)

Notes to the Trust Statement

Notes to the financial statements provide additional information required by statute and accounting standards to explain a particular feature of the financial statements. The notes also provide explanations and additional disclosure to assist readers’ understanding and interpretation of the financial statements.

1. Statement of accounting policies

1.1 Basis of preparation

The Trust Statement is prepared in accordance with:

• the accounts direction issued by HM Treasury under Section 2 of the Exchequer and Audit Departments Act 1921
• the 2022 to 2023 Financial Reporting Manual (FReM) issued by HM Treasury
• International Financial Reporting Standards (IFRS) adapted or interpreted for the public sector context
• using the historical cost convention in accordance with the FReM, where assets are recorded at their original value
• accounting policies detailed in subsequent notes

The accounting policies have been developed by HMRC and have been reviewed during 2022 to 2023. These policies have been applied consistently in dealing with items considered material in relation to the accounts.

The Trust Statement is prepared on a going concern basis.

The financial information presented is rounded to the nearest £0.1 billion, except for COVID-19 support payments recovered as Income Tax or Corporation Tax (notes 2.1 and 2.3), taxation due to the Isle of Man (note 3.5), revenue losses (note 4.4), and Certificates of Tax Deposit (note 8), which are rounded to the nearest £1 million, due to the much smaller amounts disclosed in these notes.

Basis of accounting

The majority of taxes and duties are accounted for on an accruals basis.

As agreed with HM Treasury the following elements are accounted for on a partial accrual basis as not enough information is known to reliably accrue for the revenue, hence there is no accrued revenue receivable estimate in the Statement of Financial Position:

• Corporation Tax for smaller companies that do not pay by instalments – note 2.3
• Capital Gains Tax reported via Self Assessment – note 2.6

As agreed with HM Treasury the following elements and some repayments are accounted for on a cash basis:

• VAT Import One Stop Shop – note 2.2
• Stamp Duty – note 2.5
• National Insurance classes 1A and 1B – note 3.1
• Student Loans – note 3.3
• Interest on receivables – note 4.1

Accounting for these elements on a cash basis does not have a material impact on revenue.

Significant accounting estimates

The preparation of the financial statements includes the use of estimates and assumptions. Although the estimates have been prepared using the best information available at the time of producing, actual results may differ from those estimates. The significant accounting estimates with a risk of a material change to the carrying value within the next year in terms of IAS 1, ‘Presentation of Financial Statements’, are:

• Income Tax self assessment Accrued Revenue Receivable – note 4.2.2
• Corporation Tax (Quarterly Instalment Payers) Accrued Revenue Receivable – note 4.2.3
• Tax receivable and accrued revenue receivable impairment – note 4.3
• Provision for liabilities – note 6

1.2 Revenue recognition

Taxes and duties are measured at the fair value of the consideration received or receivable net of repayments. Revenue is recognised as per the FReM, which is in accordance with International Financial Reporting Standard 15 with adaptations applied, as taxes and duties arise from statute and not a contract. Revenue is recognised when:

• a taxable event has occurred (these are described in note 2 for material taxes and duties)
• the revenue can be measured reliably
• it is probable that the economic benefits from the taxable event will flow to HMRC

Revenues are deemed to accrue evenly over the period for which they are due.

1.3 The tax gap

The tax gap is not recognised or measured in the Trust Statement, in accordance with the requirements of the FReM. The tax gap is the difference between the amount of tax that should, in theory, be paid to HMRC and what is actually collected.

Further information on the tax gap can be found in the section ‘Performance analysis, collecting the right tax’.

2. Accounting policies and analysis

2.1 Income Tax

For the year ended 31 March	2023 £bn	2022 £bn
Pay As You Earn and other Income Tax	209.8	188.4
Self Assessment	47.7	44.6
Simple Assessment	0.5	0.4
Total	258.0	233.4

The taxable event for Income Tax (IT) is the earning of assessable income during the taxation period by the taxpayer. Accrued revenue for Self Assessment is required to be estimated, as tax returns reporting taxpayer liabilities are not filed until after the Trust Statement has been published. See note 4.2.2 for further information.

COVID-19 support payments are recoverable as IT if the recipient was not entitled to the amount in accordance with the scheme under which the payment was made. The amount chargeable is the amount the recipient is not entitled to. For the year ended 31 March 2023, COVID-19 support payments recovered via IT totalled £228 million (£67 million in 2021 to 2022).

IT includes amounts collected on behalf of the Scottish and Welsh devolved administrations, further details of which are set out in note 12.

2.2 Value Added Tax

For the year ended 31 March	2023 £bn	2022 £bn
Gross revenue	274.1	256.2
Less: revenue repayable	(107.2)	(107.4)
Net revenue	166.9	148.8

The taxable event for Value Added Tax (VAT) is the supply of goods and services that attract VAT during the taxation period by the taxpayer. VAT is structured in such a manner that taxpayers are also entitled to claim repayments; hence a breakdown of gross revenue and repayments is disclosed.

Import One Stop Shop (IOSS) is a monthly VAT reporting and payment system for imports. VAT return information reported via IOSS is not available at the time of producing the accounts so this is recognised on a cash basis (see note 1.1).

2.3 Corporation Tax

For the year ended 31 March	2023 £bn	2022 £bn
Total	80.5	68.3

The taxable event for Corporation Tax (CT) is the earning of assessable profit during the taxation period by the taxpayer. The nature of CT legislation and our associated systems mean that accrued revenue is required to be estimated, as tax returns reporting taxpayer liabilities, reliefs or associated tax payments related to the taxation period are not filed until after the Trust Statement has been published. See note 4.2.3 for further information.

CT is accounted for on a partial accrual basis, as agreed with HM Treasury (see note 1.1), because not enough information is known to reliably accrue for the revenue for smaller companies that do not pay by instalments. There is no accrued revenue receivable estimate in the Statement of Financial Position for these smaller companies.

Estimates for some corporation tax reliefs (CTR), those where there is, or could be, a payable element in excess of negative taxation, are reported in the Resource Accounts. As per the FReM, disbursements of £12.2 billion (£11.0 billion in 2021 to 2022) were made from the Trust Statement to the Resource Accounts to fund the CTR expenditure reported in the Resource Accounts. For further information see note 5.1.4 in the Resource Accounts.

COVID-19 support payments are recoverable as CT if the recipient is a company and was not entitled to the amount in accordance with the scheme under which the payment was made. The amount chargeable is the amount the recipient is not entitled to. For the year ended 31 March 2023, COVID-19 support payments recovered via CT totalled £206 million (£73 million in 2021 to 2022).

2.4 Hydrocarbon oils duties

For the year ended 31 March	2023 £bn	2022 £bn
Total	25.0	25.8

The taxable event for Hydrocarbon oils duties is the date of production, date of import or movement of relevant goods out of a duty suspended regime (a regime where, under UK legislation, certain goods benefit from a temporary suspension or reduction of import duties).

2.5 Stamp taxes

For the year ended 31 March	2023 £bn	2022 £bn
Stamp Duty Land Tax	15.2	14.2
Stamp Duty Reserve Tax	2.5	2.9
Stamp Duty	1.2	1.5
Annual Tax on Enveloped Dwellings	0.1	0.1
Total	19.0	18.7

The taxable event for:

• Stamp Duty Land Tax (SDLT) is the purchase of property
• Stamp Duty Reserve Tax and Stamp Duty is the purchase of shares. HMRC can only record Stamp Duty when a stamp is presented to HMRC and hence the duty is recognised on a cash basis (see note 1.1)
• Annual Tax on Enveloped Dwellings (ATED) is a company owning or part-owning a UK residential property valued at £500,000 or more during a chargeable period. ATED applies to a property that is a dwelling, if all or part of it is used, or could be used, as a residence

2.6 Capital Gains Tax

For the year ended 31 March	2023 £bn	2022 £bn
Total	17.0	15.8

The taxable event for Capital Gains Tax (CGT) is the disposal of a chargeable asset leading to a taxable gain.

CGT receipts for UK residents are reported in the Trust Statement on a partial accrual basis and repayments are reported on a cash basis in the period the repayment is made (see note 1.1).

2.7 Alcohol duties

For the year ended 31 March	2023 £bn	2022 £bn
Wine, cider and perry	4.7	4.9
Spirits	4.1	4.5
Beer	3.5	3.7
Total	12.3	13.1

The taxable event for alcohol duties is the date of production, date of import or date of movement of relevant goods out of a duty suspended regime (a regime where, under UK legislation, certain goods benefit from a temporary suspension or reduction of import duties).

2.8 Tobacco

For the year ended 31 March	2023 £bn	2022 £bn
Cigarettes	7.1	7.6
Hand-rolling tobacco	2.1	2.4
Cigars	0.1	0.1
Tobacco for heating and other	0.1	0.1
Total	9.4	10.2

The taxable event for tobacco duties is the date of production, date of import or date of movement of relevant goods out of a duty suspended regime (a regime where, under UK legislation, certain goods benefit from a temporary suspension or reduction of import duties).

2.9 Other taxes and duties

For the year ended 31 March	Note	2023 £bn	2022 £bn
Insurance Premium Tax		7.6	6.7
Inheritance Tax		7.1	6.1
Customs Duties		5.8	4.9
Energy Profits Levy	2.9.1	4.6	–
Apprenticeship Levy		3.6	3.3
Betting and Gaming duties		3.4	3.1
Air Passenger Duty		3.3	1.2
Bank Surcharge		2.7	2.8
Climate Change Levy		2.1	2.0
Bank Levy		1.1	1.2
Digital Services Tax		0.6	0.5
Landfill Tax		0.6	0.7
Soft Drinks Industry Levy		0.4	0.3
Aggregates Levy		0.4	0.4
Plastic Packaging Tax	2.9.2	0.3	–
Residential Property Developer Tax	2.9.3	0.2	–
Diverted Profits Tax		–	0.2
Petroleum Revenue Tax	2.9.4	–	(0.1)
Total		43.8	33.3

2.9.1 Energy Profits Levy

The Energy Profits Levy is an additional levy on UK oil and gas profits on top of the existing headline rate of Corporation Tax (CT). The levy is effective for accounting periods beginning on or after 26 May 2022. The levy will apply to a company’s profits relating to oil rights and oil extraction activities and is charged as if it were CT. The taxable event for the Energy Profits Levy is the earning of assessable profit during the taxation period by the taxpayer.

2.9.2 Plastic Packaging Tax

Entities that import or manufacture finished plastic packaging components which contain less than 30% recycled plastic are liable to Plastic Packaging Tax if the amount is 10 tonnes or more in the period from 1 April 2022. The taxable event is the import or manufacture of finished plastic packaging components during the taxation period.

2.9.3 Residential Property Developer Tax

Residential Property Developer Tax (RPDT) is a tax on the trading profits of residential property developers charged in addition to standard Corporation Tax (CT). It applies to profits arising from residential property development activity from 1 April 2022. The taxable event for RPDT is the earning of assessable profit during the taxation period by the taxpayer.

2.9.4 Petroleum Revenue Tax

Petroleum Revenue Tax (PRT) is a ‘field-based’ tax charged on the profits arising from individual oil and gas fields that were approved for development before 16 March 1993. The rate of PRT was permanently set at 0% effective from 1 January 2016 but it has not been abolished so that losses (such as losses arising from decommissioning PRT-liable fields) can be carried back against past PRT payments, with HMRC making a provision for this. For further information on oil and gas field decommissioning costs, please see note 6.3.

3. Other revenue, income and disbursements

3.1 National Insurance Contributions

For the year ended 31 March	2023 £bn	2022 £bn
National Insurance Fund Great Britain (NIF GB)	129.8	125.2
National Insurance Fund Northern Ireland (NIF NI)	2.8	2.7
National Health Services (NHS)	43.2	30.4
Total National Insurance Contributions (NICs)	175.8	158.3
Less: NIC expenditure	(1.0)	–
NICs due to NIF and NHS	174.8	158.3

National Insurance Contributions (NICs) are collected by HMRC on behalf of the National Insurance Funds (NIF) of Great Britain and Northern Ireland and the National Health Services (NHS) for England, Wales, Scotland and Northern Ireland. They are payable to the NIF and the NHS when received and not when accrued.

NICs 1A and 1B information reported via P11D and P11D(b) forms is not available at the time of producing the accounts so these are recognised on a cash basis (see note 1.1).

3.2 Appropriation of revenue to the Resource Accounts

For the year ended 31 March	2023 £bn	2022 £bn
Corporation tax reliefs	12.2	11.0
Personal tax credits	8.9	10.9
Total Appropriation of revenue to Resource Accounts	21.1	21.9

The expenditure relating to personal tax credits (PTC) and some corporation tax reliefs (CTR), see note 2.3, is accounted for in the Resource Accounts.

The Trust Statement is responsible for the payment of PTC and CTR through the tax collection and repayment process. As per the FReM, these amounts are recorded in the Trust Statement as revenue received and as a disbursement to Resource Accounts.

The reduction in PTC reflects the migration of claimants to Universal Credit, which is accounted for in the Department for Work and Pensions’ accounts.

For further information on personal tax credits and corporation tax reliefs, see note 5.1.1 and 5.1.4 in the Resource Accounts.

For further reference to the disbursement, see the Consolidated Statement of Changes in Taxpayers’ Equity in the Resource Accounts.

3.3 Student Loan recoveries

Student Loan repayments are collected on behalf of and paid to the Department for Education (DfE). The majority are collected through PAYE with an element collected through Self Assessment. Any difference between the amount of Student Loan repayments received and the cash paid to the DfE is shown as a payable (refer to note 5 – other taxes and duties).

3.4 Fines and penalties

This consists of income arising from the levying of tax fines and penalties. Penalties relating to NICs are accounted for as NIC income and paid over to the National Insurance Fund.

3.5 Taxation due to the Isle of Man

Under the Isle of Man Act 1979, a revenue sharing arrangement exists between the UK and the Isle of Man (IoM). Detail of the revenue sharing arrangement was agreed on 24 March 2020, superseding all previous agreements. Certain tax revenue streams, known as ‘common duties’ are pooled and then shared on an agreed basis. The IoM is entitled to the share of common duties collected in the UK and the IoM that are attributable to goods consumed and services supplied in the island. If the IoM agreed share is greater than revenues collected and retained by the IoM, this results in the UK making payment to the IoM to ensure the IoM receives the correct share. This is shown as a disbursement. Where the IoM collects and retains more than agreed under the sharing arrangement, the IoM makes payment to the UK. This is shown as other revenue and income.

For the year ended 31 March 2023 net payments to the IoM totalled £304 million (£252 million net payments in 2021 to 2022).

4. Receivables, accrued revenue receivable and impairment charges

Due to the amount of data presented, only part of the table below is visible. Please use the scollbar at the bottom of the table to view all the columns.

	Receivables £bn As at 31 March 2023	Accrued revenue receivable £bn As at 31 March 2023	Total £bn As at 31 March 2023	Receivables £bn As at 31 March 2022	Accrued revenue receivable £bn As at 31 March 2022	Total £bn As at 31 March 2022
Non-current assets
Receivables due after one year:
Inheritance Tax	2.1	–	2.1	1.8	–	1.8
Non-current assets after impairment	2.1	–	2.1	1.8	–	1.8
Current assets
Receivables and ARR due within one year:
Income Tax	11.9	48.7	60.6	10.4	41.9	52.3
Value Added Tax	20.9	46.2	67.1	16.2	46.1	62.3
Corporation Tax	6.2	10.1	16.3	5.5	9.4	14.9
National Insurance Contributions	6.9	17.4	24.3	6.5	16.7	23.2
Other taxes and duties	12.0	10.2	22.2	10.8	8.5	19.3
Current assets before impairment	57.9	132.6	190.5	49.4	122.6	172.0
Less impairment (note 4.3)	(19.2)	(1.5)	(20.7)	(14.4)	(1.9)	(16.3)
Total current assets after impairment	38.7	131.1	169.8	35.0	120.7	155.7
Total assets before impairment	60.0	132.6	192.6	51.2	122.6	173.8
Less impairment (note 4.3)	(19.2)	(1.5)	(20.7)	(14.4)	(1.9)	(16.3)
Total assets after impairment	40.8	131.1	171.9	36.8	120.7	157.5

4.1 Receivables

Receivables represent all taxpayer liabilities that have been established, irrespective of whether due or overdue, for which payments have not been received at the Statement of Financial Position date. Accrued interest on interest-bearing receivables is not available at the time of producing the accounts so this is recognised on a cash basis (see note 1.1).

Further information on receivables can be found in the section ‘Performance analysis’, ‘Receivables’.

4.2 Accrued revenue receivable

Accrued revenue receivable (ARR) represents amounts of taxes and duties where the taxable event has occurred but the tax return has not been received from the taxpayer by the end of the reporting period. For taxes where HMRC has received returns since the end of the reporting period, the department used this information to support its valuation of ARR. For those taxes where HMRC is yet to receive taxpayer returns, principally Income Tax self assessment (ITSA) and Corporation Tax (CT), the department has estimated ARR. Due to the nature of tax legislation, ITSA and CT are the most difficult taxes to estimate.

Tax forecasting models are used to produce the ITSA and CT ARR estimates, and take into consideration the economic assumptions prepared for the March 2023 Budget and the Economic and Fiscal Outlook published by the Office for Budget Responsibility (OBR) in March 2023.

These estimates have been prepared using the judgement of professional departmental economists and statisticians.

4.2.1 Uncertainty around the accrued revenue receivable estimates

Conclusions around estimation uncertainty are based on evidence from the performance of our estimation models over previous years, changes to reflect the March 2023 Budget, and the Economic and Fiscal Outlook published by the OBR in March 2023.

Actual outcomes could differ from the estimates used, due to the areas of uncertainty involved.

Each year HMRC reviews the performance of its estimation models. Last year, the ARR underestimation was £4.6 billion (0.6% of 2021 to 2022 total revenue).

The process for each significant estimate is described in more detail below:

4.2.2 Income Tax self assessment

Income Tax self assessment (ITSA) ARR is estimated to be £25.3 billion this year (£20.3 billion in 2021 to 2022), which is included in the total Income Tax ARR of £48.7 billion (£41.9 billion in 2021 to 2022) in note 4.

The SA regime involves long filing and payment lags, so the ARR estimate is driven by the March 2023 Budget forecast and the underlying economic determinants are based on the OBR central forecast rather than by receipts data.

The estimation process has 3 stages:

1. Estimation of 2022 to 2023 accrued tax liabilities due to information from SA returns relating to current year not being available at the point of estimation. Therefore, the March 2023 budget for ITSA forecast has been revised in line with the latest economic and tax receipts data that has been received.

2. From the figure in (1), a deduction is made to account for payments already received in relation to 2022 to 2023 by the end of the financial year.

3. A further deduction is made for payments related to the current taxation period but not settled by 31 March. This relates to payments on account due by the following 31 January as these are included within Income Tax receivables (see table above).

The remaining amount is the 2022 to 2023 ARR estimate.

There are several key economic factors that underpin these estimates and are the main contributors to the increase in the ARR estimate for 2022 to 2023. These include self employed income growth, dividend income growth and Average Effective Tax Rates (AETR). AETR is total tax liability as a proportion of total income across all individuals.

Sensitivity analysis has been produced to demonstrate the impact of changes to key assumptions used in the current estimate and the results are shown in the table below.

Based on historic data, changes in key assumptions are unlikely to exceed the percentages within the table below.

Impact on ITSA ARR of varying key economic factors

Key Assumption (percentage point change)	Increase £bn	Decrease £bn
Self-employed income growth (+/-7%)	1.7	(1.7)
AETR on NSND income of mainly SA individuals (note 4) (+/-0.6%)	1.6	(1.6)
Dividend AETR of mainly SA individuals (note 4) (+/-3%)	0.9	(0.9)
NSND SA liability of mainly PAYE individuals (note 5) (+/-43%)	0.7	(0.7)
Deduction rate on PAYE income of mainly SA individuals (note 4) (+/-0.55%)	(0.5)	0.5
Dividend AETR of mainly PAYE individuals (note 5) (+/-1%)	0.5	(0.5)
Land Expenses (+/- 4%)	0.4	(0.4)
Adjustments to Profit (+/-24%)	0.4	(0.4)
Dividend income growth (+/-3%)	0.4	(0.4)

Note 4: Mainly SA Individuals are those within SA who have some Non-Saving Non Dividend (NSND) income from non PAYE sources such as self-employed income, property income, foreign income or do not have a PAYE source

Note 5: Mainly PAYE individuals are those within SA whose NSND is entirely from PAYE sources (Employment/Pension)

4.2.3 Corporation Tax

Corporation Tax (CT) ARR is £10.1 billion (£9.4 billion in 2021 to 2022) which includes an estimated amount of £6.3 billion (£6.5 billion in 2021 to 2022).

HMRC has a number of taxpayer liabilities which have been postponed pending finalisation of enquiries. HMRC undertakes a review of large postponed cases for Corporation Tax to ensure that revenue that meets the revenue recognition criteria, as set out in note 1.2, is recognised in the accounts. As a result, an amount of £2.3 billion (£1.4 billion in 2021 to 2022) has been included in ARR.

As with SA, the filing of CT returns and related payments are subject to a considerable lag and relate to the accounting periods of taxpayers rather than the current taxation period. Since there is less outturn data available, the ARR estimate is subject to uncertainty.

The key drivers of the ARR estimate are outturn CT receipts and returns received to date and a series of assumptions. The assumptions used are needed to estimate the total amount of accrued tax liabilities arising from profits generated in the taxation period and from CT returns that relate to 2022 to 2023 but are not available at the point of estimation. Separate ARR estimates have been calculated for onshore and North Sea companies because of differences in how these companies operate and, in particular, the number of instalments paid. Further detail can be found below.

Onshore companies

CT for large onshore companies is paid in 4 Quarterly Instalment Payments (QIPs) for each accounting period of the taxpayer. CT ARR has been estimated where between one and four QIPs for onshore companies have been received using a model that forecasts companies’ CT liabilities based on the number and value of QIPs received by a given date.

The key assumptions used in this modelling are the proportion of CT that is paid late and/or overpaid and the proportion of CT liabilities paid in each quarterly instalment. These assumptions are informed by looking at historic trends in outturn data. CT is assumed to accrue evenly throughout the companies’ accounting periods.

For accounting periods where no QIPs have been received, ARR has been estimated using OBR’s March 2023 Corporation Tax forecast.

As agreed with HM Treasury, Corporation Tax for smaller companies that do not pay by instalment are accounted for on a partial accrual basis, as a reliable ARR estimate for these companies cannot be formed.

North Sea companies

North Sea companies pay their CT liabilities in Three Instalment Payments (TIPs). A similar methodology to that of onshore companies is used for calculating the estimate.

