HMRC are coming after you for unpaid tax during the pandemic

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HMRC provide advice on self-employed tax returns

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Earlier this week, the Public Accounts Committee shared that overall tax debt in the UK has risen to £39billion. This is more than double the amount that was reported back in early 2020, before the pandemic started. The Committee launched a report into how the pandemic has exacerbated the issue of tax debt in the country.

Rising inflation and debt originating from pandemic-era support schemes have resulted in MPs calling on HMRC to tackle the issue of unpaid taxes.

The Public Accounts Committee urged HMRC to target individuals and businesses who are opting not to pay their taxes, while still making sure vulnerable households are supported.

In the early days of the pandemic, the tax body paused the majority of its debt collection services as a means of support.

Furthermore, HMRC reduced the number of letters sent out to taxpayers and in-person collections from being carried out.

READ MORE: Council tax reductions explained: Who is eligible to pay less and how to claim

Following these decisions, the number of Britons in debt rose from 3.8 million in January 2020 to 6.2 million in September 2021.

Going forward, HMRC has been charged with bringing down tax debt down from the current £39billion to a pre-pandemic level of £16billion.

According to MPs, the Government body must strike a “difficult balance” between being fiscally responsible and caring towards those who are unable to pay taxes at the moment.

This will involve HMRC having to foster better communication channels between the Government and taxpayers to have a better understanding of how debt can be repaid.

Dame Meg Hillier MP, the chair of the Public Accounts Committee, outlined what HMRC needs to achieve in order to successfully recover unpaid taxes.

The Committee’s chair said: “You might be forgiven for thinking we’ve magically found that tree after all – the public purse is rattling but a chunk of the tax revenues needed to refill it have not been collected.

“Add to that the pandemic and record inflation, and HMRC has a tricky balance to strike.

“Those least able to afford rising bills, including tax bills, are also the easiest collection ‘targets’.

“HMRC must tread carefully, taking a sensitive approach that supports a renewing economy, and doesn’t necessarily include bailiffs coming knocking.”

She added: “At the same time, HMRC’s challenges chasing down high-wealth individuals and companies who take advantage of every trick in the book to avoid and evade tax and outrun the law are well-known.

“Those tricks are just not available to ordinary people, now emerging from the misery of the pandemic into an exploding cost of living crisis.

“HMRC must push much harder at the doors – no matter where they are – of those who are not paying their fair share.”

In a statement, a HMRC spokesperson said: “We are recouping debt safely, taking into account customers’ circumstances and making repayments affordable.

“It’s in no-one’s interests to push viable businesses into insolvency when they can succeed given some time to repay their tax debts.”

HMRC shared that it would be recruiting nearly 2,000 extra staff over the 12 months to assist in debt collection efforts.

The Public Accounts Committee’s report can be found on the Parliamentary website.

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