Inland Revenue has no plans to recover £39billion of Covid debt, MPs say Business

HMRC has been accused of not having a ‘clear plan’ to recover £39billion in unpaid tax after the mountain of debt rose dramatically during the pandemic.

Public Accounts Committee MPs say the tax authorities must urgently step up plans to recover the missing money, which is particularly crucial at a time when public finances and household living standards are under strain test.

They said: ‘We are not convinced that HMRC has a clear plan to tackle the mountain of tax debt that has accumulated during the pandemic.

MPs have called for a detailed plan within the next six months to show targets, delisting decisions and contingency arrangements for future fundraising issues.

The pile of unpaid taxes rose from £16billion before Covid to a peak of £67billion in August 2020, after the first lockdown.

It has since fallen to £39billion, but MPs fear ‘the remaining debt is likely to be the hardest to collect and repayment rates have slowed’.

Dame Meg Hillier, chair of the committee, said the tax authorities had the tricky job of making sure they didn’t harm businesses as they recovered from Covid, while cracking down on abuses of the system.

She said: ‘HMRC must tread carefully, taking a sensitive approach that supports a renewed economy and does not necessarily include the bailiffs who come knocking.

“At the same time, the challenges of HMRC chasing down very wealthy individuals and businesses who take advantage of every trick in the book to avoid and evade tax and evade the law are well known.

“These tricks are simply not available to ordinary people, who are now emerging from the misery of the pandemic into an exploding cost of living crisis. HMRC must push much harder on the doors – no matter where they are – of those who are not paying their fair share. »

This includes a warning from MPs that “rogue companies are exploiting the pandemic to make profits at the expense of taxpayers”.

They fear moves to ease insolvency rules during Covid, combined with the large-scale offer of grants and emergency loans, have left bad companies “embezzling large sums”.