However, most TIPs relating from 1 January to 31 March are not due in sufficient time to be included in the TIPs estimation model and these amounts are therefore estimated.

This year’s estimate is based on the OBR’s March 2023 North Sea taxes forecast which shows a decrease in receipts from 2022 to 2023 as a result of energy prices falling back from their highs in the summer and autumn 2022. This is a contributing factor to the decrease in the ARR estimate from 2021 to 2022.

Sensitivity analysis has been produced to demonstrate the impact of changes to key assumptions used in the current estimate and the results are shown in the table below.

Based on recent historic data, changes in key assumptions are likely to fall within the ranges in the table below.

Impact on CT ARR of varying key economic factors

Key Assumption (percentage point change)	Increase £bn	Decrease £bn
Late payments (+/-1% point)	0.2	(0.2)
Overpayments (+/-1% point)	(0.2)	0.2
CT liability growth (+/-10% points)	0.4	(0.4)
Proportion of companies’ CT liabilities paid with in-year QIPs (+/-1% point)	(0.5)	0.5

4.2.4 Value Added Tax

Value Added Tax (VAT) ARR is £46.2 billion (£46.1 billion in 2021 to 2022). A large amount of the VAT ARR is based on actual return data and is not therefore subject to significant estimation uncertainty. Returns submitted in June and July relating to the current reporting period are not available at the time of producing the ARR so an estimate is produced by calculating the value of these returns as a proportion of the total value of the returns in the preceding period last year. Those proportions are then applied to the value of returns for the corresponding period this year. The ARR estimate for 2022 to 2023 is £6.7 billion.

A number of further adjustments need to be made to reflect VAT that is accounted for outside the process described above. These adjustments relate to import VAT and repayments made to government departments. These are based largely on actual return information although some forecast element remains using the methodology described above.

4.3 Impairment of receivables and ARR

	Impairment of Receivables £bn As at 31 March 2023	Impairment of accrued revenue receivable £bn As at 31 March 2023	Total £bn As at 31 March 2023	Total £bn As at 31 March 2022
Balance as at 1 April	14.4	1.9	16.3	16.2
Increase/(decrease) in impairment	4.8	(0.4)	4.4	0.1
Balance as at 31 March	19.2	1.5	20.7	16.3

Receivables and ARR in the Statement of Financial Position are reported after impairment to reflect an amount that is likely to be collected. This amount is estimated based on HMRC’s analysis of existing receivables and ARR historical trends of collection rates, losses, discharges, amendments and cancellations.

4.3.1 Impairment calculation and analysis

The FReM does not require HMRC to determine impairments in accordance with IFRS 9, as the standard relates to financial instruments, and taxes and duties arise from statute and not a contract. However, impairments have been measured applying the expected credit loss (ECL) model set out in IFRS 9.

The ECL model estimates the future recoverability of receivables and ARR based on their age and historic debt recovery rates, accepting that the non-payment risk associated with tax debt increases with age. The uncertain economic conditions in 2022 to 2023 have further increased the likelihood of debts aging and therefore the risk of non-collection.

Accordingly, given the unprecedented economic volatility of recent years, HMRC has considered the following 3 debt scenarios when producing the 2022 to 2023 impairment:

• the lower scenario considers the pre March 2020 recovery rates and applies that to future recoveries
• the middle (base) scenario considers current recovery rates and applies that to future recoveries
• the upper scenario considers the recovery rates between March 2020 and March 2022 and applies that to future recoveries

In all scenarios ARR impairment is based on multi-year collection rates and is the same in each scenario.

The table below provides a summary of the middle (base) scenario:

Age	Gross Balance £bn	Impairment Rate %	Impairment £bn
Accrued revenue receivable	135.9	1.1	1.5
Receivables not overdue	16.0	7.5	1.2
Debts less than 1 year overdue	26.8	20.0	5.4
Debts 1 to 2 years overdue	6.5	55.0	3.6
Debts more than 2 years overdue	10.6	85.0	9.0
Total	195.8	10.6	20.7

HMRC has analysed the clearing of debts over two year periods from the years before and after the pandemic, alongside prior year and industry standard impairment rates, to produce the impairment rates used for each of the debt scenarios.

HMRC has reviewed the Bank of England’s Monetary Policy report (note 1), published in May 2023, to consider current and forecast economic indicators, and studied the effects on debt collection and losses of the global recession in the years following the financial crisis in 2008.

The impairment of receivables (excluding ARR) reached 41.8% in 2009 to 2010 following the 2008 financial crisis, 9.8 percentage points above the 32.0% 2022 to 2023 rate (28.1% in 2021 to 2022). The receivable and debt balances remain higher than their pre-pandemic positions, increasing the risk of non-collection as they age and resulting in a higher impairment rate.

In recent years HMRC has been supporting debt collection activities which include:

• supporting more taxpayers with Time to Pay arrangements compared to prior years, including a ‘Breathing Space’ scheme which allows customers with debt problems more time from all creditor action
• implementing the ‘Debt Respite’ scheme, allowing qualifying customers to pay their overdue tax over a 3 to 10 year period
• tailoring debt interventions to customer circumstances such as type, size, behaviour and debt collectability rather than following pre-determined journeys
• recruiting additional debt management staff whilst encouraging customers to use enhanced digital services to further increase the resource available for debt collection activity

Some of these arrangements will result in debts being paid over a longer period of time, which should assist recovery, but extending credit terms may increase the risk of loss.

HMRC has observed a challenging yet more positive economic outlook published by the Bank of England in May 2023 than in previous 2022 to 2023 publications, and therefore consider the middle (base) scenario a reasonable proxy for estimating future recoverability.

The 2022 to 2023 total impairment rate is 10.6% (note 2) (2021 to 2022 was 9.3%).

4.3.2 Sensitivity Analysis

HMRC recognises that future economic conditions remain uncertain and have produced sensitivity analysis to demonstrate the possible outcomes if the impairment scenario were to differ from the middle (base) scenario.

Potential impact on impairments

Scenario	Change to Impairment £bn
Upper scenario	2.9
Lower scenario	(2.9)

Note 1: Monetary policy report

Note 2: Total impairment divided by total receivables and ARR before impairment

4.4 Revenue losses

For the year ended 31 March	Remissions (2023) £m	Write-offs (2023) £m	Total (2023) £m	Remissions (2022) £m	Write-offs (2022) £m	Total (2022) £m
Income Tax	216	439	655	241	280	521
Value Added Tax	62	1,742	1,804	12	980	992
Corporation Tax	13	268	281	5	157	162
National Insurance Contributions	30	343	373	40	196	236
Fines and penalties	206	283	489	136	160	296
Other remissions and write-offs	69	79	148	81	119	200
Total revenue losses	596	3,154	3,750	515	1,892	2,407

Revenue losses are reported net of insolvency dividend payments to HMRC and are made up of remissions and write-offs. Remissions are debts capable of recovery, but HMRC has decided not to pursue the liability on the grounds of value for money. Write-offs are debts that are considered to be irrecoverable because there is no practical means for pursuing the liability.

HMRC write-off debt from the statement of financial position when a customer is formally declared insolvent. The vast majority of revenue losses are driven by individual and business insolvencies. On 31 March 2023, HMRC had £5.1 billion of debt that may go into formal insolvency. Once in formal insolvency, on average the dividend payment HMRC eventually receives is 5% in the pound. In 2022 to 2023 we received £261 million in such dividend payments.

Revenue losses have increased by 56% between 31 March 2022 and 31 March 2023, however they are lower than pre-pandemic levels (8% lower when compared to 31 March 2020).

For certain taxes, only a partial split between remissions and write-offs is known. Where information is unavailable, the percentage split of the known element is applied to the remainder to calculate a total estimated remission and write-off split.

Fines and penalties relating to National Insurance Contributions (NICs) are accounted for as NICs revenue losses.

Further information on losses can be found in the section ‘Performance analysis’, ‘Tax losses’.

Revenue losses – cases more than £10 million

For the year ended 31 March 2023, there were 24 cases (21 cases as at 31 March 2022) where the loss exceeded £10 million, totalling £833 million (£541 million as at 31 March 2022). Details are shown below:

There were 21 write-offs (18 cases as at 31 March 2022) relating to Insolvency and one remission (one case as at 31 March 2022) totalling £579 million (£377 million as at 31 March 2022).

There was one write-off case (one case as at 31 March 2022) of £38 million (£12 million as at 31 March 2022) relating to Missing Trader fraud. All Missing Trader cases are assessed to establish if there is potential to recover revenue and, where appropriate, proactive insolvency action is initiated.

There was a bulk remission for Self Assessment penalties of £216 million (£152 million as at 31 March 2022), where it had been identified customers were no longer liable for SA or were no longer self-employed and had ceased to trade. HMRC decided not to pursue on the grounds of value for money.

4.5 Breakdown of impairment charges

Impairment charges are made up of revenue losses and the movement in the impairment of receivables and ARR.

For the year ended 31 March	Note	2023 £bn	2022 £bn
Increase in impairment of receivables and ARR	4.3	4.4	0.1
Revenue losses	4.4	3.8	2.4
Total impairment charges		8.2	2.5

5. Payables, accrued revenue payable and deferred revenue

Due to the amount of data presented, only part of the table below is visible. Please use the scollbar at the bottom of the table to view all the columns.

	Payables £bn As at 31 March 2023	Accrued revenue payable £bn As at 31 March 2023	Deferred revenue £bn As at 31 March 2023	Total £bn As at 31 March 2023	Payables £bn As at 31 March 2022	Accrued revenue payable £bn As at 31 March 2022	Deferred revenue £bn As at 31 March 2022	Total £bn As at 31 March 2022
Income Tax	4.5	1.1	–	5.6	2.1	3.7	–	5.8
Value Added Tax	1.5	19.5	–	21.0	2.9	18.0	0.1	21.0
Corporation Tax	11.7	3.5	0.2	15.4	10.7	1.9	0.4	13.0
National Insurance Contributions	1.0	21.3	–	22.3	1.3	20.7	–	22.0
Other taxes and duties	2.9	0.2	2.7	5.8	2.4	0.2	2.2	4.8
Other payables	–	–	–	–	0.1	–	–	0.1
Payments on account	4.2	–	–	4.2	3.0	–	–	3.0
Current liabilities before cash and cash equivalents	25.8	45.6	2.9	74.3	22.5	44.5	2.7	69.7
Cash and cash equivalents	1.4	–	–	1.4	1.6	–	–	1.6
Total current liabilities	27.2	45.6	2.9	75.7	24.1	44.5	2.7	71.3

There are no liabilities in the table above which fall due after one year.

5.1 Payables

Payables are amounts recorded as due to customers by HMRC at the end of the reporting period but payment has not been made. Other payables are amounts mainly due to the Resource Accounts that have not been transferred at the reporting period end date. Payments on account are taxpayer credit amounts that have not been allocated to a tax charge at the reporting period end date.

5.2 Accrued revenue payable

Accrued revenue payable (ARP) is recognised for:

• amounts due to VAT traders that have an established revenue repayment claim relating to the financial year, but the date the claim is received is after the end of the reporting period. It is necessary to estimate VAT ARP of £2.3 billion as returns submitted in June and July relating to the current financial year are not available at the time of producing the estimate
• amounts of receivables and accrued revenue receivable that when received will be passed to a third-party after adjusting for expenditure, for example National Insurance Contributions due to the National Insurance Funds and National Health Services
• amounts in respect of Corporation Tax, Income Tax and other small taxes likely to be repayable by HMRC pending finalisation of taxpayer liabilities accruing over the taxation period, and for expected Corporation Tax overpayments

Estimates have been made to support the ARP balances where tax returns reporting taxpayer liabilities or associated tax repayments related to the taxation period are not filed until after the Trust Statement has been published. Each year HMRC reviews the performance of its estimation models. Last year, the ARP underestimation was £0.1 billion (0.01% of 2021 to 2022 total revenue).

5.3 Deferred revenue

Deferred revenue includes duties and taxes paid in the current year which relate to future accounting periods.

5.4 Cash and cash equivalents

This reflects the net position of cash in HMRC bank accounts and payments that have been authorised for issue but the money has not cleared through the banking system as of 31 March.

6. Provision for liabilities and contingent liabilities

Provisions are recognised when HMRC has a present legal or constructive obligation as a result of a past event, it is probable that HMRC will be required to settle that obligation and an amount can be estimated reliably.

The contingent liabilities relate to legal cases for which the outcome is uncertain and HMRC consider that there is only a possible rather than probable likelihood that a payment will be required and/or the amount cannot be measured reliably.

Provision for liabilities

	Legal claims £bn	Oil and gas field decommissioning £bn	Total 2023 £bn	Total 2022 £bn
Balance as at 1 April	3.2	10.4	13.6	12.9
Provided in the year	1.2	–	1.2	2.8
Provision not required written back	(1.1)	(5.6)	(6.7)	(1.0)
Provision utilised in the year	(0.3)	(0.3)	(0.6)	(1.1)
Balance as at 31 March	3.0	4.5	7.5	13.6

Analysis of expected timing of cash flows

	Legal claims £bn	Oil and gas field decommissioning £bn	Total 2023 £bn
Amounts payable within 5 years	3.0	1.8	4.8
Amounts payable after 5 years	–	2.7	2.7
Balance as at 31 March	3.0	4.5	7.5

6.1 Provisions in-year expenditure movement

	Legal claims £bn	Oil and gas field decommissioning £bn	Total 2023 £bn	Total 2022 £bn
Total provided in the year	1.2	–	1.2	2.8
Provision not required written back	(1.1)	(5.6)	(6.7)	(1.0)
Net movement increase/(decrease)	0.1	(5.6)	(5.5)	1.8

6.2 Legal claims

Provision for liabilities

HMRC is involved in a number of legal and other disputes which can result in claims against HMRC by taxpayers. It is in the nature of HMRC’s business that a number of these matters may be the subject of litigation over several years. The department, having taken legal and other specialist advice, has established a provision having regard to the relevant facts and circumstances of each matter in accordance with accounting requirements. Due to an element of uncertainty in the estimate of the provision, the ultimate liability for such matters may vary from the amounts provided and is dependent upon the outcome of litigation proceedings, investigations and possible settlement discussions. Provisions were reviewed during 2022 to 2023; discounting has not been applied on the basis of materiality.

Contingent liabilities

Contingent liabilities are disclosed at a value made in accordance with a best estimate based on the information available at the end of the reporting period. Those estimates are subject to change and, for some legal cases, are inherently uncertain. Regular review of the contingent liabilities leads to the recognition of new cases where appropriate. Existing cases may also be revalued, recognised as provisions, or removed from the contingent liability disclosures (i.e. where the probability that HMRC will be required to make a payment to settle the liability is now considered to be remote).

As at 31 March 2023, HMRC has 8 cases estimated to have a value of £4.1 billion (compared to 7 cases with an estimated value of £3.2 billion as at 31 March 2022) where the maximum potential tax repayment, before losses, capital allowances and other tax reliefs, is over £100 million. Each case may include a lead case with follower claimants and cover a range of heads of duty, including Corporation Tax, Income Tax and VAT.

Further claimants may opt to follow a lead case but are not yet known to HMRC or the Courts. Wider adoption claims of this nature are difficult to quantify with sufficient reliability and therefore deemed to fall outside of criteria in the relevant accounting standards. They are not recognised in the Accounts or disclosed in these notes.

6.3 Exchequer liabilities arising from oil and gas infrastructure

There are 2 taxes levied on companies exploring and producing oil and gas from the UK Continental Shelf (UKCS): Petroleum Revenue Tax (PRT) and offshore Corporation Tax (CT), the latter comprising of 3 elements: Ring-fenced Corporation Tax, Supplementary Charge and the Energy Profits Levy.

The legislation governing the losses from decommissioning costs (Oil Taxation Act 1975) allows participators in an oil and gas field liable to PRT to carry-back decommissioning losses almost indefinitely against profits it has previously made from the field, or which previous participators in the field have made. This may result in the repayment of PRT. With respect to offshore CT, the Corporation Tax Act 2010 allows for a company’s decommissioning loss to be carried back against its own historical profits dating back to April 2002. Again, this may result in a repayment of offshore CT.

Provision for oil and gas field decommissioning

The provision for tax repayments is an estimate based on the appropriately discounted sum of all forecast decommissioning repayments over the expected lifetime of the North Sea oil and gas fields. Repayment profiles are derived from the output produced by HMRC’s North Sea Forecasting Model developed at the individual company and field level. There has been no significant change in the model since last year.

A provision of £4.5 billion has been reported in 2022 to 2023 based on the estimated tax repayments of PRT £1.3 billion (£2.1 billion in 2021 to 2022) and offshore CT £3.2 billion (£8.3 billion in 2021 to 2022) by HMRC to companies over the period to 2065 due to losses from decommissioning expenditure.

The key determinants of the provision estimate are:

• future decommissioning costs from the North Sea Transition Authority’s (NSTA) Asset Stewardship Survey
• oil and gas prices and production from the Office for Budget Responsibility (OBR), Department for Energy Security and Net Zero (DESNZ) and NSTA
• discount rates from HM Treasury
• the US Dollar/Sterling exchange rate from the OBR

There has been a £5.9 billion decrease in the overall provision since last year. The main causes of the decrease were lower forecast decommissioning expenditure, higher forecast long term oil prices, higher discount rates and a stronger forecast US Dollar compared to Sterling.

The provision utilised in-year is the tax repayments in 2022 to 2023 due to decommissioning expenditure.

Uncertainty around the estimate of the provision

There is inherent uncertainty surrounding forecasting oil and gas revenues over 30+ years ahead.

The largest impact on the size of the provision, and biggest source of uncertainty in estimating it, is quantification of future decommissioning costs. Annually, the NSTA estimates the total costs of remaining oil and gas decommissioning for the UKCS, including newly sanctioned projects, and changes to the portfolio of potential, as yet unsanctioned projects.

The provision included in the Trust Statement is calculated using the NSTA’s estimate for remaining decommissioning costs due to be published in August 2023. A ten percent increase in the decommissioning cost estimate would increase the provision to £5.0 billion. Similarly a ten percent reduction would decrease the provision to £4.1 billion.

A major economic determinant which drives the provision are oil and gas prices. The model has utilised certain DESNZ projections and applied a growth rate to projected prices for later years. Compared to the baseline oil and gas price forecasts a ten percent increase (decrease) would decrease (increase) the provision by approximately £0.3 billion (£0.4 billion).

The provision is also impacted by discount rates and foreign exchange rates as follows:

• an increase in the discount rate will reduce the present value of the provision. An overall increase in the discount rates of 50 basis points will decrease the overall provision by £0.2 billion. The same decrease in discount rates would increase the provision by £0.3 billion
• as oil prices are denominated in US Dollars, the overall provision is impacted by changes in the US Dollar/Sterling exchange rate. A 10-cent appreciation in the US Dollar gives rise to higher Sterling oil prices resulting in a £0.2 billion decrease in the provision. A 10-cent depreciation of the Dollar results in a £0.2 billion increase in the required provision

7. Balance on Consolidated Fund Account

Movements on Consolidated Fund account

	2023 £bn	2022 £bn
Balance on Consolidated Fund as at 1 April	72.6	68.1
Net revenue for the Consolidated Fund	611.1	543.1
Less amount paid to Consolidated Fund	(595.0)	(538.6)
Balance on Consolidated Fund Account	88.7	72.6

8. Certificates of tax deposit

Under the Certificate of Tax Deposit (CTD) scheme, HMRC previously accepted deposits from individuals, businesses and trustees liable for certain taxes. Relevant taxes can be found at Pay your tax bill by Certificate of Tax Deposit.

HMRC administers the CTD scheme on behalf of HM Treasury. The National Loans Fund (NLF) account includes the CTDs held by the NLF as at 31 March. More information on the NLF account can be found at HMT central funds.

From 23 November 2017, the CTD scheme has been closed for new purchases but existing certificates will continue to be honoured until 23 November 2023. The value redeemed for the year ended 31 March 2023 totalled £142 million (£32 million in 2021 to 2022).

Delays in processing between redemption of CTDs and the transfer of funds to and from the NLF can result in an outstanding balance at the year end; this balance is included within payables in the Trust Statement – Statement of Financial Position.

9. R.N. Limited

R.N. Limited is a registered company that administers, on behalf of HMRC, the holding of charges securing tax debts owed to HMRC. These tax debts are reflected in the Trust Statement. The company’s parent undertaking and controlling party is HMRC.

R.N. Limited also holds on behalf of HMRC, assets that have been assigned to HMRC in settlement of tax debts. These are not recognised in the Trust Statement until realised. There is no designation order requiring R.N. Limited’s financial statement to be consolidated within HMRC’s Accounts. R.N. Limited’s accounts can be viewed at Companies House.

10. Third party assets

The department holds cash and other assets which have been seized in relation to ongoing legal proceedings. These assets do not belong to the department and do not form part of these accounts although, where seized assets are forfeited without legal proceedings, proceeds are recognised as penalty income.

The department holds amounts in relation to businesses operating under the terms of the Northern Ireland (NI) protocol who have registered with HMRC to use the One Stop Shop (OSS) scheme to report and pay VAT due to the EU. This entails the making of payments to HMRC who will then forward any relevant amounts to the EU. The scheme was implemented on 1 July 2021 and covers goods sold from NI to consumers in the EU.

11. Related party transactions

Due to the nature of HMRC’s business, we have a large number of transactions, relating to taxation income, with other government departments and other central government bodies. No Board member, key manager or other related party has undertaken material transactions with the department during the year.

12. Devolved taxes

12.1 Scottish Income Tax

The Scottish Parliament has the power to set and change its own tax rate bands and limits, introduce new ones, and include a zero rate, to all non-savings non-dividend (NSND) Income Tax paid by Scottish taxpayers (Scotland Acts 2012, 2016). These powers were fully effective from 6 April 2017.

Starting from the 2018 to 2019 tax year and continuing up to the 2022 to 2023 tax year there have been 5 Income Tax bands in Scotland with different limits and rates applied to each. These range from the Starter rate of 19% up to the Top rate of 46%. This means that a Scottish taxpayer can pay a different amount of total Income Tax compared to someone from England and Northern Ireland earning the same amount of income. More information on the Scottish Income Tax rates for the 2022 to 2023 tax year can be found on the Income Tax in Scotland page of the GOV.UK website .

12.2 Welsh rates of Income Tax

The Wales Act 2017 gives the Welsh Parliament the power to set Welsh Rates of Income Tax (WRIT). This allows the Welsh Government to affect the amount of Income Tax that Welsh taxpayers pay and, as a result, the amount that the Welsh Government can spend in Wales. WRIT is calculated on a tax year basis and was introduced with effect from 6 April 2019.

