Policy paper

COVID-19: how HMRC will continue to support customers and the economy

Updated 9 November 2021

Throughout the pandemic, HMRC’s priority has been to deliver the government support to protect people’s livelihoods and help businesses get through this difficult time financially. As the country learns to live with COVID-19, the country will face serious economic challenges. We will support businesses and individuals to adapt to a changing economy, while continuing to help fund our public services.

It will take time for the UK to recover and rebuild the economy. Our purpose is to collect the money that pays for our public services and pay out the correct financial support to those in need. We will carry out this vital work in a way that is sensitive to any customers’ altered needs and capabilities.

This issue briefing sets out how we will work with our customers and stakeholders over the coming months. We are committed to being as open and as transparent as possible when we make any changes.

Support schemes and policy changes

HMRC’s work has been at the centre of the government’s response to COVID-19. Whether that’s by administering the support schemes, changing our operational approach or through more than 80 other temporary policy changes.

Through the Coronavirus Job Retention Scheme and the Self-Employment Income Support Scheme, we have supported millions of people. We have a dedicated GOV.UK page with more statistics on the Coronavirus Job Retention Scheme, the Self-Employment Income Support Scheme, Eat Out to Help Out and the VAT payments deferral scheme.

HMRC’s priority in administering the support schemes was to get money to the people who need it as quickly as possible. For the Coronavirus Job Retention Scheme and the Self-Employment Income Support Scheme, customers went from making a claim to having the money in their accounts in 6 working days.

While doing this, we needed to protect the schemes against abuse from organised criminal attacks, inflated claims and other non-compliance. We designed these schemes in a way that reduced the likelihood of mistakes happening, and removed opportunities for fraud. Our data and risking experts checked claims for signs of criminal activity and blocked the suspicious claims. This saw us block nearly 49,000 claims before they could be paid out.

Where honest mistakes happen, we’ve helped customers put it right, but are taking tougher action on deliberate fraudulent behaviour. Our analysts are using multiple data sources to quickly identify discrepancies. We are seeing clear patterns that make fraud easier to spot.

In March 2021, the government announced it was investing £100 million to expand the scope of our compliance work.

The Taxpayer Protection Taskforce will see us commit more than 1,200 people to recovering money paid out to incorrect and fraudulent claims. We have will open more than 30,000 one-to-one enquiries into COVID support scheme claims and we expect the taskforce to recover £1 billion over the next 2 years.

We continue to encourage businesses and individuals to come forward and self-correct if they have made a mistake in their claim. Where people have made an honest mistake, we want to help people correct them.

No one who has tried to do the right thing but made an honest mistake has any need to be concerned, as long as they work with us to put it right. Where customers don’t take the opportunity to correct and don’t respond to our prompts, we will carry out investigations into their affairs.

As well as these support schemes, we implemented more than 80 other temporary policy changes or clarifications to respond to the impact of COVID-19, including letting taxpayers defer payments of Income Tax and VAT. As the situation in the country evolves, we are reviewing which measures are still needed, which are no longer necessary and which we should keep as a permanent improvement to the way we operate the tax system.

Providing this support has been resource intensive and this has had some implications for our day-to-day operation. We have strived to maintain our levels of customer service, and customer satisfaction has remained high; however, we have had to ask for our customers’ ongoing patience while waiting to get through to our tax helplines.

The quickest way to contact us is through our digital channels: customers can use their personal or business tax account, the HMRC App, or webchat. In 2020 to 2021, around 85% of those who used our digital services were satisfied. See more information about how we have performed against our customer service targets.

Reforming the tax system

COVID-19 has emphasised the need for the tax system to be more adaptable, resilient and responsive. The government has announced a 10-year strategy for building a trusted, modern tax administration system.

Our changes will ensure HMRC has the right data to develop new policies and improve the future targeting of incentives and reliefs. Modern digital systems and real-time information will help people to get their tax right first time and make it much harder for people to avoid paying the tax due.

HMRC has consulted on how the tax administration framework could be reformed to support a trusted, modern tax administration system.

Principles for the next steps

Over time, as the threat of the virus recedes, the country will slowly return to a steady state – a ‘new normal’ – and HMRC’s activities are no different. We will of course keep the situation under constant review to ensure we aren’t moving too quickly or doing anything which could unnecessarily jeopardise the nation’s economic recovery as we continue to adapt to the impact of the pandemic.

