Billions in tax lost as HMRC staff transferred to Brexit and Covid fraud

Billions of pounds in tax has been lost because HM Revenue & Customs (HMRC) moved 2,300 tax compliance staff to work on Brexit and Covid schemes.

Treasury minister Victoria Atkins said nearly 1,250 tax compliance officers, who would usually investigate tax dodging and non-compliance, were redeployed to work on Covid-19 pandemic schemes in 2021-22.

Another 1,040 were shifted to handle matters relating to the UK’s departure from the EU, she said in response to ministerial questions.

Tax revenue recovered through compliance work was £30.8 billion in 2021-22, down £6 billion from 2019-20, Ms Atkins said.

With 9% of tax compliance workers being transferred, HMRC closed a third fewer compliance cases last year than before the pandemic, according to the Liberal Democrats, who put the parliamentary questions to the minister.

The party’s Treasury spokesperson Sarah Olney said: “This Conservative Government is in non-stop firefighting mode because of their gross incompetence, from the botched EU trade deal to the unforgivable mistakes made during the pandemic.

“Civil servants are being moved from one crisis to another in a constant game of whack-a-mole.

“This is allowing criminals to get away with dodging paying millions of pounds in tax, while hard-working families see their taxes hiked and public services are on their knees.

“The Government needs to step up efforts to recover billions of pounds in unpaid taxes, instead of asking the public to clean up their mess.”

A HMRC spokesperson said: “We move resources where and when they are most needed, and our performance is reflected in the fact that we collected a record sum for the UK’s public services last year.

“The National Audit Office (NAO) has recognised that HMRC’s compliance work provides good value to the taxpayer.”

In December, Whitehall’s spending watchdog found that in 2020-21, the redeployment of HMRC staff to Covid support schemes shrank the number of those working on tax compliance by 12%.

Before the pandemic, tax revenues from compliance work were on average 5.2% of total HMRC revenues. This dropped to 4.2% between 2020 and 2022 – a £9 billion reduction, according to the NAO.