The Welsh rates up to the 2022 to 2023 tax year were set at 10% for each of the tax bands. This means that a Welsh taxpayer paid the same amount of total Income Tax as someone from England and Northern Ireland earning the same amount of income, but for the Welsh taxpayer 10 percentage points of each tax band was owed to the Welsh Government with the remainder owed to the UK Consolidated Fund.

12.3 Scottish and Welsh rate of Income Tax estimates for 2022 to 2023

The provisional estimate of revenue raised in 2022 to 2023 from Scottish Income Tax is £15.0 billion and from Welsh rates of Income Tax it is £2.6 billion.

These figures have been estimated because actual data is unavailable. For example, minimal disclosure has been made to HMRC in respect of SA revenue for the 2022 to 2023 tax year, and PAYE revenue is not available for taxpayers whose accounts have not been reconciled at the time the estimate has been produced for the Trust Statement. They also include estimates for the impact of budget measures, Gift Aid and other effects, such as broader demographic changes before the amount is apportioned between Scotland, Wales and the remainder of the UK.

The Scottish and Welsh shares of Income Tax liabilities are estimated using a model based on the HMRC Survey of Personal Incomes which reflects data collected in 2019 to 2020. These are also adjusted to take account of the latest 2021 to 2022 Income Tax for the Scottish and Welsh final outturn data. This latter adjustment involves scaling each of the provisional estimates in 2022 to 2023 by the percentage difference between their 2021 to 2022 final outturn data and the underlying methodology’s estimates of 2021 to 2022 based on the HMRC Survey of Personal Incomes.

The underlying methodology estimated lower Scottish Income Tax receipts in 2021 to 2022 than the final outturn, therefore, the 2022 to 2023 provisional estimate has been scaled up by a proportionate amount. Conversely, the methodology estimated higher Welsh rates of Income Tax receipts for 2021 to 2022 than the final outturn and the 2022 to 2023 provisional estimate has been scaled down by a proportionate amount.

Further information on revenue for the tax year 2022 to 2023 that becomes available during 2022 to 2023 will allow refinement of these calculations. Updated figures will be disclosed in the 2023 to 2024 Trust Statement, allowing a final reconciliation for the 2022 to 2023 tax year.

12.4 Scottish and Welsh rates of Income Tax outturn for 2021 to 2022

Provisional estimates for Scottish Income Tax of £13.3 billion and £2.4 billion for Welsh rates of Income Tax were disclosed in last year’s accounts. Now that HMRC has established over 95% of the tax liabilities for the year, the final outturn figures for 2021 to 2022 have been calculated as £13.7 billion for Scottish Income Tax and £2.4 billion for Welsh rates of Income Tax.

For full details on the 2021 to 2022 outturn please refer to the HMRC publications released on 6 July 2023 Scottish and Welsh Income Tax Outturn Statistics. The outturn publications are not subject to NAO audit.

HM Treasury is responsible for ensuring that the proceeds are made available to fund expenditure by the Scottish and Welsh Governments; these transfers are not accounted for in the HMRC Trust Statement.

The costs of collecting and administering are charged to the Scottish and Welsh Governments and accounted for in the Resource Accounts, but these are not individually disclosed due to materiality.

13. Events after the reporting period

There are no reportable events after the reporting period. These accounts have been authorised for issue by the Accounting Officer on the same date as the Comptroller and Auditor General’s Audit Certificate.

Accounts direction given by HM Treasury

Accounts direction given by HM Treasury in accordance with Section 2 of The Exchequer and Audit Departments Act 1921

1. This direction applies to those government departments listed in appendix 2.

2. The Department shall prepare a Trust Statement (“the Statement”) for the financial year ended 31 March 2023 for the revenue and other income, as directed by the Treasury, collected by the department as an agent for others, in compliance with the accounting principles and disclosure requirements of the edition of Government Financial Reporting Manual (“FReM”) 2022-23.

3. The Statement shall be prepared, as prescribed in Appendix 1, so as to give a true and fair view of (a) the state of affairs relating to the collection and allocation of taxes, licence fees, fines and penalties and other income by the Department as agent and of the expenses incurred in the collection of those taxes, licence fees, fines and penalties insofar as they can properly be met from that revenue and other income; (b) the revenue and expenditure; and (c) the cash flows for the year then ended.

4. The Statement shall also be prepared so as to provide disclosure of any material expenditure or income that has not been applied to the purposes intended by Parliament or material transactions that have not conformed to the authorities which govern them.

5. When preparing the Statement, the Department shall comply with the guidance given in the FReM (Chapter 11). The Department shall also agree with HM Treasury the format of the Principal Accounting Officer’s Foreword to the Statement, and the supporting notes, and the accounting policies to be adopted, particularly in relation to revenue recognition. Regard shall also be given to all relevant accounting and disclosure requirements in Managing Public Money and other guidance issued by HM Treasury, and to the principles underlying International Financial Reporting Standards.

6. Compliance with the requirements of the FReM will, in all but exceptional circumstances, be necessary for the accounts to give a true and fair view. If, in these exceptional circumstances, compliance with the requirements of the FReM is inconsistent with the requirement to give a true and fair view, the requirements of the FReM should be departed from only to the extent necessary to give a true and fair view. In such cases, informed and unbiased judgement should be used to devise an appropriate alternative treatment which should be consistent with both the economic characteristics of the circumstances concerned and the spirit of the FReM. Any material departure from the FReM should be discussed in the first instance with HM Treasury.

7. The Statement shall be transmitted to the Comptroller and Auditor General for the purpose of his examination and report by a date agreed with the Comptroller and Auditor General and HM Treasury to enable compliance with the administrative deadline for laying the audited accounts before Parliament.

8. The Trust Statement, together with this direction (but with the exception of the related appendices) and the Report produced by the Comptroller and Auditor General under section 2 of the Exchequer and Audit Departments Act 1921 shall be laid before Parliament at the same time as the Department’s Resource Accounts for the year unless the Treasury have agreed that the Trust Statement may be laid at a later date.

Michael Sunderland
Deputy Director, Government Financial Reporting
His Majesty’s Treasury
15 December 2022

Resource Accounts

Consolidated Statement of Comprehensive Net Expenditure for the year ended 31 March 2023

This statement summarises the expenditure incurred and income generated on an accruals basis. Other comprehensive expenditure and income includes changes to the values of non‐current assets that cannot yet be recognised as income or expenditure.

Consolidated Statement of Comprehensive Net Expenditure

Due to the amount of data presented, only part of the table below is visible. Please use the scollbar at the bottom of the table to view all the columns.

	Note	Core department and agency (2022-23) £m	Departmental group (2022-23) £m	Core department and agency (2021-22) £m	Departmental group (2021-22) £m
Cash items:
Personal tax credits	5.1.1	8,835.0	8,835.0	10,605.5	10,605.5
Corporation tax reliefs	5.1.4	12,556.4	12,556.4	11,692.8	11,692.8
Child Benefit		11,599.5	11,599.5	11,423.8	11,423.8
Cost of Living Payments		717.9	717.9	–	–
Tax‑Free Childcare		494.4	494.4	428.4	428.4
Lifetime ISA		436.8	436.8	418.9	418.9
Help to Save		53.2	53.2	20.4	20.4
COVID‑19 support schemes	4.1	(132.5)	(132.5)	17,262.7	17,262.7
Staff and related costs		3,343.2	3,356.3	2,950.4	2,981.9
Goods and services		1,535.3	1,518.3	1,417.4	1,380.9
Service charges		140.7	140.7	184.0	184.0
Payments in lieu of tax relief and rates		76.1	76.1	212.5	212.5
Other cash expenditure		345.1	345.9	479.8	480.4
Non-cash items:
Transfer of personal tax credit receivables to DWP		146.8	146.8	676.0	676.0
Amortisation	7	330.1	330.1	114.4	114.4
Depreciation	6	151.2	151.2	74.2	74.4
Provisions	13	21.0	21.0	(2.7)	(2.7)
Other		29.8	29.8	90.1	90.1
Total operating expenditure	2	40,680.0	40,676.9	58,048.6	58,044.4
Total operating income		(276.1)	(273.0)	(387.2)	(383.0)
Net operating expenditure		40,403.9	40,403.9	57,661.4	57,661.4
Net expenditure for the year		40,403.9	40,403.9	57,661.4	57,661.4
Other comprehensive net expenditure
Items that will not be reclassified to net operating costs:
Net loss/(gain) on:
– revaluation of property, plant and equipment		(2.7)	(2.7)	1.8	1.8
– revaluation of intangible assets		(87.6)	(87.6)	(64.0)	(64.0)
– actuarial revaluation of pension scheme		2.1	2.1	1.5	1.5
Total comprehensive expenditure for the year		40,315.7	40,315.7	57,600.7	57,600.7

The notes to the departmental Resource Accounts form part of these accounts.

Consolidated Statement of Financial Position as at 31 March 2023

This statement presents the financial position of the department. It comprises 3 main components: assets owned or controlled; liabilities owed to other bodies; and equity, the remaining value of the entity.

Consolidated Statement of Financial Position

	Note	Core department and agency (2022-23) £m	Departmental group (2022-23) £m	Core department and agency (2021-22) £m	Departmental group (2021-22) £m
Non-current assets:
Property, plant and equipment	6	611.4	611.4	669.5	670.0
Right‑of‑use assets	6 and 8.1	1,028.4	1,028.4	–	–
Intangible assets	7	2,405.4	2,405.4	2,077.8	2,077.8
Receivables	10	1,250.1	1,250.1	1,201.0	1,194.0
Pension Asset	14	1.7	1.7	4.3	4.4
Total non-current assets		5,297.0	5,297.0	3,952.6	3,946.2
Current assets:
Inventories		2.2	2.2	2.2	2.2
Trade and other receivables	10	1,037.1	1,036.7	991.0	991.8
Cash and cash equivalents	11	77.9	78.6	4,701.5	4,706.2
Total current assets		1,117.2	1,117.5	5,694.7	5,700.2
Total assets		6,414.2	6,414.5	9,647.3	9,646.4
Current liabilities:
Trade and other payables	12	(10,571.9)	(10,572.2)	(14,865.4)	(14,864.5)
Liabilities relating to right‑of‑use assets	8.2 and 12	(65.5)	(65.5)	–	–
Provisions	13	(26.0)	(26.0)	(15.6)	(15.6)
Total current liabilities		(10,663.4)	(10,663.7)	(14,881.0)	(14,880.1)
Total assets less current liabilities		(4,249.2)	(4,249.2)	(5,233.7)	(5,233.7)
Non-current liabilities:
Payables	12	(1,845.6)	(1,845.6)	(1,823.0)	(1,823.0)
Liabilities relating to right‑of‑use assets	8.2 and 12	(1,345.8)	(1,345.8)	–	–
Provisions	13	(133.3)	(133.3)	(142.3)	(142.3)
Total non-current liabilities		(3,324.7)	(3,324.7)	(1,965.3)	(1,965.3)
Total assets less total liabilities		(7,573.9)	(7,573.9)	(7,199.0)	(7,199.0)
Taxpayers’ equity and other reserves:
General fund		7,733.2	7,733.2	7,317.2	7,317.2
Revaluation reserve		(159.3)	(159.3)	(118.2)	(118.2)
Total equity		7,573.9	7,573.9	7,199.0	7,199.0

The notes to the departmental Resource Accounts form part of these accounts.

Jim Harra
Accounting Officer
6 July 2023

Consolidated Statement of Cash Flows for the year ended 31 March 2023

This statement shows the changes to the department’s cash and cash equivalents during the reporting period. It shows how the department generates and uses these by classifying cash flows as operating, investing and financing activities. Cash flows arising from financing activities include Parliamentary Supply.

Consolidated Statement of Cash Flows

Due to the amount of data presented, only part of the table below is visible. Please use the scollbar at the bottom of the table to view all the columns.

	Note	Core department and agency (2022-23) £m	Departmental group (2022-23) £m	Core department and agency (2021-22) £m	Departmental group (2021-22) £m
Cash flows from operating activities
Net operating expenditure		(40,403.9)	(40,403.9)	(57,661.4)	(57,661.4)
Adjustments for non‑cash transactions	2	678.9	678.9	952.0	952.2
(Increase)/decrease in trade and other receivables	10	(95.1)	(101.1)	272.0	270.4
Less: Movements in receivables not passing through the Statement of Comprehensive Net Expenditure		117.6	117.6	4.2	4.2
Personal tax credits receivables, adjusted for impairment, transferred to DWP	5.1.2	(146.8)	(146.8)	(676.0)	(676.0)
(Increase)/decrease in inventories		(0.1)	(0.1)	(0.6)	(0.6)
Increase/(decrease) in trade and other payables	12	(4,271.1)	(4,269.6)	(6,994.6)	(6,992.7)
Less: Movements in payables not passing through the Statement of Comprehensive Net Expenditure		4,638.3	4,638.3	5,396.6	5,396.6
Use of provisions	13	(19.6)	(19.6)	(31.5)	(31.5)
Net cash outflow from operating activities		(39,501.8)	(39,506.3)	(58,739.3)	(58,738.8)
Cash flows from investing activities
Additions to property, plant and equipment	6	(65.0)	(64.9)	(232.0)	(232.0)
Less additions to leased property, plant and equipment		3.1	3.1	3.0	3.0
Additions to intangible assets	7	(580.0)	(580.0)	(546.5)	(546.5)
Proceeds of disposal of property, plant and equipment		0.2	0.6	0.8	0.8
Net cash outflow from investing activities		(641.7)	(641.2)	(774.7)	(774.7)
Cash flows from financing activities
From the Consolidated Fund (Supply) – current year		14,194.3	14,194.3	32,149.5	32,149.5
From the Trust Statement		21,148.8	21,148.8	21,929.6	21,929.6
From the National Insurance Fund		258.8	258.8	240.3	240.3
Capital element of payments in respect of leases and on-Statement of Financial Position PFI contracts		(86.2)	(86.2)	(12.0)	(12.0)
Capital element of receipts in respect of sub-leases		5.9	5.9	–	–
Net financing		35,521.6	35,521.6	54,307.4	54,307.4
Net increase/(decrease) in cash and cash equivalents in the period before adjustment for receipts and payments to the Consolidated Fund		(4,621.9)	(4,625.9)	(5,206.6)	(5,206.1)
Payments of amounts due to the Consolidated Fund		(1.7)	(1.7)	(2.1)	(2.1)
Net increase/(decrease) in cash and cash equivalents in the period after adjustment for receipts and payments to the Consolidated Fund		(4,623.6)	(4,627.6)	(5,208.7)	(5,208.2)
Cash and cash equivalents at the beginning of the period	11	4,701.5	4,706.2	9,910.2	9,914.4
Cash and cash equivalents at the end of the period	11	77.9	78.6	4,701.5	4,706.2

The notes to the departmental Resource Accounts form part of these accounts.

Consolidated Statement of Changes in Taxpayers’ Equity for the year ended 31 March 2023

This statement shows the movement in the year on the different reserves held by the department, analysed into General Fund and revaluation reserve. The General Fund represents the total assets less liabilities of the department, to the extent that it is not represented by other reserves and financing items. The revaluation reserve reflects the change in asset values that have not been recognised as income or expenditure.

Core department and agency figures are the same as departmental group, therefore core department and agency are not shown.

Consolidated Statement of Changes in Taxpayers’ Equity

Due to the amount of data presented, only part of the table below is visible. Please use the scollbar at the bottom of the table to view all the columns.

	Note	General fund Departmental group (2022-23) £m	Revaluation reserve (note 1) Departmental group (2022-23) £m	Taxpayers’ equity Departmental group (2022-23) £m	General fund Departmental group (2021-22) £m	Revaluation reserve (note 1) Departmental group (2021-22) £m	Taxpayers’ equity Departmental group (2021-22) £m
Balance at 1 April		(7,317.2)	118.2	(7,199.0)	(9,245.8)	103.1	(9,142.7)
IFRS 16 adoption adjustment (note 2)		(290.0)	–	(290.0)	–	–	–
Net Parliamentary funding – drawn down		14,194.3	–	14,194.3	32,149.5	–	32,149.5
Net Parliamentary funding – deemed (note 3)		4,694.5	–	4,694.5	9,908.6	–	9,908.6
Funding from Trust Statement (note 4)		21,148.8	–	21,148.8	21,929.6	–	21,929.6
National Insurance Fund		263.2	–	263.2	255.2	–	255.2
Supply (payable)/receivable adjustment		(72.3)	–	(72.3)	(4,694.5)	–	(4,694.5)
Income payable to the Consolidated Fund		(0.3)	–	(0.3)	(7.5)	–	(7.5)
Net expenditure for the year		(40,403.9)	–	(40,403.9)	(57,661.4)	–	(57,661.4)
Other net comprehensive expenditure:
Revaluation of property, plant and equipment		–	2.7	2.7	–	(1.8)	(1.8)
Revaluation of intangible assets		–	87.6	87.6	–	64.0	64.0
Transfer between reserves		49.2	(49.2)	–	47.1	(47.1)	–
Pension reserve actuarial (losses)/gains		(2.1)	–	(2.1)	(1.5)	–	(1.5)
Contributions to LGPS pension fund by DWP		0.6	–	0.6	1.5	–	1.5
Non‑cash charges – auditor’s remuneration	2	2.0	–	2.0	2.0	–	2.0
Balance at 31 March		(7,733.2)	159.3	(7,573.9)	(7,317.2)	118.2	(7,199.0)

Note 1: The 31 March 2023 balance comprised £13.0 million in relation to property, plant and equipment assets (31 March 2022 £10.4 million, 31 March 2021 £28.1 million) and £146.3 million in relation to intangible assets (31 March 2022 £107.8 million, 31 March 2021 £75.0 million).

Note 2: This represents developer contribution income received and spent before the adoption of IFRS 16.

Note 3: This is any Supply drawn down in the previous year which was not spent at that year‐end and, therefore, is available to be spent in a subsequent financial year.

Note 4: Personal tax credits and corporation tax reliefs are funded out of tax receipts from the Trust Statement. Please see the Statement of Revenue, Other Income and Expenditure in the Trust Statement.

The notes to the departmental Resource Accounts form part of these accounts.

Notes to the departmental Resource Accounts

Notes to the financial statements provide additional information required by statute and accounting standards to explain a particular feature of the financial statements. The notes which follow will also provide explanations and additional disclosure to assist readers’ understanding and interpretation of the financial statements.

1. Statement of accounting policies

1.1 Basis of accounting

These financial statements have been prepared in accordance with the Government Financial Reporting Manual (FReM) for the financial year 2022 to 2023 issued by HM Treasury. The accounting policies contained in the FReM apply International Financial Reporting Standards (IFRS) as adapted or interpreted for the public sector context. Net liabilities shown on the Statement of Financial Position are expected to be met by future funding from the Trust Statement, in respect of the corporation tax reliefs which are the primary element, or voted by Parliament annually through Supply and Appropriation Acts. Given there is no reason to believe the resources required to settle these liabilities will not be forthcoming, the Resource Account has been prepared on a going concern basis.

2022 to 2023 FReM

Where the FReM permits a choice of accounting policy, HM Revenue and Customs has applied the most appropriate to give a true and fair view.

1.2 Accounting convention

These accounts have been prepared on an accruals basis under the historical cost convention modified to account for the revaluation of property, plant and equipment and intangible assets.

1.3 Basis of consolidation

This account consolidates the results of the bodies falling within the departmental boundary as defined by the FReM. For HMRC these are; core department, Valuation Office Agency (VOA) and Revenue and Customs Digital Technology Services Limited (RCDTS Ltd). RCDTS ceased to trade on 31 March 2023.

1.4 COVID-19 support schemes

HMRC is empowered with the authority to make payments under the respective COVID‐19 support schemes (or extensions) at the point an HM Treasury direction is issued, following the Coronavirus Act 2020.

Expenditure on claims for the Coronavirus Job Retention Scheme and Eat Out to Help Out was recognised on an accruals basis in the financial year in which the economic activity being subsidised has, or would have but for the pandemic, taken place.

Expenditure on claims for Self‐Employment Income Support Scheme was recognised in the financial year when the claimant fulfilled the performance obligations associated with the grant. The first 3 tranches were recognised in 2020 to 2021 and the fourth and fifth tranches were recognised in 2021 to 2022.

Expenditure for the one-off £500 payment for Working Households Receiving Tax Credits was recognised in the financial year 2021 to 2022.

1.5 Cost of Living Payments

HMRC are jointly delivering the Cost of Living Payments with the Department for Work and Pensions. The payments have been made at a value set down in the Social Security and Additional Payments Act 2022. Cost of Living Payments expenditure is recognised in the financial year when payment due to a customer has been approved by HMRC for payment.

1.6 Tax credits

1.6.1 Personal tax credits

Where overpayments of personal tax credits arise these are not by arrangement and are not credit assessed or loan agreements. Customers are given a certain time to settle the overpayment, or enter into an arrangement to pay debt. The debt is considered to be overdue after 30 days. The HMRC business model for managing personal tax credit overpayment debt is to collect the contractual cash flows only, with no intention to sell the debt asset.

Personal tax credit debt is being transferred to the Department for Work and Pensions (DWP) as part of the transition to Universal Credit, this is a transfer between government bodies and not a sale of the debt.

As per the FReM, the IFRS 9 simplified approach to impairing assets is used to impair tax credit overpayment debt over the lifetime of the debt. The contractual cash flows are solely repayments of principal debt and therefore the debt is measured at amortised cost.

For personal tax credits receivables, there is not a definition of default due to the nature of the legislation surrounding the recovery of overpayments. Personal tax credits receivables are reported net of losses which are defined and detailed in the Losses Statement which is reported in the Parliamentary accountability section.

1.6.2 Corporation tax reliefs

In the absence of a specific applicable accounting standard, management have determined the following accounting policy for recognising and measuring expenditure on corporation tax reliefs in line with the principles of IFRS.

Expenditure is recognised as companies engaged in qualifying activities incur their qualifying expenditure, not when subsequent claims are received. This provides a consistent recognition point for expenditure and income between these accounts and the HMRC Trust Statement, where the related Corporation Tax income is recognised as the taxable events occur and not when returns are filed.

Expenditure and related accrual profiles are estimated by the department’s statisticians using analysis of historic relief claims and applying forecast growth and uplift assumptions and adjustments made for planned changes in relevant policy and rates. This estimation is required due to the time-lag between the end of companies’ accounting periods and the submission of their tax returns. The filing requirements are such that these returns are not due until 12 months after their accounting period end. Additionally, amended claims can be received up to 24 months after their accounting period end.