We are following some key principles to make sure we continue to support the individuals and businesses of the United Kingdom, while protecting the tax system and bringing in the money to fund the country’s vital public services.

Our approach will be to collect the tax due in a way that recognises the very real needs and challenges that businesses and individuals face.

We will communicate openly and transparently, to give people as much certainty as possible.

It is more important than ever that we are professional, fair and even-handed in the way we interact with our customers.

Where we have introduced temporary administrative arrangements that have improved the customer experience or created operational improvements, we will try to build on these changes to deliver long-term sustainable solutions.

It is important that businesses plan ahead and we are encouraging our customers to go digital to make this easier, by using services such as Making Tax Digital.

Tax collection and benefit payments

Taxpayers and claimants should continue to file their tax returns and claim forms or renewals on time. Coronavirus grants and support payments, including the Coronavirus Job Retention Scheme and the Self-Employment Income Support Scheme, paid to businesses should be included in tax returns.

Find out if you need to include a COVID-19 grant or support payment on your tax return.

While we appreciate there will be many competing priorities for businesses as the economy continues to adapt, customers should prepare now to meet their future tax obligations.

It is vital that people contact us if they can’t meet the deadlines; these penalties are sometimes automated, so we will only know if a customer has a reasonable excuse if they inform us.

Compliance checks

A ‘compliance check’ allows us to investigate someone’s tax affairs if we think they may not be paying the right amount of tax. Our approach is to do this in a way that recognises the very real needs and challenges that businesses and individuals may be facing.

Over the coming months, our compliance approach will continue to be informed by customers’ individual circumstances, particularly if they are still severely affected by the effects of the pandemic.

We know people may not be able to respond immediately, so we will make it clear that they will not be penalised for any delay as a result of the outbreak, although interest will still apply on any unpaid tax.

It will be difficult for us to identify all customers severely affected and we may not always get this right, but we will consider individual circumstances when taxpayers share these with us.

One of our vital roles is to make sure that businesses who pay the right tax aren’t disadvantaged or undercut by competitors cheating the system, or who make errors and pay less tax as a result. This is particularly important as those businesses try to adapt and recover from the impact of the pandemic.

It is vital that we continue to take robust action to protect customers and the tax system from harm, so we will continue to prioritise tackling fraud and other tax crime.

Debt

We are continuing to take a compassionate and common-sense approach to dealing with customers with tax debts and those who are concerned about their ability to meet their tax obligations.

We will continue to support customers who get in touch with us, for example by offering them affordable and sustainable payment plans called Time to Pay arrangements. We typically have more than half a million arrangements in place at any one time, and more than nine out of ten of them complete successfully. We have tailored our communications to reflect the current exceptional circumstances and are signposting the extra support available.

We are mindful that some customers will remain in uncertain financial circumstances for a period of time, and we are ready to provide them with support. Most tax debts incur interest, so we encourage people to get in touch if they think they won’t be able to pay their tax liabilities on time. We want to support customers out of debt to help them get back on track with their tax affairs and avoid debts getting bigger.

As the country slowly returns to a steady state, we are restarting our debt collection work - you can find out more in our Collecting tax debts as we emerge from coronavirus (COVID-19) policy paper. Where customers are unwilling to discuss a payment plan, or where a customer ignores our attempts to contact them, we may start the process of collecting the debt using our enforcement powers. We take great care to use these powers carefully and fairly, and only as a last resort. We will do everything we can to help businesses with temporary cash-flow issues to survive as the economy grows.

From October 2021, the moratorium on company winding-up petitions has been partly lifted, so we will begin to take insolvency action against some companies, where appropriate. We only petition for insolvency after considering all alternative routes to recovery. It usually applies only where a customer’s debt position is deemed to be non-recoverable, where they have actively gone out of their way to avoid paying what they owe, or where we suspect fraud. We will give companies at least 21 days to respond with a proposal for repayment before proceeding, but it is right that we act where a customer does not engage with us about its tax debts or continues to build up unpaid tax with no viable plan for paying their tax.

We do not want people to worry: we are always ready to help those who want to settle their affairs, and we will be understanding and sympathetic. If customers are worried about payment, they should call the dedicated Payment Support Service as soon as possible.