HMRC Statistics

(Source: HMRC Consultation Document ‘Modernising Powers, Deterrents and Safeguards: Payments, Repayments and Debt: The Developing Programme of Work’ 25 June 2007)

1. HMRC collected around £400 billion in the year to March 2006 and repaid around £85 billion.
2. As at March 2006, there was an outstanding balance of around £22bn representing some five percent of receipts. While the majority of this debt is under three months old and is successfully collected within a short time, HMRC writes off around one per cent of its receipts - mainly because of taxpayer insolvency.
3. Over £200bn is paid each year in income tax and national insurance contributions via PAYE, 47% of all the tax that HMRC collects. Employers wait for HMRC to initiate some action before making any in-year payment. At present, these late payments attract neither interest nor a penalty. It is estimated that the cost of this to the Exchequer is some £60-70m in terms of lost interest, in addition to the use of HMRC’s resources in taking action.
4. 850,000 companies pay both CT and VAT, or receive repayments; 600,000 of these companies also operate at least one PAYE scheme; 200,000 self-employed businesses are within ITSA, are registered for VAT and operate PAYE.
5. HMRC makes more than 400,000 visits every year to collect payment or take distraint action and takes more than 200,000 court actions a year for unpaid tax.

Breakdown of amounts owed to HMRC at 31st March 2006

Type of debt Value (£billion)

Income Tax (SA and PAYE) 6.3
NIC 3.1
Companies 1.2
Overpaid credits and benefits 3.8
VAT and Excise 5.5
Inheritance Tax 0.7
Other Taxes and duties 1.3

TOTAL 21.9



As much as the UK debt market is increasing so are liabilities owing to HM Revenue & Customs.
As people struggle financially all areas suffer, this has lead to an untapped growing market, with a rapidly increasing number of potential clients:

* The Inland Revenue collected £219 billion in overdue tax and National Insurance Contributions in 2002-03. At the end of March 2003 outstanding debts totalled £14 billion.(3)

Much like everyone else, self-employed people are also finding that they need more help and they are looking to third parties for assistance:

* National Debtline & Citizens Advice Bureau receives around 150,000 tax liability enquiries every year. (2)

The collection of outstanding liabilities is becoming harder for HM Revenue & Customs because:

* Over £3 billion of debt is over a year old. (3)
* The longer a debt is outstanding, the harder it becomes to collect. In Budget 2003, the Department were given additional funding for 75 staff to reduce the backlog of debt which should bring in an extra £85 million a year in tax revenue by 2007-08 (3)
* A significant proportion of this debt was owed by insolvent businesses and by taxpayers who could not be traced, or was under negotiation or being paid off under instalment arrangements (3)

It is also a costly exercise because:

* The Department’s Receivables Management Service is responsible for collecting and enforcing recovery of debts. It employs around 8,000 staff and costs £150 million a year (3)
* In the year to October 2002 the Department wrote off tax and other miscellaneous duties of over £500 million and in the year to March 2003 £275 million was written off in respect of National Insurance contributions which were no longer recoverable. Over £575 million of this was written off as a result of business failure or insolvency. (3)

The split within the market sector can also be analysed as a marketing tool because:

* Men are more likely than women to be self-employed - 73 per cent of the 3 million self-employed people in spring 2005 were male. Around a fifth of all self-employed people worked in construction, with similar proportions in sales and distribution, hotels and restaurants; and in banking, finance and insurance. (4)

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Source: http:// www.statistics.gov.uk