In subsequent accounting periods the department evaluates any new information available and determines whether previous estimates of expenditure need to be adjusted. A final estimate is made 5 years after initial recognition with the resulting amount considered to be a reasonable proxy for final outturn in the absence of readily available outturn values.

All reliefs expenditure is funded by the Trust Statement, this funding being recognised in reserves.

1.7 Child Benefit (note 1)

Child Benefit expenditure is recognised in the month payment becomes due.

Child Benefit expenditure includes amounts paid to taxpayers earning greater than £50,000 per annum and recovered via future Income Tax charges. These Income Tax charges are accounted for in the Trust Statement.

Where under or overpayments are identified, adjustments are made to expenditure, with receivables and payables recognised appropriately. Overpayments are treated as receivables and the department seeks to recover these from future benefit entitlement or through direct repayment.

Child Benefit receivables are reported net of losses as detailed in the Losses Statement which is reported in the Parliamentary accountability section. Losses are made up of remissions and write‐offs.

1.8 Tax-Free Childcare (note 1)

Tax‐Free Childcare expenditure is recognised in the financial year in which the top‐up payments are made and is reported in this Resource Account.

1.9 Lifetime ISA (LISA) (note 1)

LISA expenditure is recognised in HMRC financial statements net of penalties, at the point a claim is paid to the relevant LISA provider.

1.10 Non-current assets

1.10.1 General

Property, furniture, vehicles, IT hardware, software licences and website development costs reported by the core department are capitalised (excluding certain low value assets). Accommodation refurbishments are capitalised if costs exceed £150,000 (VOA: £15,000). For other assets a £5,000 capitalisation threshold applies.

Where a contract contains a lease with a term of more than 12 months (unless the underlying asset is of low value), a right‐of‐use asset and a lease liability are recognised, representing the obligation to make lease payments and the right to use the underlying leased asset. The lease liability is measured at the net present value of future lease payments (excluding VAT), discounted at the interest rate implicit in the lease. The asset value is calculated as the lease liability net of developer contribution and any lease prepayments made.

Assets under construction are recorded at cost. Non‐property assets are valued on a depreciated historical cost basis as a proxy for fair value as they are of low value with short lives.

Assets are stated at cost less accumulated depreciation/amortisation and impairment losses. These are depreciated/amortised at rates calculated to write them down to estimated residual values on a straight‐line basis over their useful lives. All intangible assets are assessed to have a finite useful life over which they are amortised. Asset useful lives are normally in the following ranges:

Note 1: Payments in respect of Child Benefit, Tax-Free Childcare and Lifetime ISA (LISA) are made in accordance with the relevant legislation.

Asset category – property, plant and equipment	Useful economic life
Land	Not depreciated
Freehold buildings	50 years
Leased serviced accommodation	Period of the lease
Leased IT assets	Period of the lease
Right‑of‑use assets	Period of the lease
Accommodation refurbishments	Remainder of the lease to which they relate
Office equipment	5 to 20 years
Computer equipment	4 to 7 years
Vehicles	5 to 8 years
Furniture and fittings	10 to 15 years
Scientific aids	3 to 10 years

Asset category – intangible assets	Useful economic life
Developed computer software	10 years unless known to be otherwise
Software licences	Period of the licence
Website development costs	10 years unless known to be otherwise

The useful economic life of all assets is considered on an annual basis and changed if required. A formal impairment review is undertaken on an annual basis for buildings, accommodation refurbishments and developed computer software assets.

1.10.2 Property Plant and Equipment

Property

Buildings to which we are contracted under HMRC Locations Programme are recognised as right‐of‐use assets with a lease liability measured at the present value of future lease payments, discounted at the interest rate implicit in the lease. Further such leases will be reviewed on a case‐by‐case basis to ensure they are classified correctly.

For Private Finance Initiative (PFI) transactions where the department has control within a contract and a material residual interest, property is recognised as a non‐current asset and the liability to pay for it is accounted for as a lease. Contractual payments are apportioned between Consolidated Statement of Comprehensive Net Expenditure, financing and service charges and a Consolidated Statement of Financial Position lease liability.

The department has also capitalised other PFI property interests as leases being service concession arrangements.

Land reported in these Accounts represents the HMRC ownership of land.

Property assets have been stated at current value in existing use using professional valuation on a rolling 5 year programme, all assets will be professionally revalued within this time period. Each year 20% of the estate is physically revalued with the remainder undergoing a desktop revaluation exercise to identify material changes. The basis of the valuation is in accordance with the professional standards of the Royal Institute of Chartered Surveyors: RICS Valuation. Compliance with the RICS professional standards and valuation practice statements gives assurance also of compliance with the International Valuers Standards.

Information technology

Where applicable, the IT non‐current assets recognised by our IT partners and used in providing the IT service to the department have been capitalised as leases and are disclosed at the lower of fair value and the present value of the minimum lease payments, at the inception of the contract.

Assets under construction

Assets under construction are separately reported in note 6. In respect of the HMRC Locations Programme, this includes accommodation refurbishment and furniture assets. Costs are accumulated until the asset is available for use whereupon it is transferred to the relevant asset class and depreciation commences.

1.10.3 Intangibles

Developed computer software

Computer software that has been developed by the department and its IT service partners, and for which the department has ownership rights has been capitalised. This capitalisation includes the staff costs for developing, integrating and testing IT software.

Excluding additions in the financial year, and any software formally valued during the year, software assets are revalued annually by applying an index. As the major cost of developing computer software is IT labour costs, the index used is Office of National Statistics – ‘AWE: Information and Communication Index: Non Seasonally Adjusted Total Pay Including Arrears’. This index focuses on tracking changes in pay within the Information and Communications Industries.

Software licenses

Software licences are capitalised where their useful life is greater than 12 months and value is over £5,000.

Assets under construction

Intangible assets under construction relate to software development by the department, our IT Partners and RCDTS Ltd. Intangible assets under construction are separately reported in note 7. Costs are accumulated until the asset is available for use whereupon it is transferred to the relevant asset class and amortisation commences.

1.11 Leases

Like other government bodies, HMRC typically lease properties used for administrative purposes for reasons of efficiency and flexibility. The departmental group also benefits from the lease of vehicles. For other types of assets, the departmental group determines whether to lease or purchase based on value for money considerations, such as whether the underlying asset is required for its entire life or for a more limited period.

IFRS 16 Leases was due for adoption across government bodies reporting under the FReM from 1 April 2022 and therefore has been adopted for the first time in these accounts. IFRS 16, which replaces IAS 17, introduces a single lease accounting model that requires a lessee to recognise assets and liabilities for all leases (except for the exemptions listed below).

Scope and exclusions – the departmental group as lessee

In accordance with IFRS 16 Leases, contracts, or parts of contracts, that convey the right to control the use of an asset for a period, in exchange for consideration, are accounted for as leases. Contracts for services are evaluated to determine whether they convey the right to control the use of an identified asset, incorporating both the right to obtain substantially all the economic benefits from the asset and to direct its use. If so, the relevant part of the contract is treated as a lease.

As adapted by the FReM, IFRS 16 has also been applied to leases with nil or nominal (that is, significantly below market value) consideration and arrangements for sharing accommodation between government departments.

When making the above assessments, the department excludes 2 types of leases: firstly, those relating to low value items, which it considers as those where the underlying asset would have a cost of less than £5,000 when new, provided those items are not highly dependent on or integrated with other items; and secondly, those with a term of less than 12 months.

Initial recognition – the departmental group as lessee

At the commencement of a lease (or on the date of transition to IFRS 16, if later), the department recognises a right‐of‐use asset, representing our right to use an underlying asset through the lease term, and a lease liability, representing our obligation to make lease payments.

The lease liability is measured at the present value of the remaining lease payments discounted either by the interest rate implicit in the lease or, where this is not readily determinable, the department’s incremental rate of borrowing. This rate is advised annually by HM Treasury, 3.51% for leases recognised in 2023 (0.95% 2022). The lease payments will be for the non‐ cancellable period of each lease together with additional periods for any extension options the department is reasonably certain to exercise; and for leases with the option to terminate where the department is reasonably certain not to exercise that option.

Where a lease contract has expired, but the department remains in occupation pending negotiations for a renewed term, the decision about whether the lease should be recognised factors in an assessment of the economic incentives for both the landlord and the lessee and how long the lease will be in place.

The measurement of lease payments excludes any VAT payable, and irrecoverable VAT is expensed at the point it falls due in line with IFRIC 21 Levies.

The right‐of‐use asset is measured at the value of the lease liability, adjusted for: any lease payments made before the commencement date; any lease incentives received; any incremental costs of obtaining the lease; and any costs of removing the asset and restoring the site at the end of the lease to the conditions stipulated by the lease terms and conditions.

However, in accordance with the FReM, where the lease requires nil or nominal consideration (usually referred to as a ‘peppercorn’ lease) the asset will instead be measured at its existing use value, using market prices or rentals for equivalent land and properties, with the difference between the carrying amount of the right‐of‐use asset and lease liability treated as notional income (or on transition, as a credit to the General Fund).

Enhancements to leased assets, such as alterations to a leased building, are not classified within right‐of‐use assets but are classified as property, plant and equipment in accordance with the FReM.

The transitional impacts of adopting IFRS 16 are set out in note 8.

Subsequent measurement – the departmental group as lessee

After initial recognition, the right‐of‐use asset will be measured using the fair value model. The departmental group considers that the cost model (measurement by reference to the lease liability) is a reasonable proxy for fair value, in the case of non‐property leases, and for property leases of less than 5 years or with regular rent reviews. For other leases, the asset will be carried at a revalued amount.

The value of the asset will be adjusted for subsequent depreciation and impairment, and for reassessments and modifications of the lease liability as described below. Where the amount of a reduction to the asset exceeds the carrying value of the asset, the excess amount is recognised as expenditure in the Consolidated Statement of Comprehensive Net Expenditure (CSoCNE).

The lease liability will be adjusted for the accrual of interest, repayments, reassessments and modifications. Reassessments are reappraisals of the probability of the options given by the existing lease contract, for example where we no longer expect to exercise an option, and modifications are changes to the lease contract. Reassessments and modifications are accounted for by discounting the revised cash flows: using a revised discount rate where the department becomes or ceases to be reasonably certain to exercise or not exercise an extension or termination option, or the lease is modified to amend the non‐cancellable period, change the term of the lease, change the consideration or the scope; or at the existing discount rate where there is a movement in an index or rate that will alter the cash flows, or the amount payable under a residual value guarantee changes.

Expenditure charged to the CSoCNE for each financial year includes interest on the lease liability and a straight‐line depreciation charge on the right‐of‐use asset over the life of the lease, together with any impairment of the right‐of‐use asset and any change in variable lease payments that was not included in the measurement of the lease payments during the period in which the triggering event occurred.

Lease payments are debited against the liability. Rental payments in respect of leases of low value items, or with a term under 12 months, are also expensed.

Finance and operating leases – the departmental group as lessor

Where the department acts as a lessor or intermediate lessor for an asset it has itself leased, the arrangement will be assessed to determine whether it constitutes a finance lease, this being where the risks and rewards incidental to ownership of an underlying asset are substantially transferred to the lessee. For these leases the asset is derecognised and a receivable representing the net interest in the lease is recognised, with accrued interest being treated as income over its life. Where sublease rental income is inclusive of the value of irrecoverable VAT charged on the head‐lease, the value of the VAT is excluded from the receivable and credited directly to the CSoCNE.

All other leases are treated as operating leases and rental income is recognised in the CSoCNE on a straight‐line basis.

Transitional arrangements

We have applied a number of options and practical expedients on initial adoption of IFRS 16, these principally being mandated by the FReM.

IFRS 16 has been applied retrospectively using the ‘cumulative catch‐up’ approach without restatement of comparative balances, recognising the cumulative impact at the date of transition as an adjustment to the opening balance of taxpayer’s equity. Consequently, the financial statements for 2021 to 2022 have been prepared in accordance with the previously adopted standard, IAS 17 Leases, and comparatives have not been restated.

There has been no reassessment of existing contracts that the department had previously assessed as containing or not containing a lease. However, new contracts will be classified according to the criteria given in IFRS 16.

For leases previously treated as operating leases, right‐of‐use assets have been measured at the present value of the remaining lease payments, adjusted for any prepayment or accrual balances in respect of the lease payments. The department has used hindsight in determining the remaining term of leases and no adjustment has been made for leases whose term ends within 12 months of the date of first adoption or where the underlying asset had a value of less than £5,000.

For leases previously recognised as finance leases, the carrying amount of the lease liability and the right‐of‐use asset as at the date of first adoption are the respective carrying amounts of the lease liability and leased asset as determined immediately before that date, in accordance with IAS 17.

The recognition and measurement exemption for short‐term leases has been applied.

Where the department subleases a right‐of‐use asset, the classification of the sublease as a finance or operating lease has been reassessed. Where an arrangement previously treated as an operating lease is found to be a finance lease, it has been treated as a new lease, commencing on the date of first adoption.

In addition, the department has elected not to apply IFRS 16 to leases of intangible assets.

Estimates and judgements

Where a lease is embedded in a contract for services, the amount to be recognised as the right‐of‐use asset and lease liability should be the stand‐alone price of the lease component only. Where this is not readily observable, a determination will be made by reference for other observable data, such as the fair value of similar assets or price of contracts for similar non‐lease components.

As described above, the department has determined the lease term by assessing the level of certainty as to whether termination or extension options will be exercised. In making these judgements, reliance has been placed on the professional judgement of estates staff, supported by information on corporate asset management plans, other business strategies, investment already made in the underlying asset, ongoing business needs and market conditions.

The department has determined that the cost model is a reasonable proxy for fair value in most cases because the rents payable are aligned to open market rates. In the case of longer leases, where there are not regular rent reviews, there is a greater chance of divergence between cost and fair value, hence a professional revaluation is appropriate.

1.12 Pensions

1.12.1 Civil Service Pension Schemes

The Principal Civil Service Pension Scheme (PCSPS) and the Civil Servants and Others Pension Scheme (CSOPS) known as Alpha, are unfunded and contributory defined benefit schemes. The departmental group recognises the expected cost of these elements. This is determined systematically and rationally over the period during which we benefit from employees’ services by payment to the PCSPS and CSOPS of amounts calculated on an accruing basis. Liability for payment of future benefits is a charge on the PCSPS and CSOPS. Further information can be found within the accounts of Civil Service Pensions.

Civil Service Pensions

1.12.2 Local Government Pension Scheme

A number of the Valuation Office Agency employees are members of the Local Government Pension Scheme (LGPS). The LGPS is one of the largest public sector pension schemes in the UK. It is a nationwide defined benefit pension scheme designed for people working in local government or for individuals employed by other organisations who have chosen to participate in it.

Further information can be found within the Valuation Office Agency accounts that can be viewed at GOV.UK.

1.12.3 Partnership pensions

The partnership pension account is a stakeholder pension arrangement with employees able to choose a stakeholder pension product from a panel of providers. The partnership pension account is a defined contribution scheme, provided as an alternative option for members who do not wish to join one of our defined benefit arrangements (classic, classic plus, premium, nuvos and alpha).

1.12.4 Aviva Friends Life plc

A number of RCDTS Ltd employees are members of the Aviva Friends Life plc pension scheme, a contract‐based defined contribution pension scheme which is administered by Aviva plc and overseen by the RCDTS Ltd Board.

Further information can be found within the RCDTS Ltd accounts available at Companies House by 31 December 2023.

1.13 Provisions and Contingent liabilities

The department discloses provisions and contingent liabilities in excess of the de minimis limit for reporting of £0.1 million.

We recognise provisions in accordance with IAS 37: Provisions, Contingent Liabilities and Contingent Assets. The expenditure required to settle the obligation is calculated based on the best available information.

Where the time value of money is significant, provisions and contingent liabilities are stated at discounted amounts, as directed by revised Public Expenditure System (PES) (2022) 08.

1.13.1 Early departure costs

The department is required to meet the additional cost of benefits beyond the normal PCSPS benefits in respect of employees who have taken early departure or retirement under the Civil Service Compensation Scheme. The department has made provision in full for early retirement costs. The estimated risk‐adjusted cash flows are discounted at 1.70% as set by HM Treasury (2021 to 2022: (1.30)%).

1.13.2 Remote Contingent liabilities

For Parliamentary reporting and accountability purposes certain statutory and non‐statutory contingent liabilities where the likelihood of a transfer of economic benefit is remote, are disclosed separately, in accordance with the requirements of Managing Public Money. Remote contingent liabilities are reported in the Parliamentary accountability section.

1.14 Value Added Tax (VAT)

Most of the activities of the department are outside the scope of VAT. A proportion of the activities of the department will attract VAT, and output VAT will apply in these circumstances. The department also has recoverable and non‐recoverable elements for input VAT on purchases. Some purchase VAT on a restricted number of services is recovered under Section 41 of the VAT Act 1994 and in accordance with the HM Treasury ‘Contracting‐out Direction’. Section 41 is intended to remove any disincentive to government departments of contracting‐out activities performed ‘in‐house’ where there is a sound basis for doing so. Non‐recoverable VAT is charged to the relevant expenditure category or included in the capitalised purchase cost of non‐current assets. Income and expenditure is otherwise shown net of VAT.

1.15 Critical accounting judgements and key sources of estimation

The preparation of financial statements in accordance with IFRS requires the use of certain accounting estimates. It also requires management to exercise judgement in the process of applying the department’s accounting policies.

The areas that involve a higher degree of judgement or complexity, or where the assumptions and estimates are significant to the Resource Accounts, are as follows:

Personal tax credits expenditure

Personal tax credits, reported at note 5.1.1, consist of Child Tax Credit and Working Tax Credit. Receivable and payable balances are based on data from tax credits systems and are used to inform the appropriation of revenue from the Trust Statement, where a cash‐based disbursements figure is recorded (see note 3.2), to these accounts on an accruals accounting basis.

Finalisation is the process, occurring after the financial year end, by which claimants confirm their actual income and other circumstances for the previous award year. These accounts include an estimate of the finalisation exercise relating to 2022 to 2023. The estimate produced for financial year 2022 to 2023 considers the impact of claimants migrating to DWP under Universal Credit throughout 2023 to 2024 using the best available information, the extent to which policies impact on the estimate and utilises the latest compliance information. It is therefore subject to uncertainty.

The accrual for personal tax credits is calculated using the actual split of Working Tax Credit and Child Tax Credit payments made in the current year.

Corporation tax reliefs expenditure

The accounting policy for corporation tax reliefs is a judgement in the context of these accounts because management has determined an appropriate policy for recognition and measurement in the absence of a specific accounting standard. In adopting the current policy, we have selected a recognition point that maintains consistency between relief expenditure recognised in these accounts and the related Corporation Tax income recognised in the Trust Statement.

Expenditure is recognised for corporation tax reliefs in advance of claims being received because of the timing difference between when qualifying expenditure is incurred by companies and when they make claims. Estimation uncertainty results from this timing difference because assumptions about qualifying expenditure need to be made based on historic experience, forecast growth rates and planned changes in relevant tax policy and rates.

The key assumptions in the estimates for corporation tax reliefs are:

• the proportion of company tax returns for the latest year’s outturn data used in the estimate that have not been received or processed at the time the data extract is taken for the estimate (referred to as the “uplift factor”)
• the forecast growth rate

Note 5.1.4 provides further detail on the estimation uncertainty relating to corporation tax reliefs.

Impairment of receivables

Receivables in the Statement of Financial Position are reported after impairment, which is estimated based on our analysis of existing receivables and historical trends in debt recovery, losses, discharges, amendments and cancellations. The FReM does not require HMRC to determine impairments in accordance with IFRS 9 for tax credits and benefits, as the standard relates to financial instruments, and credits and benefits arise from statute and not a contract. However, to the extent applicable and feasible, impairment of receivables has been calculated in accordance with this standard.

The following receivables balances have been impaired: personal tax credits, Child Benefit, law costs, and other receivables (see note 10).

To calculate the impairment for personal tax credits receivables we use an expected credit losses (ECL) model that estimates future debt recoverability of personal tax credits debt based on historic debt recovery rates.

The main judgements that we have made when producing the ECL model are:

• a value for new debts is given by the yearly evolution of the debt stock less remissions, transfers and recoveries,
• recent debt recovery experience is a reasonable proxy for recovery rates that inform our scenario analysis,
• the migration of claimants to Universal Credit affects debt movements and it is therefore necessary to assess the effect of HMRC debt recovery efficiency in isolation from the effect of the rate of transition to Universal credit,
• external future economic developments will not significantly affect recovery rates
• the discount rate applied to future recoveries is 1.9%, in accordance with Public Expenditure System papers published for government by HM Treasury,
• the consideration of the following 3 debt scenarios: the upper scenario considers the past 3 years debt recovery rates, takes the highest recovery rate and applies that rate to future recoveries; the middle (base) scenario takes the last complete year’s debt recovery rate and applies that to future recoveries; and the lower scenario considers the past 3 years debt recovery rates, takes the lowest recovery rate and applies that rate to future recoveries.

The model assumes the upper and lower recovery scenarios will occur with a 10% likelihood and the base scenario with an 80% likelihood.

Provisions and contingent liabilities

The department undertakes a quarterly review of provisions and contingent liabilities. These are estimated by appropriate business areas based on the likelihood of a liability materialising.

1.16 Impending application of newly issued accounting standards not yet effective

New and revised standards and interpretations have been issued but are not yet effective and have not therefore been adopted in this account.

IFRS 17 Insurance Contracts

IFRS 17 is the new accounting standard for Insurance Contracts and aims to make risk transfer contracts more comparable between entities. While the standard, which will replace IFRS 4: Insurance Contracts, will be effective for annual reporting periods beginning on or after 1 January 2023, an implementation date for government has been confirmed as 1 April 2025. HMRC are currently engaging in the cross‐government consultation process to assess the impacts of the new standard.

2. Expenditure

Due to the amount of data presented, only part of the table below is visible. Please use the scollbar at the bottom of the table to view all the columns.

