According to HMRC’s annual records, the pandemic caused a decline in tax receipts of about £30 billion in the previous financial year.
HMRC said in its 2020/21 annual report that it had received £608.8 billion in tax receipts, down from £636.7 billion in 2019/20.
The decline was attributed to ‘exceptional economic circumstances imposed by COVID-19, and pandemic constraints forced HMRC to curtail its compliance effort,’ according to HMRC.
The additional tax earned by HMRC’s work combating avoidance, evasion, and other non-compliance fell by 18% as a result of the decline in compliance activity. From £36.9 billion to £30.4 billion, this figure has dropped. The tax shortfall is currently anticipated to be 5.3 percent, according to the tax authorities.
Jim Harra, HMRC’s First Permanent Secretary and Chief Executive said:
‘Throughout this exceptionally challenging year, we kept all our core services running and ensured customers could access the right help when they needed it. To do this, we had to make choices about how we balanced our resources – for example, we took the conscious decision to divert some of our skilled advisers from PAYE and Self Assessment services to provide COVID-19 support because that’s what individuals and small businesses needed from us most urgently at a time of acute crisis.’