	Note	Core department and agency (2022-23) £m	Departmental group (2022-23) £m	Core department and agency (2021-22) £m	Departmental group (2021-22) £m
Personal tax credits	5.1.1	8,835.0	8,835.0	10,605.5	10,605.5
Corporation tax reliefs	5.1.4	12,556.4	12,556.4	11,692.8	11,692.8
Child Benefit
Child Benefit (note 1)		11,595.6	11,595.6	11,420.0	11,420.0
Guardian’s Allowance (funded from National Insurance Fund)		3.9	3.9	3.8	3.8
		11,599.5	11,599.5	11,423.8	11,423.8
Cost of Living Payment		717.9	717.9	–	–
Tax-Free Childcare		494.4	494.4	428.4	428.4
Lifetime ISA		436.8	436.8	418.9	418.9
Help to Save		53.2	53.2	20.4	20.4
COVID-19 support schemes (note 2)	4.1
Coronavirus Job Retention Scheme		(130.9)	(130.9)	8,200.9	8,200.9
Self‑Employment Income Support Scheme		(1.5)	(1.5)	8,343.4	8,343.4
Eat Out to Help Out		–	–	(0.7)	(0.7)
Working Households Receiving Tax Credits		(0.1)	(0.1)	719.1	719.1
		(132.5)	(132.5)	17,262.7	17,262.7
Staff and related costs	Staff costs
Wages and salaries		2,438.8	2,449.4	2,176.0	2,202.2
Other pension costs		630.3	631.2	559.9	562.1
Less capitalised costs		(62.2)	(62.2)	(51.6)	(51.6)
Social security costs		266.6	267.9	219.1	222.2
Travel, subsistence and hospitality		41.7	42.0	16.5	16.5
Recruitment and training		31.4	31.4	26.5	26.5
Early severance schemes (note 3)		(3.4)	(3.4)	4.0	4.0
		3,343.2	3,356.3	2,950.4	2,981.9
Service charges
IT Public Private Partnership contract (PPP) payments		84.8	84.8	136.2	136.2
Accommodation PFI and non‑PFI contract payments		37.4	37.4	36.7	36.7
Interest charges		17.4	17.4	8.8	8.8
Indexation of liability on PFI deals		–	–	0.8	0.8
IT Public Private Partnership interest charges		1.1	1.1	1.5	1.5
		140.7	140.7	184.0	184.0
Goods and services
IT services and consumables		1,024.2	1,006.8	933.0	896.5
Contracted out services		305.2	305.2	301.9	301.9
Printing, postage, stationery and office supplies		58.6	58.6	51.8	51.8
Legal and investigation		52.7	52.7	35.1	35.1
Enforcement costs		41.1	41.1	37.5	37.5
Telephone expenses		29.6	30.0	38.7	38.7
Other goods and services		18.9	18.9	17.6	17.6
Consultancy		5.0	5.0	1.8	1.8
		1,535.3	1,518.3	1,417.4	1,380.9
Payments in lieu of tax relief and rates		76.1	76.1	212.5	212.5
Other cash expenditure
Accommodation expenses		211.4	211.4	252.9	252.9
Operating leases		38.2	38.2	157.4	157.4
National Insurance Fund other government department collection service		51.3	51.3	52.0	52.0
Losses and special payments (excluding Child Benefit, tax credits and COVID‑19 support schemes)		3.6	3.6	4.7	4.7
Auditors remuneration and expenses(4)		–	0.1	0.1	0.1
Other		40.6	41.3	12.7	13.3
		345.1	345.9	479.8	480.4
Non-cash items:
Amortisation, depreciation and impairments
Amortisation	7	330.1	330.1	114.4	114.4
Depreciation	6	151.2	151.2	74.2	74.4
Loss on impairment of non-current assets		10.7	10.7	19.3	19.3
		492.0	492.0	207.9	208.1
Provisions for liabilities and charges	13	21.0	21.0	(2.7)	(2.7)
Other non-cash
Transfer of personal tax credits receivables to DWP		146.8	146.8	676.0	676.0
Auditors remuneration and expenses (note 4)		2.0	2.0	2.0	2.0
Other		17.1	17.1	68.8	68.8
		165.9	165.9	746.8	746.8
Total non-cash items		678.9	678.9	952.0	952.2
Total operating expenditure		40,680.0	40,676.9	58,048.6	58,044.4

Note 1: Child Benefit expenditure includes amounts paid to higher rate taxpayers earning greater than £50,000 per annum. It is estimated that £487 million (2021 to 2022: £454 million) will be recovered via future Income Tax charges arising from payments of Child Benefit to those earning over £50,000 in 2022 to 2023. These Income Tax charges are accounted for in the Trust Statement. The prior year comparative has been revised.

Note 2: Negative value represents repayment of COVID‐19.

Note 3: Early severance schemes includes an adjustment of £4.5 million in 2022 to 2023 relating to 2019 to 2020 exit scheme cases where no further payments are required.

Note 4: The NAO did not undertake any work of a non‐audit nature during the period.

3. Statement of operating expenditure by operating segment

This note shows how resource expenditure is apportioned against the main areas of core business activity.

Each segment relates to a core business activity reported to the Chief Executive and the Board. This management information covers expenditure and income and is used by the Board to inform decisions.

3.1 Expenditure and income by reportable segment

Due to the amount of data presented, only part of the table below is visible. Please use the scollbar at the bottom of the table to view all the columns.

	Gross expenditure (2022-23) £m	Income (2022-23) £m	Net expenditure (2022-23) £m	Gross expenditure (2021-22) £m	Income (2021-22) £m	Net expenditure (2021-22) £m
Reportable segment
Customer Services	927.6	46.4	881.2	868.0	33.1	834.9
Customer Strategy and Tax Design	233.7	7.1	226.6	208.7	17.1	191.6
Customer Compliance	1,602.5	72.5	1,530.0	1,391.8	84.9	1,306.9
Solicitors Office and Legal Services	130.0	7.0	123.0	100.7	7.5	93.2
Borders and Trade	375.0	11.9	363.1	485.0	5.1	479.9
Chief Digital and Information Officer Group	1,118.6	53.4	1,065.2	959.2	47.1	912.1
Chief Finance Officer Group	490.2	70.1	420.1	645.9	170.1	475.8
Chief People Officer Group	113.0	6.8	106.2	115.8	8.8	107.0
Chief Executive Office	2.2	–	2.2	2.2	–	2.2
Transformation Group	225.9	0.9	225.0	133.9	0.5	133.4
Communications	22.6	0.6	22.0	20.9	0.1	20.8
Valuation Office Agency	218.2	47.1	171.1	207.3	42.5	164.8
Total	5,459.5	323.8	5,135.7	5,139.4	416.8	4,722.6

3.2 Reconciliation between operating segments and Consolidated Statement of Comprehensive Net Expenditure

Information on all other net expenditure is included in the table below. This information is reported to the Board, however as it is centrally managed it is reported in a different format than the reportable segments in the management accounts which compares budgeted spend to full year forecast spend at the segment level.

Reconciliation between operating segments and Consolidated Statement of Comprehensive Net Expenditure

	2022-23 £m	2021-22 £m
Total net expenditure reported for operating segments	5,135.7	4,722.6
COVID‑19 support schemes	(132.5)	17,262.7
Cost of Living Payment	717.9	–
Personal tax credits	8,835.0	10,605.5
Child Benefit and Child Trust Fund	11,599.5	11,423.8
Corporation tax reliefs	12,556.4	11,692.8
Lifetime ISA	436.8	418.9
Depreciation/Amortisation/Impairment	488.6	202.2
Transfer of personal tax credits receivables to DWP	146.8	676.0
Tax‑Free Childcare	494.5	428.4
Help to Save	53.1	20.4
Payments in lieu of tax relief	7.9	130.0
Payments of Local Authority Rates	64.2	78.1
Net Operating Expenditure in Statement of Comprehensive Net Expenditure	40,403.9	57,661.4

4. COVID‐19 Support schemes

4.1 COVID-19

The COVID‐19 support schemes were created as part of the government’s response to the coronavirus pandemic. HMRC had delivery responsibility and funding from HM Treasury for the Coronavirus Job Retention Scheme, Self‐Employment Income Support Scheme, Working Households Receiving Tax Credits and Eat Out to Help Out.

4.1.1 COVID-19 expenditure

The COVID‐19 support schemes ended during 2021 to 2022, so there was no significant expenditure related to them in 2022 to 2023.

In 2022 to 2023, HMRC continued to receive repayments in respect of the COVID‐19 support schemes. Repayments occur when customers entitled to a grant choose to repay it, or when customers repay following a prompt from HMRC or an unprompted disclosure. Amounts recovered through tax returns and tax charges are not included in these Resource Accounts and are recorded in the Statement of Revenue, Other Income and Expenditure in the Trust Statement.

Analysis of COVID-19 support scheme expenditure

Due to the amount of data presented, only part of the table below is visible. Please use the scollbar at the bottom of the table to view all the columns.

	Claims approved (2022-23) £m	Repayments (2022-23) £m	Accrual (2022-23) £m	Expenditure (2022-23) £m	Claims approved (2021-22) £m	Repayments (2021-22) £m	Accrual (2021-22) £m	Expenditure (2021-22) £m
Coronavirus Job Retention Scheme	0.1	(131.0)	–	(130.9)	8,725.2	(525.6)	1.3	8,200.9
Self‑Employment Income Support Scheme	0.1	(1.6)	–	(1.5)	8,371.7	(28.4)	0.1	8,343.4
Working Households Receiving Tax Credits	0.1	–	(0.2)	(0.1)	718.9	–	0.2	719.1
Eat Out to Help Out	–	–	–	–	–	(0.7)	–	(0.7)
Total	0.3	(132.6)	(0.2)	(132.5)	17,815.8	(554.7)	1.6	17,262.7

5. Tax credits and Child Benefit

5.1 Tax credits

Since the 2011 to 2012 financial year, personal tax credits expenditure and certain corporation tax reliefs have been reported in these Accounts. Tax credits can comprise of both an element that is treated as negative taxation, being the extent to which the relief is less than or equal to the recipient’s tax liability, and an element that is in excess of the tax liability, being a payment of entitlement. Only those credits that include a payment of entitlement are reported in these accounts.

5.1.1 Analysis of personal tax credits expenditure

Personal tax credits consist of Child Tax Credit and Working Tax Credit. The apportionment of expenditure between Child Tax Credit and Working Tax Credit shown in the table below is estimated (see note 1.15 for the estimation techniques used).

Awards are assessed and paid throughout the financial year on a provisional basis, based on claimants’ assessments of their personal circumstances.

Claims are adjusted after the end of each award year, once claimants’ actual circumstances are known, this is called Finalisation. Finalisation may give rise to under or overpayments which are accounted for as soon as identified. Finalisation is not complete until after the Resource Account has been published, consequently there is uncertainty around the level of adjustments likely to arise.

Analysis of personal tax credits expenditure

Due to the amount of data presented, only part of the table below is visible. Please use the scollbar at the bottom of the table to view all the columns.

	Child Tax Credit (2022-23) £m	Working Tax Credit (2022-23) £m	Total tax credits (2022-23) £m	Child Tax Credit (2021-22) £m	Working Tax Credit (2021-22) £m	Total tax credits (2021-22) £m
Tax credits	7,209.4	1,577.3	8,786.7	8,379.3	2,069.0	10,448.3
Movement in impairment of receivables	(107.9)	(25.1)	(133.0)	104.8	22.6	127.4
Remissions/write‑offs	106.0	75.3	181.3	21.2	8.6	29.8
Total personal tax credits	7,207.5	1,627.5	8,835.0	8,505.3	2,100.2	10,605.5

Further information on the operation of personal tax credits can be found at the HMRC page of GOV.UK

5.1.2 Personal tax credits receivables

Where under or overpayments are identified, either during the award year or subsequently, adjustments are made to expenditure. Overpayments are treated as receivables and the department seeks to recover these from future personal tax credits awards or through direct repayment.

The Department for Work and Pensions (DWP) has responsibility for recovering personal tax credits debt for customers who have made a claim to Universal Credit (UC). DWP is also responsible for taking on the debt of customers who have fallen out of the tax credits regime and for whom a direct earnings attachment can be used to recover the debt. HMRC started to transfer this debt in 2019 to 2020. In line with the Financial Reporting Manual (FReM), debt transfers are treated as capital grants in kind in the Financial Statements. The debt stock is impaired consistently with IFRS 9 (Financial Instruments) and in line with HMRC policy.

Personal tax credits receivables

	Note	2022-23 £m	2021-22 £m
Receivables as at 1 April		3,326.8	4,302.2
Adjustment to prior year finalisation estimate		152.8	(1.2)
Estimated overpayment of awards prior to finalisation (note 1)		235.0	247.0
Overpayments identified from change of circumstances in year		265.4	824.0
Transferred to DWP (note 2)		(290.7)	(1,440.7)
Recoveries made		(544.7)	(574.7)
Remissions/write‑offs		(181.3)	(29.8)
Receivables as at 31 March		2,963.3	3,326.8
Impairment as at 1 April		1,646.4	2,283.7
– Transferred to DWP (note 3)		(143.9)	(764.7)
– Movement in impairment		(133.0)	127.4
Impairment at 31 March		1,369.5	1,646.4
Net receivables at 31 March		1,593.8	1,680.4
Of which:
Amounts expected to be recovered within one year	10	464.8	486.4
Amounts expected to be recovered in more than one year	10	1,129.0	1,194.0
Total		1,593.8	1,680.4

Note 1: The range of the estimate is £130 million to £360 million (2020 to 2021: £130 million to £360 million).

Note 2 and Note 3: Summary of receivables transferred to DWP

		2022-23 £m	2021-22 £m
Summary of receivables transferred to DWP
Gross receivables		290.7	1,440.7
Impairments		(143.9)	(764.7)
Net receivables transferred to DWP		146.8	676.0

Personal tax credits expected credit loss (ECL)

HMRC routinely assess likely recovery of debts, accepting that the individual credit risk associated with these debts increases as they age. However, the credit risk itself is not routinely assessed because the debts relate to overpayments made to benefit claimants, and not to lending through formal arrangements.

As simple financial instruments, under IFRS 9 the debts are impaired over their lifetime as required under the FReM (chapter 8.2, table 2, interpretation 6).

The credit loss we recognise is the difference between the cash flows that are due to HMRC, in accordance with our contractual relationship with our customers, and the cash flows that we expect to receive.

The main data inputs to the model are historic monthly stocks and flows of debt (including recoveries, remissions and transfers to DWP), tax credit expenditure forecasts, the finalisation estimate, and the claimant migration profile to Universal Credit.

The key assumptions/judgements included in the ECL model are included in note 1.15.

HMRC have explored possible correlations between the unemployment rate and live recovery of personal tax credits debt; and between the Average Earnings Index and Consumer Price Index and direct recovery of personal tax credits debt. After testing, no robust relationships were found between these economic determinants and debt recovery, therefore forecasts of future economic conditions are not included in our ECL model. We therefore consider historic recovery experience to be a suitable proxy for future debt recovery.

The impairment is calculated in yearly bandings with historic recovery rates for each year being applied to cover the entire aged debt balance. The table below provides a summary of the impairment information:

	Gross receivable £m	Impairment £m	Net receivable £m
Total HMRC debt	2,963.3	1,369.5	1,593.8
of which debt less than one year old	387.7	64.2	323.5
of which debt more than one but less than 5 years old	941.7	273.5	668.2
of which debt more than 5 but less than 10 years old	907.6	417.7	489.9
of which debt more than 10 years old	726.3	614.1	112.2

Sensitivity analysis

There is a significant degree of uncertainty around the assumptions that underpin the ECL model. The sensitivity analysis below provides an indication of the impact on the estimate if key assumptions were to change.

Scenario	Change to impairment as a percentage of gross receivables	Change to impairment £m
The upper recovery scenario was applied to 100% of the debt stock (as opposed to 10%).	-2%	(70.0)
The lower recovery scenario was applied to 100% of the debt stock (as opposed to 10%).	9%	275.0

Personal tax credits finalisation

HMRC analysts provide an estimated range for the results of the current year finalisation exercise and the estimate disclosed represents the most‐likely point within the range. The range is obtained by assessing the level of overpayment created in current and previous years and then considering the impact of other factors. The lower end of the range is £100 million and the upper end is £345 million.

The estimate produced for 2021 to 2022 considers the impact of claimants migrating to Universal Credit in the next financial year using the best available information. The impacts of COVID‐19 are not considered to be material to these calculations.

5.1.3 Personal tax credits error and fraud

HMRC measures the overall level of error and fraud by investigating a random sample of finalised awards, although because of the design of the tax credits scheme this cannot be completed until after claimants have finalised their awards for the preceding year. Some claimants, such as those taxpayers included within Self Assessment, may not finalise their awards for the preceding year until 31 January. HMRC used a tried and tested estimation methodology for the calculation of the finalisation estimate supported by annual review.

In arriving at our personal tax credits estimates we consider 2 types of uncertainty – variance, which is a consequence of the sample size, and bias. In particular, we seek to manage the risk of potential bias through customer non‐response in several ways including; ensuring that compliance officers are in a position to make a valid decision without customer response, completion of extensive quality checks of error and fraud cases, and monitoring of the outcome of non‐response cases against those where customers do respond.

For error and fraud in the claimant’s favour, the difference in the proportion of cases that are incorrect is not statistically significant. Consequently, HMRC have no concerns about non‐response causing bias in the statistics for error and fraud favouring the claimant. For error in HMRC’s favour, the difference in the proportions is statistically significant, but for HMRC to consider making an adjustment we would need a high level of certainty that we would find more errors on these cases if the customer did respond, and no evidence is held to suggest this. Consequently, no adjustment is made to the estimate of error and fraud favouring the claimant or HMRC to account for non‐response.

HMRC completed its testing on finalised awards for 2021 to 2022, based on a random sample of 2,000 enquiries. As shown in the table below, the central estimate of error and fraud overpayment rate has decreased by 0.2% to 4.5% and the central estimate of error and fraud underpayment rate has decreased by 0.4% to 0.4%, from the 2021 to 2022 estimates. Please see Tax credits and Child Benefit in Strategic objective 1 of the Performance Analysis for more detail. We will be developing alternative methods of measuring error and fraud for the next Annual Report and Accounts, as the current approach becomes less viable due to the reducing tax credits population as claimants move to Universal Credit.

Estimated value of personal tax credits error and fraud and as a percentage of final award value

	Lower bound (2021-22 awards) £m	Central estimate (2021-22 awards) £m	Upper bound (2021-22 awards) £m	Lower bound (2020-21 awards) £m	Central estimate (2020-21 awards) £m	Upper bound (2020-21 awards) £m
Overpayments to claimants	440 (3.9%)	510 (4.5%)	580 (5.2%)	630 (4.1%)	730 (4.7%)	830 (5.4%)
Underpayments to claimants	30 (0.2%)	40 (0.4%)	60 (0.5%)	100 (0.6%)	120 (0.8%)	140 (0.9%)

5.1.4 Corporation tax reliefs

In certain circumstances, companies are permitted to reduce their tax liability by making a claim for corporation tax reliefs. To be entitled to these reliefs, a company must be undertaking specific activities and meet the criteria set out for that relief. The corporation tax reliefs reported in these Resource Accounts are reliefs where there is or could be, by their design, a payable element that is in excess of any negative taxation. Other corporation tax reliefs are included in the Trust Statement.

Corporation tax reliefs

	2022-23 £m	2021-22 £m
Research and development:
Small and Medium Enterprises (SME) scheme	6,492.5	5,895.6
Research and development expenditure credits (RDEC)	3,701.0	3,620.4
Creative industries:
High‑end Television Tax Relief	952.5	867.1
Film Tax Relief	824.7	829.0
Theatre Tax Relief	224.6	104.0
Video Games Tax Relief	208.8	246.3
Orchestra Tax Relief	42.5	21.8
Children’s Television Tax Relief	29.6	23.4
Animation Tax Relief	26.2	23.5
Museums and Galleries Tax Relief	8.3	15.1
Land Remediation Relief	45.3	46.8
Enhanced Capital Allowance	0.4	0.2
Vaccine Research Relief (note 1)	–	(0.4)
Total	12,556.4	11,692.8

Note 1: Relief ceased in 2016 to 2017.

In accordance with our accounting policy set out in note 1.6.2, of the expenditure reported in 2022 to 2023 above, £2,525.0 million relates to our final estimate for 2017 to 2018:

Expenditure relating to 2017-18:

	Estimate reported in 2017-18 (£m)	Final estimate (£m)	Included in value reported in these accounts (£m)
Research and development SME	1,380.8	2,737.5	1,356.7
Research and development RDEC	1,498.5	2,413.0	914.5
Creative industries	796.9	1,043.9	247.0
Land Remediation	26.6	33.4	6.8
Total	3,702.8	6,227.8	2,525.0

Corporation tax reliefs expenditure and related accruals are estimated using analysis of historic relief claims and applying forecast growth and uplift assumptions, and adjustments made for planned changes in relevant policy and rates, by the department’s statisticians. An estimate is required due to the time‐lag between the end of companies’ accounting periods and the submission of their company tax returns (as explained in note 1.6.2). The settled values for 2017 to 2018 are reported in 2022 to 2023.

Research and development tax relief

The cut‐off date for data used in the research and development tax relief estimate for the financial year 2022 to 2023 were claims for the 2021 to 2022 financial year processed by 31 January 2023. The percentage uplift factor applied for claims not received at the cut-off date is:

• R&D SME claims: for negative taxation element 58.3%; for payment element 25.6%
• R&D Expenditure Credit (RDEC) claims: 41.8%

The forecast growth assumption used for the 2022 to 2023 R&D reliefs estimates are:

• R&D expenditure, on which RDEC is claimed, will grow by 6.9% in 2022 to 2023, calculated as the OBR ICC determinant
• R&D expenditure on which R&D SME relief is claimed, will grow by 9.0% in 2022 to 2023. This is calculated as the OBR ICC investment determinant plus an additional expenditure growth rate of 2.2% to reflect the fact that R&D SME growth has exceeded the OBR ICC business investment determinant in recent years.

Sensitivity analysis has been applied to understand the degree of uncertainty in the estimates if the key assumptions were to change. The range estimates set out in the table below are based on judgments of the levels of uncertainty, and it is possible that actual values may exceed them.

Change to key assumption:	Change in assumption	Variation £m	Change in assumption	Variation £m
R&D SME uplift for 2021 to 2022 vary by up to 11.0% (note 1)	Increase by 11.0%	375	Decrease by 11.0%	(375)
RDEC uplift for 2021 to 2022 varies by up to 6.0% (note 2)	Increase by 6.0%	92	Decrease by 6.0%	(92)
R&D SME expenditure growth in 2022 to 2023 varies by up to +9.0%/‑6.4% (note 3)	Increase by 9.0%	425	Decrease by 6.4%	(301)
RDEC expenditure growth in 2022 to 2023 varies by up to +2.1%/‑.19.7% (note 4)	Increase by 2.1%	56	Decrease by 19.7%	(512)

Note 1: For the R&D SME uplift factors, the change to the key assumption is based on maximum variations seen in recent years, based on a 31 January cut‐off date for data.

Note 2: For R&D RDEC uplift factor, the change to the key assumption is based on maximum variations seen in recent years between the actual increase and the uplift assumption.

Note 3: For the R&D SME expenditure growth, the increase is based on the upper end of the range being the highest growth in the last 3 years and the decrease is based on the lowest growth in the last 3 years.

Note 4: For the RDEC expenditure growth, the increase is based on the RDEC growth being in line with SME assumed growth for 2022 to 2023 and the decrease is based on the lowest growth in the last 3 years.

Creative industries reliefs

The key assumptions underpinning the creatives industries reliefs are similar to those used for R&D relief.

For High‐end Television Tax Relief, Film Tax Relief and Video Games Tax Relief, the 3 largest creative industries reliefs for financial year 2021 to 2022, the cut‐off date for data used in the estimate for the financial year 2022 to 2023 was claims processed for the financial year 2021 to 2022 by 3 March 2023. For the other creative industries tax reliefs, we have used outturn data for the financial year 2020 to 2021 processed by 17 May 2022.

The forecast growth rate assumptions used for the financial year 2022 to 2023 are:

• High‐end Television Tax Relief, Video Games Tax Relief, Animation Tax Relief and Children’s TV Tax relief will grow in line with the OBR nominal GDP determinant.
• Film Tax Relief growth rate is based on the British Film Institute’s (BFI’s) research statistics ‘Film and high‐end television production in the UK: Q1 2023’, published in May 2023, and applying a lag profile to reflect BFI statistics allocate all the expenditure to the year in which the film starts its principal photograph and tax relief is typically spread over the start year and following years.
• Theatre Tax Relief, Orchestra Tax Relief and Museum and Galleries Tax Relief expenditure is forecast to be the estimated expenditure for the financial year 2019 to 2020 (pre‐COVID‐19) increased annually by the OBR nominal GDP determinant per year, before making an adjustment for the estimated impact of the increase in the rate of these reliefs which commenced on 27 October 2021.

For High‐end Tax Relief and Film Tax Relief, the 2 largest creative industries reliefs, sensitivity analysis has been applied to understand the degree of uncertainty in the estimates if the key assumptions underpinning them were to change. The range estimates set out in the table below are based on judgments of the levels of uncertainty, and it is possible that actual values may exceed them. Sensitivity analysis is not included for other creative industries reliefs – these have a smaller estimate and their range is expected to be immaterial.

Change to key assumption:	Change in Assumption	Variation £m	Change in Assumption	Variation £m
High‑end Television Tax Relief expenditure growth in 2022 to 2023 varies by up to +5.0%/‑4.4% (note 1)	Increase by 5%	41	Decrease by 4.4%	(36)
Film Tax Relief expenditure growth in 2022 to 2023 varies by up to +11.2%/‑46.8% (note 2)	Increase by 11.2%	56	Decrease by 46.8%	(233)

Note 1: For High‐end Television Tax Relief, the increase is based the upper end of the range being the highest growth in the last 3 years and the decrease is based on the average growth rate in the last 3 years.

Note 2: For Film Tax Relief, the upper end of the range is based on growth being one‐and‐a‐quarter times the applied growth rate; this is based on a time‐adjusted profile of film production expenditure published by the British Film Institute. The lower end of the range is the average expenditure growth in the last 3 years.

5.1.5 Corporation tax reliefs – R&D error and fraud

An estimate of error and fraud has been included in these accounts since 2019 to 2020 in response to the increasing take up of these reliefs over recent years.

Following the Annual Report and Accounts for the financial year 2019 to 2020, we undertook a Random Enquiry Programme (REP) for Small and Medium Enterprise (SME) claims based on a random sample of 500 claims received in 2020 to 2021.

The Resource Accounts for the financial year 2022 to 2023 is the first set of accounts for which there have been a sufficient number of cases closed in the REP to be able to use the results in estimating the rate of error and fraud in R&D expenditure in the Resource Accounts. Given the lag between R&D expenditure and the filing deadline for making R&D claims and amendments, the sample taken related to claims received in 2020 to 2021, which covered R&D expenditure by companies in the financial years 2018 to 2019, 2019 to 2020 and 2020 to 2021. Therefore, we are reporting an updated estimate of error and fraud relating to the financial year 2020 to 2021 in these Accounts.

For large businesses (LB) claiming RDEC, the estimate is derived using a combination of data for the population reviewed through our compliance processes due to the involvement of dedicated Customer Compliance Managers who work with large businesses eligible for RDEC reliefs, and an estimate for the remaining population using comparable error rates from Tax Gaps. HMRC analysts have used 2020 to 2021 compliance data from our Large Business team, to estimate the error and fraud within the R&D tax relief expenditure for Large Business customers claiming RDEC in 2020 to 2021.

For the SME scheme, this represents a significant methodological improvement by way of moving from an assumption‐based methodology to an evidence driven random enquiry program. For LB claiming RDEC, the approach is similar to that used to calculate R&D error and fraud in previous years.

The movement in the estimated rate of R&D error and fraud for 2020 to 2021 from that reported in the Annual Report and Accounts for 2020 to 2021 is explained at within the Research and development tax reliefs section of Strategic objective 1 in the Performance analysis.

Estimated value of R&D error and fraud and as a percentage of the estimated R&D tax relief expenditure

	Estimate of the rate of error and fraud (2020-21)	Implied monetary value of error and fraud (2020-21) £bn
Error and fraud – SME Scheme (note 1)	24.4%	1.04
Error and fraud – RDEC( note 2 and note 3)	3.6%	0.09
Error and fraud – Total R&D tax relief expenditure (note 4)	16.7%	1.13

Note 1: Revised figures for 2020 to 2021 – the estimated of rate of error and fraud for the SME Scheme for 2020 to 2021 previously reported in the Annual Report and Accounts was 5.5% (£303 million) of the expenditure estimate originally reported for 2020 to 2021.

Note 2: Revised figures for 2020 to 2021 – the estimated of rate of error and fraud for RDEC for 2020 to 2021 previously reported in the Annual Report and Accounts was 0.9% (£33 million) of the expenditure estimate originally reported for 2020 to 2021.

Note 3: RDEC includes claims made by LB and SME claiming RDEC.

Note 4: Revised figures for 2020 to 2021 – previously reported in Annual Report and Accounts: estimated of rate of error and fraud for total R&D tax relief expenditure for 2020 to 2021 was 3.6% (£336 million).

For the SME estimate, we estimated ranges which illustrates 95% confidence interval for the error and fraud estimate.

For LB claiming RDEC, given the assumption‐based methodology used to calculate error and fraud, statistical confidence intervals cannot be calculated. Therefore, upper and lower bounds have been derived based on best and worst‐case scenarios for the rate of error and fraud within the non‐reviewed populations. For the upper estimate we assume the level of risk in the non‐ reviewed population is 4%. For the lower estimate, we assume there is no risk in the non‐ reviewed population, as in the reviewed population.

Whilst we attempt to capture all reasonable possibilities within our ranges they do not exhaust the range of reasonable possible outcomes and it is possible that actual values may fall outside the ranges.

Applying the resultant lower, middle and upper bound rates for SME and LB claiming RDEC to the estimated R&D corporation tax relief expenditure for the financial year 2020 to 2021 (as reported in the Resource Accounts for 2020 to 2021) gives the results below.

	Lower bound £bn	Lower bound %	Most likely £bn	Most likely %	Upper bound £bn	Upper bound %
SME scheme	0.81	19.1	1.04	24.4	1.44	33.9
RDEC scheme	0.07	2.6	0.09	3.6	0.13	5.1
Combined	0.88	13.0	1.13	16.7	1.57	23.2

Also impacting the quantitative estimates of error and fraud for 2020 to 2021 are revisions to the estimated expenditure base of R&D corporation tax reliefs for that year. As explained in note 5.1.4 there are timing lags between companies’ accounting periods during which underlying R&D expenditure is incurred and submission of their corporation tax returns and R&D relief claims related to that year. Our estimates of reliefs expenditure are therefore revised over a 5‐year period after which they are considered final, and an adjustment is made to each year’s expenditure base for the final change in estimate relating to the period five years preceding. However, as this adjustment relates to a different financial year, we have excluded it from calculation of our revised 2020 to 2021 error and fraud estimates above. We have additionally used the latest estimate of 2020 to 2021 R&D reliefs expenditure, which captures the impact to date of the anticipated 5‐year adjustment. This further decreases the 2020 to 2021 expenditure base, reflecting overestimations in initial estimates for this year during the economic uncertainty of the pandemic.

	2020-21 expenditure initially estimated £m	Final adjustment relating to 2015-16 £m	Total expenditure reported in 2020-21 Annual Report and Accounts £m	Updated estimate for 2020-21 £m
R&D SME	4,719.7	766.1	5,485.8	4,254.1
RDEC	3,052.8	786.5	3,839.3	2,510.8
Other – Creative Industries/Land remediation/Vaccine Research	1,142.7	228.3	1,371.0	1,062.8
Total	8,915.2	1,780.9	10,696.1	7,827.7

Quantifications for error and fraud in subsequent years’ expenditure, including for that reported in these accounts, will be performed once relevant available data is available. While the above results are indicative of higher levels of error and fraud than previously estimated, applying the rates above to estimates of subsequent years’ expenditure would not give a reliable estimate of error and fraud in those years. There is considerable uncertainty ahead of performing random enquiries for these years because of policy and operational measures introduced to the R&D schemes, which have been designed to reduce the rate of error and fraud.

However, for illustrative purposes, we have considered the possible error and fraud position for 2022 to 2023 expenditure. Where we have a more robust evidence base for operational measures already introduced affecting expenditure in 2022 to 2023, our best judgement is that these will reduce the level of error and fraud for the SME scheme by £250 million. This is equivalent to a reduction of the rate of error and fraud in the SME scheme of around 5 percentage points compared with 2020 to 2021. We have been unable to quantify the impact of policy measures, particularly measures to mandate digital claims and require additional information, which will also impact claims relating to expenditure in 2022 to 2023. Taking account of the estimated level of expenditure in 2022 to 2023 (£7.9 billion excluding a final adjustment relating to 2017 to 2018), and the reductions in the error and fraud rate that we have been able to quantify, this would suggest error and fraud of around £1.05 billion in total across the SME scheme and RDEC (equating to 13.3% of total relevant 2022 to 2023 expenditure). When the full impacts of these changes are available, our assessment is that the true level of error and fraud for expenditure in 2022 to 2023 will be lower than this.

5.2 Child Benefit

For 2022 to 2023 the Child Benefit Error and Fraud Analytical Programme (EFAP) exercise took a stratified random sample of 2,700 cases which were selected to be representative of the Child Benefit population.

Of the responders 97% were assessed to be compliant, while 72% of non‐responders were assessed as likely to be eligible.

Claims were deemed non‐compliant by HMRC compliance officers in the following circumstances:

• Group 1 – The claimant replies and the information provided proves ineligibility to Child Benefit; or
• Group 2 – The claimant does not reply to requests for information during the estimation exercise and is deemed non‐compliant based upon the desk‐based analysis.

Non‐compliance was assessed for Group 1 as 3% and Group 2, 28%.

For cases where error and fraud was determined from the reply (Group 1), several themes are apparent. In particular, the largest (73%) are error and fraud risks due to claims continuing for children that have left Full Time Non‐Advanced Education. These estimates are based on a relatively small sample size and are therefore subject to a high degree of uncertainty.

Estimated value of Child Benefit error and fraud and as a percentage of estimated Child Benefit expenditure

	Lower bound (2022-23) £m	Central estimate (2022-23) £m	Upper bound (2022-23) £m	Lower bound (2021-22) £m	Central estimate (2021-22) £m	Upper bound (2021-22) £m
Child Benefit error and fraud	70 (0.6%)	90 (0.8%)	110 (1%)	75 (0.6%)	105 (0.9%)	135 (1.2%)

From 2023 to 2024 we will change the method of measuring Child Benefit error and fraud to a monthly sampling approach. This will make it easier to assess the duration of error and fraud as we will assess eligibility within each month, rather than the full tax year.

6. Property, plant and equipment

Due to the amount of data presented, only part of the table below is visible. Please use the scollbar at the bottom of the table to view all the columns.

	Land (note 1) (2022-23) £m	Buildings (note 1) (2022-23) £m	Accommodation refurbishments (note 1) (2022-23) £m	Office and computer equipment (2022-23) £m	Vehicles (2022-23) £m	Furniture and fittings (2022-23) £m	Assets under construction (2022-23) £m	Scientific aids (2022-23) £m	Total (2022-23) £m
Cost or valuation
At 31 March 2022	6.6	106.1	350.3	294.9	15.8	63.1	159.2	3.0	999.0
IFRS 16 adoption adjustment	–	1,163.0	(19.0)	–	1.6	–	–	–	1,145.6
At 1 April 2022	6.6	1,269.1	331.3	294.9	17.4	63.1	159.2	3.0	2,144.6
Additions	–	2.0	0.1	21.9	2.2	1.4	37.3	–	64.9
Disposals	–	(71.5)	(7.7)	(14.6)	(0.9)	(7.7)	–	(2.6)	(105.0)
Impairments	–	–	(7.2)	–	–	–	–	–	(7.2)
Reclassifications	13.8	–	119.9	16.6	0.3	11.6	(160.7)	–	1.5
Revaluations (note 2)	–	(10.2)	–	–	–	–	–	–	(10.2)
At 31 March 2023	20.4	1,189.4	436.4	318.8	19.0	68.4	35.8	0.4	2,088.6
Depreciation
At 1 April 2022	–	(76.9)	(53.1)	(173.1)	(11.1)	(12.0)	–	(2.8)	(329.0)
Charged in year	–	(70.5)	(35.0)	(37.5)	(1.8)	(6.4)	–	–	(151.2)
Disposals	–	0.2	4.3	12.5	0.9	3.7	–	2.5	24.1
Impairments	–	–	–	–	–	–	–	–	–
Reclassifications	–	–	–	–	–	–	–	–	–
Revaluations (note 2)	–	7.3	–	–	–	–	–	–	7.3
At 31 March 2023	–	(139.9)	(83.8)	(198.1)	(12.0)	(14.7)	–	(0.3)	(448.8)
Carrying amount at 31 March 2022	6.6	29.2	297.2	121.8	4.7	51.1	159.2	0.2	670.0
Carrying amount at 31 March 2023	20.4	1,049.5	352.6	120.7	7.0	53.7	35.8	0.1	1,639.8
Of the total:
Core department	20.4	1,029.8	348.0	120.6	7.0	52.2	35.6	0.1	1,613.7
Valuation Office Agency	–	19.7	4.6	0.1	–	1.5	0.2	–	26.1
Revenue and Customs Digital Technology Services Limited	–	–	–	–	–	–	–	–	–
Carrying amount at 31 March 2023	20.4	1,049.5	352.6	120.7	7.0	53.7	35.8	0.1	1,639.8
The assets are financed as follows
Owned	20.4	–	352.6	115.1	5.7	53.7	35.8	0.1	583.4
Leased	–	1,027.1	–	–	1.3	–	–	–	1,028.4
PFI contracts	–	22.4	–	5.6	–	–	–	–	28.0
Carrying amount at 31 March 2023	20.4	1,049.5	352.6	120.7	7.0	53.7	35.8	0.1	1,639.8
Amount relating to right-of-use assets (Note 8.1)	–	1,027.1	–	–	1.3	–	–	–	1,028.4
Carrying amount of property, plant and equipment net of right-of-use assets at 31 March 2023	20.4	22.4	352.6	120.7	5.7	53.7	35.8	0.1	611.4

	Land (note 1) (2021-22) £m	Buildings (note 1) (2021-22) £m	Accommodation refurbishments (note 1) (2021-22) £m	Office and computer equipment (2021-22) £m	Vehicles (2021-22) £m	Furniture and fittings (2021-22) £m	Assets under construction (2021-22) £m	Scientific aids (2021-22) £m	Total (2021-22) £m
Cost or valuation
At 1 April 2021	58.4	459.5	335.8	316.4	17.1	66.7	159.3	3.1	1,416.3
Additions	–	–	4.0	72.7	1.8	0.3	153.1	0.1	232.0
Donations	–	–	–	–	–	–	–	–	–
Disposals	(51.8)	(349.0)	(108.2)	(100.5)	(3.1)	(23.6)	–	(0.3)	(636.5)
Impairments	–	–	–	–	–	–	–	–	–
Reclassifications	–	3.8	118.7	6.3	–	19.7	(153.2)	0.1	(4.6)
Revaluations (note 2)	–	(8.2)	–	–	–	–	–	–	(8.2)
At 31 March 2022	6.6	106.1	350.3	294.9	15.8	63.1	159.2	3.0	999.0
Depreciation
At 1 April 2021	–	(274.1)	(117.7)	(244.3)	(13.1)	(19.3)	–	(2.7)	(671.2)
Charged in year	–	(5.2)	(35.4)	(26.6)	(0.7)	(6.1)	–	(0.4)	(74.4)
Disposals	–	198.6	99.9	96.2	2.7	13.4	–	0.3	411.1
Impairments	–	–	–	–	–	–	–	–	–
Reclassifications	–	(0.1)	0.1	1.6	–	–	–	–	1.6
Revaluations (note 2)	–	3.9	–	–	–	–	–	–	3.9
At 31 March 2022	–	(76.9)	(53.1)	(173.1)	(11.1)	(12.0)	–	(2.8)	(329.0)
Carrying amount at 31 March 2021	58.4	185.4	218.1	72.1	4.0	47.4	159.3	0.4	745.1
Carrying amount at 31 March 2022	6.6	29.2	297.2	121.8	4.7	51.1	159.2	0.2	670.0
The assets are financed as follows:
Owned	6.6	–	297.2	113.0	4.7	51.1	159.2	0.2	632.0
Leased	–	1.3	–	–	–	–	–	–	1.3
PFI contracts	–	27.9	–	8.8	–	–	–	–	36.7
Carrying amount at 31 March 2022	6.6	29.2	297.2	121.8	4.7	51.1	159.2	0.2	670.0
Of the total:
Core department	6.6	29.2	294.5	121.3	4.7	49.3	156.6	0.2	662.4
Valuation Office Agency	–	–	2.7	–	–	1.8	2.6	–	7.1
Revenue and Customs Digital Technology Services Limited	–	–	–	0.5	–	–	–	–	0.5
Carrying amount at 31 March 2022	6.6	29.2	297.2	121.8	4.7	51.1	159.2	0.2	670.0

Note 1: See note 1.10.2 for the accounting policy for property assets.

Note 2: See notes 1.2 and 1.10.2 for the accounting policy regarding revaluation of property, plant and equipment.

100 Parliament Street

Disposals in 2021 to 2022 include the 1 October 2021 transfer of land, building and associated assets relating to 100 Parliament Street to the Government Property Agency. The Net Book Values at the time of transfer were Land £51.8 million, Building £150.4 million and Other Assets £5.4 million.

Property revaluation

Valuations were performed by the Valuation Office Agency, an executive agency of HM Revenue and Customs, whose services include providing valuation and estate surveying services to government departments.

7. Intangible assets

Due to the amount of data presented, only part of the table below is visible. Please use the scollbar at the bottom of the table to view all the columns.

	Licences (2022-23) £m	Software (2022-23) £m	Website development (2022-23) £m	Assets under construction (2022-23) £m	Total (2022-23) £m
Cost or valuation
At 1 April 2022	87.4	4,139.0	14.4	786.1	5,026.9
Additions	19.6	–	–	560.4	580.0
Disposals	(36.8)	(48.2)	–	–	(85.0)
Impairments	–	(3.5)	–	–	(3.5)
Reclassifications	8.9	499.8	–	(510.2)	(1.5)
Revaluation (note 1)	–	287.2	–	–	287.2
At 31 March 2023	79.1	4,874.3	14.4	836.3	5,804.1
Amortisation
At 1 April 2022	(47.7)	(2,890.8)	(10.6)	–	(2,949.1)
Charged in year	(30.7)	(298.7)	(0.7)	–	(330.1)
Disposals	36.4	43.8	–	–	80.2
Impairments	–	–	–	–	–
Reclassifications	(0.4)	0.4	–	–	–
Revaluation (note 1)	–	(199.7)	–	–	(199.7)
At 31 March 2023	(42.4)	(3,345.0)	(11.3)	–	(3,398.7)
Carrying amount at 31 March 2022	39.7	1,248.2	3.8	786.1	2,077.8
Carrying amount at 31 March 2023	36.7	1,529.3	3.1	836.3	2,405.4
The assets are financed as follows:
Owned	36.7	1,529.3	3.1	836.3	2,405.4
Leased	–	–	–	–	–
PFI contracts	–	–	–	–	–
Carrying amount at 31 March 2023	36.7	1,529.3	3.1	836.3	2,405.4
Of the total:
Core department	36.7	1,523.3	3.1	786.6	2,349.7
Valuation Office Agency	–	6.0	–	49.7	55.7
Revenue and Customs Digital Technology Services Limited	–	–	–	–	–
Carrying amount at 31 March 2023	36.7	1,529.3	3.1	836.3	2,405.4

	Licences (2021-22) £m	Software (2021-22) £m	Website development (2021-22) £m	Assets under construction (2021-22) £m	Total (2021-22) £m
Cost or valuation
At 1 April 2021	103.6	3,858.7	19.9	612.1	4,594.3
Additions	20.0	–	–	526.5	546.5
Disposals	(38.9)	(301.7)	(5.5)	–	(346.1)
Impairments	–	(19.3)	–	–	(19.3)
Reclassifications	2.7	354.5	–	(352.5)	4.7
Revaluation (note 1)	–	246.8	–	–	246.8
At 31 March 2022	87.4	4,139.0	14.4	786.1	5,026.9
Amortisation
At 1 April 2021	(60.5)	(2,912.9)	(14.4)	–	(2,987.8)
Charged in year	(24.6)	(88.2)	(1.6)	–	(114.4)
Disposals	37.4	294.7	5.4	–	337.5
Impairments	–	–	–	–	–
Reclassifications	–	(1.6)	–	–	(1.6)
Revaluation (note 1)	–	(182.8)	–	–	(182.8)
At 31 March 2022	(47.7)	(2,890.8)	(10.6)	–	(2,949.1)
Carrying amount at 31 March 2020	43.1	945.8	5.5	612.1	1,606.5
Carrying amount at 31 March 2022	39.7	1,248.2	3.8	786.1	2,077.8
The assets are financed as follows:
Owned	39.7	1,248.2	3.8	786.1	2,077.8
Leased	–	–	–	–	–
PFI contracts	–	–	–	–	–
Carrying amount at 31 March 2022	39.7	1,248.2	3.8	786.1	2,077.8
Of the total:
Core department	39.7	1,241.6	3.8	763.8	2,048.9
Valuation Office Agency	–	6.6	–	22.3	28.9
Revenue and Customs Digital Technology Services Limited	–	–	–	–	–
Carrying amount at 31 March 2022	39.7	1,248.2	3.8	786.1	2,077.8

Note 1: See notes 1.2 and 1.10.3 for the accounting policy regarding revaluation of intangible assets.

8. Leases

8.1 Right-of-use assets recognised in Statement of Financial Position (SoFP)

	Departmental group Buildings (2022-23) £m	Departmental group Vehicles (2022-23) £m	Departmental group Total (2022-23) £m
Cost:
At 1 April 2022	1,164.4	1.6	1,166.0
Additions	2.0	0.5	2.5
Disposals	(71.5)	–	(71.5)
Revaluations	(0.2)	–	(0.2)
Depreciation:
At 1 April 2022	(0.1)	–	(0.1)
Charged in‑year	(67.7)	(0.8)	(68.5)
Disposal	0.2	–	0.2
Carrying amount at 31 March 2023	1,027.1	1.3	1,028.4

8.2 Lease liabilities recognised in Statement of Financial Position

Maturity analysis

	Core department and agency (2022-23) £m	Departmental group (2022-23) £m
Buildings
Not later than one year	80.8	80.8
Later than one year and not later than 5 years	351.8	351.8
Later than 5 years	1,154.0	1,154.0
Less interest element	176.7	176.7
Present Value of obligations	1,409.9	1,409.9
Vehicles
Not later than one year	0.4	0.4
Later than one year and not later than five years	1.0	1.0
Later than 5 years	–	–
Less interest element	–	–
Present Value of obligations	1.4	1.4
Total Present Value of obligations	1,411.3	1,411.3
Current portion	65.5	65.5
Non‑current portion	1,345.8	1,345.8

8.3 Amounts recognised in the Statement of Comprehensive Net Expenditure (SoCNE)

	Core department and agency (2022-23) £m	Departmental group (2022-23) £m
Variable lease payments not included in lease liabilities	(3.7)	(3.7)
Income from subleasing right‑of‑use assets	(3.4)	(3.4)
Income from short-term and low-value leases	(5.2)	(5.2)
Depreciation	68.5	68.5
Interest expense	14.6	14.6
Non‑recoverable VAT	16.3	16.3
Expense related to short‑term leases	5.2	5.2
Expense related to low‑value asset leases (excluding short‑term leases)	0.2	0.2
Total charged to the SoCNE under IFRS 16	92.5	92.5

Total charged to the SoCNE under IFRS 16 above is materially the same as would have been charged under IAS 17.

8.4 Amounts recognised in Consolidated Statement of Cash Flows

	Core department and agency (2022-23) £m	Departmental group (2022-23) £m
Total cash outflow for leases	(100.0)	(100.0)

8.5 Reconciliation from IAS 17 to IFRS 16

This table reconciles the amounts of the department’s operating lease commitments as at 31 March 2022, to the lease liabilities as at 1 April 2022 immediately following adoption of IFRS 16.

	Core department and agency (2022-23) £m	Departmental group (2022-23) £m
Closing operating leases disclosed at 31 March 2022	2,108.5	2,108.5
Leases treated as short-term on initial adoption of IFRS 16	(5.6)	(5.6)
Low-value leases on initial adoption of IFRS 16	(0.1)	(0.1)
Agreement for lease which had not commenced at 1 April 2022	(217.7)	(217.7)
Leases assessed under IAS 38 Intangibles	(6.6)	(6.6)
Adjustment for different lease term assumptions under IFRS 16	(18.5)	(18.5)
Adjustment for discounting of future cashflows	(159.5)	(159.5)
Non‑recoverable VAT	(274.2)	(274.2)
Lease liabilities on SoFP at 31 March 2022	0.6	0.6
Opening IFRS 16 SoFP liabilities at 1 April 2022	1,426.9	1,426.9

9.1 Commitments under PFI and other service concession arrangements

9.1.1 Off-Statement of Financial Position

The department has no off‐Statement of Financial Position PFI contracts.

9.1.2 On-Statement of Financial Position

The following commitments are in respect of assets that have been brought onto the department’s Statement of Financial Position under IAS 17 and IFRIC 12 Service Concession Arrangements. They comprise commitments relating to Newcastle Estates Partnership (NEP) held with DWP, St. John’s House, Bootle and also commitments in relation to IT infrastructure.

The total amount charged in the Consolidated Statement of Comprehensive Net Expenditure in respect of on‐Statement of Financial Position PFI and other service concession arrangement transactions (there were no off‐Statement of Financial Position transactions) was £97.8 million (2021 to 2022: £114.6 million). This amount is included within the figures reported in note 2 as PPP and PFI service charges.

The substance of each contract is that payments comprise 2 elements – lease payments and service elements.

Details of the obligations for lease payments

	Core department and agency (2022-23) £m	Departmental group (2022-23) £m	Core department and agency (2021-22) £m	Departmental group (2021-22) £m
Minimum lease payments:
Due within one year	11.7	11.7	12.0	12.0
Due between one year and 5 years	34.2	34.2	32.0	32.0
Due later than 5 years	–	–	13.4	13.4
Total minimum lease payments due in future periods	45.9	45.9	57.4	57.4

Details of the obligations for service elements

	Core department and agency (2022-23) £m	Departmental group (2022-23) £m	Core department and agency (2021-22) £m	Departmental group (2021-22) £m
Service elements due in future periods:
Due within one year	33.1	33.1	31.9	31.9
Due between one year and 5 years	68.5	68.5	70.4	70.4
Due later than 5 years	–	–	18.6	18.6
Total service elements due in future periods	101.6	101.6	120.9	120.9
Total commitments	147.5	147.5	178.3	178.3

9.2 Capital commitments

The capital commitments reported relate to the future cost of development of the estate and IT infrastructure.

Contracted capital commitments at 31 March not otherwise included in these financial statements

	Core department and agency (2022-23) £m	Departmental group (2022-23) £m	Core department and agency (2021-22) £m	Departmental group (2021-22) £m
Property, plant and equipment	0.2	0.2	1.6	1.6
Intangible assets	23.2	23.2	17.1	17.1
	23.4	23.4	18.7	18.7

9.3 Other financial commitments

This note discloses commitments to future expenditure, not otherwise disclosed elsewhere in the financial statements. The department has entered into non‐cancellable contracts which are not a lease, PFI contract or other service concession arrangement.

The payments to which the department are committed are as follows:

	Core department and agency (2022-23) £m	Departmental group (2022-23) £m	Core department and agency (2021-22) £m	Departmental group (2021-22) £m
Due within one year	346.3	346.3	266.6	266.6
Due between one year and 5 years	201.6	201.6	234.6	234.6
Due later than 5 years	3.3	3.3	3.5	3.5
	551.2	551.2	504.7	504.7

10. Trade receivables, financial and other assets

	Note	Core department and agency (2022-23) £m	Departmental group (2022-23) £m	Core department and agency (2021-22) £m	Departmental group (2021-22) £m
Amounts expected to be received within one year:
Personal tax credits	5.1.2	464.8	464.8	486.4	486.4
Child Benefit (note 1)		136.4	136.4	33.7	33.7
Statutory Sick Pay Rebate – (DWP)		0.3	0.3	6.9	6.9
Help to Save		9.3	9.3	14.3	14.3
Trade receivables		3.9	4.6	4.4	4.4
Receivable as intermediate lessor		5.1	5.1	–	–
Other receivables (note 2)		50.4	50.4	45.4	45.5
Deposits and advances		137.9	137.9	119.9	119.9
Value Added Tax		56.9	56.3	54.8	53.5
Prepayments – Child Benefit		37.8	37.8	55.6	55.6
Accrued income, other prepayments		133.8	133.8	169.6	171.6
RCDTS Ltd funding (note 3)		0.5	–	–	–
		1,037.1	1,036.7	991.0	991.8
Amounts expected to be received in more than one year:
Personal tax credits	5.1.2	1,129.0	1,129.0	1,194.0	1,194.0
Receivable as intermediate lessor		121.1	121.1	–	–
RCDTS Ltd funding (note 3)		–	–	7.0	–
		1,250.1	1,250.1	1,201.0	1,194.0

Note 1:This figure is net of provision for impairment amounting to £28.2 million (2021 to 2022: £28.2 million).

Note 2: This figure is net of provision for impairment amounting to departmental group: £21.2 million (2021 to 2022 departmental group: £21.7 million).

Note 3: HMRC has funded RCDTS Ltd for general working capital and investment purposes. This was previously accounted for as a long‐term loan arrangement but now reflects the planned closure of RCDTS Ltd.

11. Cash and cash equivalents

Cash and bank balances relate to the administering of the department and programme expenditure, but exclude all tax and duty revenues collected. The latter are included in the department’s Trust Statement. Cash and cash equivalents comprise cash in hand and current balances, which are readily convertible to known amounts of cash and which are subject to insignificant changes in value. Bank accounts are part of the Exchequer pyramid whereby balances are effectively held overnight with the Bank of England.

Cash and cash equivalents

	Core department and agency (2022-23) £m	Departmental group (2022-23) £m	Core department and agency (2021-22) £m	Departmental group (2021-22) £m
Balance at 1 April	4,701.5	4,706.2	9,910.2	9,914.4
Net change in cash and cash equivalent balances	(4,623.6)	(4,627.6)	(5,208.7)	(5,208.2)
Balance at 31 March	77.9	78.6	4,701.5	4,706.2
Of which balances were held at:
Government Banking Service	92.3	93.1	4,698.7	4,703.4
Commercial banks and cash in hand (note 1)	(14.4)	(14.5)	2.8	2.8
Balance at 31 March	77.9	78.6	4,701.5	4,706.2

Note 1: As at 31 March 2023, the balance reflects money being owed to the Trust Statement.

12. Trade payables, financial and other liabilities

	Core department and agency (2022-23) £m	Departmental group (2022-23) £m	Core department and agency (2021-22) £m	Departmental group (2021-22) £m
Amounts expected to be paid within one year:
Personal tax credits	377.3	377.3	392.4	392.4
Child Benefit and Tax‑Free Childcare (note 1)	393.2	393.2	171.3	171.3
Trade payables (note 2)	(2.0)	(2.0)	5.7	5.7
Taxation and social security excluding VAT	61.5	61.5	57.4	58.5
Other payables (note 1 and note 2)	88.8	88.8	68.6	69.0
Accruals – COVID‑19 support schemes	0.1	0.1	1.4	1.4
Accruals – corporation tax reliefs	9,009.3	9,009.3	8,722.8	8,722.8
Other accruals	549.1	549.4	723.7	721.3
Deferred income	16.7	16.7	20.6	20.6
Amounts issued from the Consolidated Fund for Supply but not spent at year end	72.3	72.3	4,694.5	4,694.5
Consolidated Fund Extra Receipts due to be paid to the Consolidated Fund
Received	5.6	5.6	7.0	7.0
	10,571.9	10,572.2	14,865.4	14,864.5
Liabilities relating to right‑of‑use assets	65.5	65.5	–	–
	10,637.4	10,637.7	14,865.4	14,864.5
Amounts expected to be paid in more than one year:
Accruals – corporation tax reliefs	1,814.3	1,814.3	1,782.8	1,782.8
IT Public Private Partnership	2.7	2.7	7.1	7.1
Accommodation PFI	25.0	25.0	29.6	29.6
Accommodation non‑PFI	3.6	3.6	3.5	3.5
	1,845.6	1,845.6	1,823.0	1,823.0
Liabilities relating to right‑of‑use assets	1,345.8	1,345.8	–	–
	3,191.4	3,191.4	1,823.0	1,823.0

Note 1: 2021 to 2022 payments of Child Benefits and ‘Other payables’ (administrative expenses), where cash had not yet left the bank account at the SoFP date, are now treated as payables. Previously, these payables were part of the balance for Government Banking Services (note 11).

Note 2: 2021 to 2022 ‘Trade payables’ and ‘Other payables’ have been re-represented following the reclassification of pension contributions. These were previously accounted for as ‘Trade payables’, and are now accounted for as ‘Other payables’.

12.1 Reconciliation of liabilities arising from financing activities

Due to the amount of data presented, only part of the table below is visible. Please use the scollbar at the bottom of the table to view all the columns.

	Balance at 31 March 2022 £m	Cash flows IFRS 16 adoption adjustment £m	Cash flows Financing cash flows £m	Cash flows Net cash requirement £m	Non-cash changes Acquisition £m	Non-cash changes Forex movements £m	Non-cash changes Fair value changes £m	Disposal Non-cash changes £m	Balance at 31 March 2023 £m
Supply – current year	4,694.5	–	14,194.3	(18,816.5)	–	–	–	–	72.3
From the Trust Statement	–	–	21,148.8	(21,148.8)	–	–	–	–	–
From the National Insurance Fund	(4.2)	–	258.8	(263.3)	–	–	–	–	(8.7)
Lease liabilities	45.5	1,515.1	(86.2)	–	8.2	–	–	(34.1)	1,448.5
Total liabilities from financing activities	4,735.8	1,515.1	35,515.7	(40,228.6)	8.2	–	–	(34.1)	1,512.1

	Balance at 31 March 2021 £m	Cash flows IFRS 16 adoption adjustment £m	Cash flows Financing cash flows £m	Cash flows Net cash requirement £m	Non-cash changes Acquisition £m	Non-cash changes Forex movements £m	Non-cash changes Fair value changes £m	Disposal Non-cash changes £m	Balance at 31 March 2022 £m
Supply – current year	9,908.6	–	32,149.5	(37,363.6)	–	–	–	–	4,694.5
From the Trust Statement	–	–	21,929.6	(21,929.6)	–	–	–	–	–
From the National Insurance Fund	10.7	–	240.3	(255.2)	–	–	–	–	(4.2)
Lease liabilities	221.8	–	(12.0)	–	3.0	–	0.8	(168.1)	45.5
Total liabilities from financing activities	10,141.1	–	54,307.4	(59,548.4)	3.0	–	0.8	(168.1)	4,735.8

13. Provisions for liabilities and charges

Provisions are recognised when HMRC has a present legal or constructive obligation as a result of a past event, it is probable that HMRC will be required to settle that obligation, and an amount has been reliably estimated.

Provisions for liabilities and charges

	Core department and agency (2022-23) £m	Departmental group (2022-23) £m	Core department and agency (2021-22) £m	Departmental group (2021-22) £m
Balance at 1 April	157.9	157.9	192.1	192.1
Provided in the year	52.4	52.4	48.5	48.5
Provisions not required written back	(31.4)	(31.4)	(51.2)	(51.2)
Net expenditure	21.0	21.0	(2.7)	(2.7)
Provisions utilised in the year	(19.6)	(19.6)	(31.5)	(31.5)
Balance at 31 March	159.3	159.3	157.9	157.9

13.1 Analysis of expected timing of discounted flows

	Core department and agency (2022-23) £m	Departmental group (2022-23) £m	Core department and agency (2021-22) £m	Departmental group (2021-22) £m
Not later than one year	26.0	26.0	15.6	15.6
Later than one year and not later than 5 years	124.2	124.2	92.4	92.4
Later than 5 years	9.1	9.1	49.9	49.9
Balance at 31 March	159.3	159.3	157.9	157.9

	Child Trust Fund £m	Legal claims £m	Accommodation costs £m	Other £m	Total £m
Not later than one year	0.1	21.5	3.6	0.8	26.0
Later than one year and not later than 5 years	0.3	105.6	7.4	10.9	124.2
Later than 5 years	–	4.7	3.9	0.5	9.1
Balance at 31 March	0.4	131.8	14.9	12.2	159.3

13.2 Child Trust Fund

Child Trust Fund (CTF) endowments; eligibility to which ceased on 3 January 2011, provided assistance with the funding on long‐term individual savings and investment accounts provided by approved financial institutions. A provision of £0.4 million was retained for general CTF payments amounts forecast to become payable in respect of children qualifying for CTF endowments.

13.3 Legal claims

A provision of £131.8 million (2021 to 2022: £121.6 million) has been made for costs relating to various legal claims against the department. The provision reflects all known claims, where legal advice indicates that it is probable that the claim will be successful.

13.4 Accommodation costs

A provision of £14.9 million has been made (2021 to 2022: £12.6 million) for buildings related claims giving rise to probable liabilities under tenancy agreements.

13.5 Other

Provisions relating to various other claims against the department amount to £12.2 million (2021 to 2022: £23.3 million).

14. Pension asset/liability

The Valuation Office Agency merged with The Rent Service on 1 April 2009, taking on staff who are members of the Local Government Pension Scheme. The pension assets part of the Local Government Pension Scheme are reflected in the Consolidated Statement of Financial Position.

15. Contingent liabilities

The department’s contingent liabilities are possible obligations that arise from past events and for which existence will be confirmed only by the occurrence of one or more uncertain future events not wholly within HMRC’s control. An example is legal action where the department may need to pay legal costs if it loses the case. These are not disclosed where disclosure could seriously prejudice the outcome of legal claims against the department.

The department has the following quantifiable contingent liabilities:

Legal claims – a contingent liability of £139.4 million (2021 to 2022: £131.0 million) exists for costs that may be awarded should various legal cases in which HMRC is involved be determined against the department. The contingent liability covers all such cases where the outcome is unknown or cannot be estimated reliably.

Guaranteed costs – possible liability where appointed liquidators have been guaranteed payment of their costs with a view to recovery of outstanding tax liabilities £0.7 million, 43 cases (2021 to 2022: £0.9 million, 65 cases).

Other – the department has a further number of contingent liabilities amounting to £55.7 million (2021 to 2022: £75.0 million).

16. Related‐party transactions

The department is the parent of the Valuation Office Agency as well as Revenue and Customs Digital Technology Services Limited (RCDTS Ltd). These bodies are both regarded as a related party with which the department has had various material transactions during the year.

The Valuation Office Agency has had a significant number of material transactions with other government departments. Most of these transactions have been with the Department for Levelling Up, Housing and Communities; the Department for Work and Pensions; and the Welsh Government.

RCDTS Ltd provides a managed IT service to HMRC, funding is provided from HMRC to RCDTS Ltd.

In addition, the department has had a small number of transactions with other government departments and other central government bodies.

Lucy Frazer QC MP, appointed as the Financial Secretary to the Treasury on 16 September 2021 to 7 September 2022, is married to the Chief Executive of Alexander Mann Solutions Ltd (AMS). The Financial Secretary to the Treasury is the departmental minister responsible for HMRC and VOA. AMS are contracted under a Crown Commercial Service framework arrangement to source contractors and temporary workers and was a supplier to HMRC prior to Lucy Frazer’s appointment as the Financial Secretary to the Treasury. In the financial year 2022 to 2023, HMRC group paid £196.3 million to AMS (2021 to 2022: £177.0 million). The majority of this cost relates to payments to agency staff, but an element covers the services provided by AMS to source these temporary workers. The Financial Secretary has no role in the decisions relating to this expenditure.

No Board member, key manager or other related party has undertaken any material transactions with the department during the year. Details of compensation for key management personnel can be found in the remuneration report within the accountability section.

17. Entities within the departmental boundary

The Valuation Office Agency is a supply‐financed agency. Its Annual Report and Accounts are published at GOV.UK

Revenue and Customs Digital Technology Services Limited is an Arms Length Body. Its Annual Report and Accounts are published at GOV.UK.

18. Investments and loans in other public sector bodies

The department holds no loans, public dividend capital or other interests in public bodies outside the departmental boundary.

19. Events after the reporting period date

We recognise as material non‐adjusting events after the reporting date:

As published on 13 March 2023, qualifying low‐income households in England, Wales, Scotland and Northern Ireland will receive a Cost of Living Payment of £900. This will be paid in 3 instalments for most people on tax credits and no other low‐income benefits. The initial instalment will be £301 paid between 2 and 9 May 2023, the second instalment of £300 will be paid during autumn 2023 and the third instalment of £299 will be paid during spring 2024. The payments are designed to be unequal to minimise fraud risks from those who may seek to exploit this system.

Cost of Living Payments 2023 to 2024 – GOV.UK

These accounts have been authorised for issue by the Accounting Officer on the same date as the Comptroller and Auditor General’s Audit Certificate.

Glossary to the financial statements

Accrued Revenue Payable (ARP)

There are 3 distinct types of ARP. These comprise:

• firstly, amounts due to traders that have an established revenue repayment claim relating to the financial year, but the date the claim is received is after the end of the reporting period
• secondly, amounts of receivables and accrued revenue receivable that will, when received, be passed to a third‐party, for example national insurance contributions due to the National Insurance Funds and National Health Services
• thirdly, amounts in respect of Corporation Tax and Income Tax likely to be repayable by HMRC pending finalisation of tax payer liabilities.

Accrued Revenue Receivable (ARR)

ARR represents taxes and duties relating to the financial year that are not yet due or received from taxpayers, where these have not been included in receivables.

Administration costs

These relate to the internal administration costs of running the department, for example human resources, finance, estates management, and includes both costs and associated operating income.

Amortisation

This is the method of spreading the cost of a non‐current intangible asset over its useful life.

Annually Managed Expenditure (AME)

Departments are allocated a separate annually managed spending. AME is more volatile than DEL expenditure and therefore is more difficult to explain or control as it is spent on programmes which are demand‐led – such as tax credits or Child Benefit.

Appropriation (to Resource Accounts)

These are amounts transferred to the Resource Accounts for the purposes of financing tax reliefs.

CFER

Consolidated Fund Extra Receipts. This is income which the department is not entitled to retain and it is passed over to HM Treasury.

Consolidated Fund

The Consolidated Fund is the government’s general bank account at the Bank of England. Payments from this account must be authorised in advance by the House of Commons.

Consolidated Statement of Cash Flows (CSoCF)

A statement that reports the cash flows during the financial year from operating, investing and financing activities.

Consolidated Statement of Changes in Taxpayers’ Equity (CSoCTE)

A statement which explains the movements in the department and departmental group’s net assets between the start and end of a financial year.

Consolidated Statement of Comprehensive Net Expenditure (CSoCNE)

This is the performance statement, the equivalent of the ‘Profit and Loss’ Account and Statement of Total Recognised Gains and Losses. It reports a summary of the departmental group’s expenditure and income for the financial year, along with its gains and losses.

Consolidated Statement of Financial Position (CSoFP)

Previously known as the Balance Sheet, it provides a snapshot of the assets and liabilities of the group as at the end of the reporting period.

Contingent liabilities

Contingent liabilities are either present obligations that arise from past events where a payment to settle is less than probable, or possible obligations that arise from past events and whose existence will be confirmed only by the occurrence of one or more uncertain future events not wholly within HMRC’s control HMRC’s contingent liabilities comprise the latter. An example is legal action where the department may need to pay legal costs if it loses the case. These are not disclosed where disclosure could seriously prejudice the outcome of legal claims against the department.

Current assets

A current asset is cash and any other entity asset that will be turning to cash within one year from the department’s reporting date.

Current liabilities

A current liability is an obligation that is due within one year of the department’s reporting date.

Deferred revenue

This includes duties and taxes paid in the current year that relate to future accounting periods.

Departmental Expenditure Limits (DEL)

This is the spending budget that is allocated to and spent by government departments. This amount, and how it is split between government departments, is set at Spending Reviews on a 3 yearly basis. It is normally categorised as Capital DEL and Resource DEL. Departmental expenditure includes the running of the services and the everyday cost of resources such as staff. The DEL limit is tightly controlled by HM Treasury. A department’s expenditure is deemed to be DEL unless HM Treasury has specified otherwise.

Depreciation

This is the method of spreading the cost of a non‐current tangible asset over its useful life.

Disbursement (to Resource Accounts)

This is the transfer of amounts relating to tax reliefs to the Resource Accounts.

Excess Vote

If a department breached either the total resource‐based estimates or the cash limits this will result in an Excess Vote.

Finalisation (personal tax credits)

This is the process, occurring after the financial year end, by which claimants confirm their actual income and other circumstances for the previous award year. The award is finalised for the award year that has ended and appropriate adjustments for under or overpayments of tax credits are made.

Financial Reporting Manual (FReM)

This is the HM Treasury technical accounting guide to the preparation of financial statements for government.

IAS

International Accounting Standards (see IFRS below).

IASB

International Accounting Standards Board.

IFRIC

The IFRS Interpretations Committee (IFRIC) develop guidance on appropriate accounting treatment of particular issues. They are approved by the International Accounting Standards Board (IASB).

IFRS

International Financial Reporting Standards (also including International Accounting Standards). The Financial Statements of Government adopted IFRS from 2009 to 2010 as the basis for preparation of their accounts which were previously prepared under UK based Generally Accepted Accounting Practice (UK GAAP).

Impairment of accrued revenue receivables

The process of reducing accrued revenue receivables to a fair value that is likely to be collected.

Impairment of receivables – (formerly known as ‘Provision for Doubtful Debt’ [PDD])

The process of reducing receivables to a fair value that is likely to be collected.

Import One Stop Shop (IOSS)

Monthly VAT reporting and payment system for imports.

Indemnities

Will be ordered by the court, on behalf of the insolvency practitioner or solicitors, in case the department has incorrectly wound up a viable business. These indemnities are unlimited, although we calculate a likely value for reporting purposes. The calculation is based on the likely amount that a business could be awarded in proceedings and the likelihood of a successful claim for that amount being made. The indemnity will be in place until the case is settled and the liquidation confirmed.

Intangible assets

These are non‐physical assets, for example, developed computer software and website development costs.

Losses

Losses are made up of remissions and write‐offs. Remission is the process used to identify and separate receivables which the department has decided not to pursue, for example on the grounds of value for money. Write‐offs are receivables that are considered to be irrecoverable, for example because there is no practical means for pursuing them.

Managing Public Money

This is a HM Treasury publication giving guidance on how to handle public funds.

Negative tax

This occurs where the amount of the tax credit is less than or equal to the recipient’s tax liability.

Net cash requirement

The amount of funding that the department is entitled to draw down from the Consolidated Fund.

Non-current assets

An asset that is not likely to turn to cash or cash equivalent within one year of the department’s reporting date.

Non-current liabilities

A liability not due to be paid within one year of the department’s reporting date.

Non-voted expenditure

Expenditure which is not subject to annual Parliamentary approval and in HMRC’s case mainly relates to tax credits and costs in respect of the National Insurance Fund.

One Stop Shop (OSS)

A quarterly VAT reporting and payment system for distance selling.

Payables

Are amounts recognised as owing by the department at the end of the reporting period but payment has not been made.

Payments of entitlement

This is the element of a relief which is in excess of the recipient’s tax liability.

Private Finance Initiative (PFI)

Is a way of creating public‐private partnerships (PPPs) by funding public infrastructure projects with private capital.

Programme costs

These relate to the costs incurred in the delivery of front line services such as the parts of the department which interact directly with our external customers. In addition it includes the payments made for tax credits, Child Benefit and other disbursements by the department. All expenditure and associated operating income for the Valuation Office Agency is treated as Programme.

Provisions for liabilities

These are recognised when HMRC has a present legal or constructive obligation as a result of a past event, it is probable that HMRC will be required to settle that obligation and an amount has been reliably estimated.

Quarterly Instalment Payments (QIPs)

Corporation Tax for large onshore companies paid by 4 quarterly instalment payments each year..

Receivables

These represent all amounts recognised as owing to the department at the end of the reporting period but payment has not been received. A proportion of the receivable balance relates to revenue that is not yet been received.

Receivable days

The average number of days it takes to receive payment. The department calculates Receivable Days as, ‘total receivables/total revenue x 365 days’.

Resource Accounts

The financial statements which report the cost of running the department and include payments of tax credits, Child Benefit and certain reliefs.

Statement of Parliamentary Supply (SoPS)

This is the primary parliamentary accountability statement and is unique to central government financial reporting. It reports the total outturn (how much has been spent) for the departmental group compared with the amounts approved by Parliament in the Estimate, in the various categories of expenditure.

Supply Estimates process

This is the means by which a government department seeks funds from Parliament and authority is given for departmental expenditure each year.

Suspended debt

A suspended debt is an indirect tax, penalty or surcharge that is under challenge, dispute or appeal. The value is currently included in the receivables but excluded from the debt balance as currently no recovery action can be taken.

Taxation period

This is the financial year ended 31 March and represents the period over which taxable events occur that generate net tax revenues recognised in the Statement of Revenue, Other Income and Expenditure.

Tax debt

The amount of tax that is overdue for payment and legally enforceable to be collected. Tax debt is included within the Trust Statement receivables balance. ‘Receivables’ is defined earlier in this glossary.

Three Instalment Payments (TIPs)

Corporation Tax for North Sea companies paid by 3 instalment payments each year.

Trust Statement

The financial statement which reports the revenues, expenditure, assets and liabilities related to taxes and duties collected by the department.

UK GAAP

The generally accepted accounting principles in the UK which are the body of accounting standards and guidance published by the Financial Reporting Council.

Voted expenditure

Monies voted to the department by Parliament to cover our expenditure, following the submission of our Estimates. Parliament votes annually on each government department’s future expenditure.

Annex 1: Arm’s-length bodies

Information on arm’s length bodies is shown within the Principal Accounting Officers report, Accountability relationships with arm’s length bodies. The following bodies are those within our accounting boundary for 2022 to 2023 that contribute to the departmental group.

Due to the amount of data presented, only part of the table below is visible. Please use the scollbar at the bottom of the table to view all the columns.

	Total operating income (note 2) £’000	Total operating expenditure £’000	Net expenditure for the year (including financing) £’000	Number of employees (Permanently employed staff)	Staff costs £’000 (Permanently employed staff)	Number of employees (Other staff) (note 1)	Staff costs £’000 (Other staff) (note 1)
HMRC	(228,969)	40,373,437	40,144,468	62,725	3,130,137	508	18,874
RCDTS Ltd	–	65,014	65,014	560	12,847	88	–
VOA	(44,052)	238,499	194,447	3,391	167,390	349	14,534

Note 1: “Other staff” includes Fixed Term Appointments and Temporary Fixed Term Appointments. The RCDTS Limited ‘Other staff’ relates to contingent labour and the expenditure is reported under goods and services.

Note 2: As 100% of the income generated by RCDTS Limited is from HMRC, the RCDTS income is offset against HMRC’s expenditure upon consolidation. This explains the reason for the nil figure under the RCDTS Limited income column.

Annex 2: Statistical Tables

This table provides further detail by category on HMRC spending.

Table 1: Total departmental spending (£000)

Due to the amount of data presented, only part of the table below is visible. Please use the scollbar at the bottom of the table to view all the columns.

	2018-19 Outturn	2019-20 Outturn	2020-21 Outturn	2021-22 Outturn	2022-23 Outturn	2023-24 Plans	2024-25 Plans
Resource DEL (note 1)
HMRC administration	3,483,718	3,813,617	4,335,323	4,570,843	5,199,284	5,182,044	4,601,235
VOA administration	142,738	164,797	141,100	143,995	132,548	189,939	200,876
Utilised provisions	42,918	54,597	96,219	31,502	19,614	35,000	35,000
National Insurance Fund	282,548	254,332	222,649	251,344	259,413	233,000	233,000
Cost of Living	–	–	–	–	717,872	735,000	–
COVID-19	–	–	–	719,062	-110	–	–
Total Resource DEL	3,951,922	4,287,343	4,795,291	5,716,746	6,328,621	6,374,983	5,070,111
Of which:
Staff costs	2,360,289	2,602,310	2,778,298	2,862,995	3,265,139	3,279,415	3,126,024
Purchase of goods and services	1,199,928	1,207,607	1,494,300	1,842,658	1,903,404	1,780,758	1,735,682
Income from sales of goods and services	-201,710	-204,751	-288,573	-269,435	-268,378	-343,321	-347,536
Current grants to persons and non-profit bodies (net)	1,714	6,277	52,638	743,791	720,321	737,863	2,277
Current grants abroad (net)	1,418	1,287	840	1,025	1,043	–	–
Subsidies to private sector companies	387	–	–	–	–	–	–
Rentals	208,542	296,210	326,652	277,172	159,943	122,147	97,145
Depreciation (note 2)	288,680	296,137	310,833	174,352	478,237	701,190	379,428
Change in pension scheme liabilities	1,324	-210	-210	–	–	–	–
Other resource	91,350	82,476	120,513	84,188	68,912	96,931	77,091
	3,951,922	4,287,343	4,795,291	5,716,746	6,328,621	6,374,983	5,070,111
Resource AME (note 1)
Child Benefit	11,475,319	11,487,105	11,541,713	11,420,034	11,595,575	12,896,922	13,036,525
Tax Free Childcare	115,730	245,524	253,047	428,406	494,401	618,352	664,277
Providing payments in lieu of tax relief to certain bodies	97,388	116,035	140,071	130,003	7,973	179,378	180,000
Lifetime ISA	251,019	225,808	346,120	418,943	436,809	540,474	527,292
Help to Save	–	–	–	20,361	53,202	43,819	42,850
HMRC administration	93,672	82,016	52,212	8,072	33,808	30,000	30,000
VOA – Payments of rates to LAs on behalf of certain
bodies	66,785	83,886	75,646	78,061	64,199	84,400	84,400
VOA administration	7,094	1,523	1,184	1,010	1,082	2,000	2,000
Utilised provisions	-42,920	-54,607	-96,223	-31,510	-19,615	-35,000	-35,000
Personal tax credit	22,288,296	18,331,274	15,063,222	10,605,481	8,834,945	8,768,082	3,961,547
Other reliefs and allowances	5,879,196	10,103,140	10,698,573	11,696,601	12,560,346	12,337,164	12,645,593
COVID-19	–	–	81,233,264	16,543,682	-132,476	5,330	–
Total Resource AME	40,231,579	40,621,704	119,308,829	51,319,144	33,930,249	35,470,921	31,139,484
Of which:
Purchase of goods and services	71,679	89,110	95,721	83,492	68,188	89,000	89,000
Income from sales of goods and services	-4,894	-5,224	-4,535	-4,412	-3,918	-4,600	-4,600
Current grants to persons and non-profit bodies (net)	34,231,898	30,418,746	26,770,567	39,076,439	21,426,819	23,051,454	18,417,029
Subsidies to private sector companies	5,876,916	10,100,691	88,673,903	12,186,849	12,423,956	12,338,067	12,641,055
Depreciation (note 2)	477	1,290	1,785	9,514	12,752	–	–
Take up of provisions	100,289	82,249	50,315	-2,222	22,067	30,000	30,000
Release of provision	-42,920	-54,607	-102,416	-31,299	-19,615	-35,000	-35,000
Change in pension scheme liabilities	–	–	–	–	–	2,000	2,000
Other resource	-1,866	-10,551	3,823,489	783	–	–	–
	40,231,579	40,621,704	119,308,829	51,319,144	33,930,249	35,470,921	31,139,484
Resource budget (note 1)
Total Resource DEL	3,951,922	4,287,343	4,795,291	5,716,746	6,328,621	6,374,983	5,070,111
Total Resource AME	40,231,579	40,621,704	119,308,829	51,319,144	33,930,249	35,470,921	31,139,484
Total Resource Budget	44,183,501	44,909,047	124,104,120	57,035,890	40,258,870	41,845,904	36,209,595
Of which:
Depreciation (note 2)	289,157	297,427	312,618	183,866	490,989	701,190	379,428
Capital DEL (note 3)
HMRC administration	353,476	328,666	529,830	643,880	524,552	618,485	458,188
VOA administration	8,742	6,362	6,746	20,650	31,848	8,663	10,640
Total Capital DEL	362,218	335,028	536,576	664,530	556,400	627,148	468,828
Of which:
Purchase of assets	387,376	420,306	677,700	982,938	644,473	710,149	485,479
Income from sales of assets	-25,158	-85,278	-141,124	-318,408	-88,073	-83,001	-16,651
	362,218	335,028	536,576	664,530	556,400	627,148	468,828
Capital AME (note 3 and note 5)
Child Benefit	2	10	4	7	1	10	–
HMRC administration (note 4)						99	–
Total Capital AME	2	10	4	7	1	109	–
Of which:
Capital grants to persons and non-profit bodies (net)	2	10	4	7	1	10	–
Depreciation						99	–
	2	10	4	7	1	109	–
Capital budget (note 3)
Total Capital DEL	362,218	335,028	536,576	664,530	556,400	627,148	468,828
Total Capital AME	2	10	4	7	1	109	–
Total Capital Budget	362,220	335,038	536,580	664,537	556,401	627,257	468,828

Note 1: Outturn values are consistent with those reported in SoPS 1.1.

Note 2: Includes impairments.

Note 3: Outturn values are consistent with those reported in SoPS 1.2.

Note 4: HMRC administration included Capital AME due to the introduction of IFRS16.

Note 5: AME figures are usually set at Main Estimate annually. Future years budget not yet available.

Note: The totals may differ to the information in the Statement of Parliamentary Supply due to rounding.

Note: Prior year figures may differ slightly to the published account following revisions after certification.

This table shows HMRC administration expenditure, utilised provisions and the administration element of the National Insurance Fund. This table does not include programme expenditure.

Table 2: Administration budget (£000)

Due to the amount of data presented, only part of the table below is visible. Please use the scollbar at the bottom of the table to view all the columns.

	2018-19 Outturn	2019-20 Outturn	2020-21 Outturn	2021-22 Outturn	2022-23 Outturn	2023-24 Plans	2024-25 Plans
Resource DEL
HMRC administration	773,467	767,280	896,424	828,681	948,413	1,031,471	1,013,697
Utilised provisions	7,057	2,208	–	–	–	16,000	16,000
National Insurance Fund	59,264	51,552	50,536	56,030	54,712	53,000	53,000
Total administration budget	839,788	821,040	946,960	884,711	1,003,125	1,100,471	1,082,697
Of which:
Staff costs	335,364	401,196	467,299	437,580	474,413	579,627	570,265
Purchase of goods and services	341,999	245,209	338,798	374,643	450,180	450,246	457,980
Income from sales of goods and services	-35,670	-34,256	-94,044	-94,887	-59,763	-93,222	-91,716
Current grants to persons and non-profit bodies (net)	1,671	1,660	1,661	1,642	1,659	2,063	2,030
Rentals	94,795	132,956	149,860	110,563	39,512	24,896	24,494
Depreciation	76,452	63,784	52,274	30,933	86,522	124,831	107,808
Other resource	25,177	10,491	31,112	24,237	10,602	12,030	11,836
	839,788	821,040	946,960	884,711	1,003,125	1,100,471	1,082,697

Note: The totals may differ to the information in the Statement of Parliamentary Supply due to rounding.

Note: Prior year figures may differ slightly to the published account following revisions after certification.

Annex 3: Sustainability data tables

The data in this annex meets the requirements of the HMT reporting guidance and is in addition to the progress reported against the Greening Government Commitments in the Supporting a more sustainable future section of Strategic objective 5 in the Performance analysis.

Greenhouse gas emissions

	2020-21	2021-22	2022-23
Non-financial indicators (tCO2e, 000s)
Total gross emissions	50.65	38.87	38.54
Total net emissions	29.23	24.65	25.99
Gross emissions Scope 1 and 2	50.04	37.03	32.85
Gross emissions Scope 3 (business travel)	0.61	1.84	5.69
Energy consumption (kWh, 000s)
Electricity: non-renewable	3,991	3,762	2,872
Electricity: renewable	84,586	61,537	59,491
Gas	123,598	89,768	88,635
Oil	9,222	8,709	4,828
Whitehall District Heating	3,003	3,373	N/A
Enviroenergy District Heating	3,973	4,207	N/A
Stratford District Heating	4,132	5,289	6,289
Sheffield District Heating	538	N/A	N/A
Travel breakdown (tCO2e, 000s)
Road	0.88	1.89	2.75
Rail	0.07	0.37	1.86
Air (domestic and overseas)	0.22	0.62	2.23
Financial indicators (£000)
Expenditure on energy	22,061	24,540 (note 1)	24,556
Expenditure on accredited offset purchases	–	–	–
Expenditure on official business travel	1,735	6,098	20,405

Waste

	2020-21	2021-22	2022-23
Non-financial indicators (Tonnes 000s)
Total waste	4.93	4.80	4.03
Waste:
Landfill	0.03	0.01	0.002
Recycled/composted	4.19	3.64	2.70
Incinerated/energy from waste (note 2)	0.72	1.15	1.33
Financial indicators (£000s)
Total waste	279	270	226
Waste:
Landfill	4	1	0.28
Recycled/composted	235	204	151
Incinerated/ energy from waste	40	65	75

Note 1: This has been amended from the figure published in the 2021 to 2022 Annual Report and Accounts.

Note 2: In 2021 to 2022 a small amount of waste (0.22%) was incinerated without energy recovery.

Food waste

	2022-23 (Tonnes)
Reuse
Redistribution for human consumption	–
Animal feed	–
Bio-based materials/Biochemical processing	–
Other reuse	–
Waste
Anaerobic Digestion/Codigestion	28.18
Composting/Aerobic processes	–
Incineration/Controlled combustion	–
Land application	–
Landfill	–
Sewer/Wastewater treatment	–
Refuse/Discards/Litter (incl. dumping and unmanaged disposal)	–
Other	–
Total food waste	28.18

Finite resource consumption – water

	2020-21	2021-22	2022-23
Non-financial indicators
Water consumption Supplied (m3 000s)	283	239	211
Water consumption Supplied (m3/FTE)	3.69	3.80	3.12
Financial indicators (£000s)
Water consumption Supplied	1,517	1,305 (note 1)	1,270

Copier paper purchased

	2020-21	2021-22	2022-23
Non-financial indicators (A4 reams equivalent 000s)
	23	23	36
Financial indicators (£000s)
	67	69	154

Note 1: This has been amended from the figure published in the 2021 to 2022 Annual Report and Accounts.

Air travel breakdown

Due to the amount of data presented, only part of the table below is visible. Please use the scollbar at the bottom of the table to view all the columns.

Non-financial indicators	No (2020-21)	Kms (2020-21)	mtCO2e (2020-21)	No (2021-22)	Kms (2021-22)	mtCO2e (2021-22)	No (2022-23)	Kms (2022-23)	mtCO2e (2022-23)
Total domestic	782	362,751	46.87	3,335	1,488,241	193.51	13,359	5,505,928	715.94
Total international	282	903,857	170.48	636	2,428,117	418.58	2,400	6,488,016	1,510.17
Short haul economy	148	212,805	32.56	329	585,225	88.38	1,127	1,107,488	167.25
Short haul premium economy	–	–	–	–	–	–	–	–	–
Short haul business	–	–	–	4	11,108	2.52	27	34,147	7.73
Short haul 1st	–	–	–	–	–	–	–	–	–
Long haul economy	104	486,355	71.08	146	1,244,143	183.97	632	2,978,393	440.42
Long haul premium economy	16	104,797	24.50	14	139,810	32.37	54	310,958	73.57
Long haul business	14	99,900	42.34	14	111,233	47.70	332	1,649,887	707.50
Long haul 1st	–	–	–	–	–	–	18	78,385	46.36
International non-UK	N/A	N/A	N/A	129	339,598	63.64	210	328,758	67.34

Audio Conferences

	2020-21	2021-22	2022-23
Total number of audio conferences	5,663,712	6,799,672	11,788,133

Demonstrating reductions per FTE

We have compared our footprints per FTE in 2022 to 2023 against the footprints per FTE in 2017 to 2018. There were positive improvements across all the Greening Government Commitment target areas.

Comparisons of footprints per FTE 2017 to 2018, and 2022 to 2023

Greening Government Commitment	2017 to 2018 footprints per FTE	2022 to 2023 footprints per FTE
Greenhouse gas emissions (tonnes of CO2e)	1.16	0.55
Direct building emissions (tonnes of CO2e)	0.32	0.26
Domestic flight emissions (tonnes of CO2e)	0.04	0.01
Waste (tonnes)	0.12	0.06
Water (m3)	7.12	3.12
Paper (reams of A4)	4.72	0.53

Annex 4: Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013 (Northern Ireland 1997): reports to the Health and Safety Executive

RIDDOR incidents	2022-23	2021-22
Specified injuries to workers	8	7
Occupational diseases	1	1
Fatal injuries	0	0
Dangerous occurrences	2	0
Over 3 day incapacitation of worker (Northern Ireland)	1	0
Non-fatal accidents to non-workers	0	0
Over 7 day incapacitation of worker	11	10
Total	23	18
Non-RIDDOR incidents
Stress	613	471
Slips/trips/falls	103	49
Violence and verbal abuse	222	126
Environmental	44	22
Road traffic accident	82	54
Bite (animal/insect)	8	1
Burns	33	10
Collision with a moving/fixed object	74	48
Cut	13	6
Manual handling	11	4
Exposure to hazardous substances	6	4
Asbestos, lead, ionising radiation	0	0
Noise (note 1)	8	8
Electrical	17	9
Musculoskeletal	65	46
Other (note 2)	23	32
Total	1,322	890

Note 1: The ‘Acoustic’ category has been renamed ‘Noise’.

Note 2: Health and Safety incident categories are selected by the investigating officer on the report form. ‘Other’ is selected where none of the main categories are appropriate.

Annex 5: Independent Auditor’s reports

The Trust Statement Audit Report of C&AG to the House of Commons

The Resource Accounts Certificate and Report of C&AG to the House of Commons

Report by the Comptroller and Auditor General