HMRC saw a drop of almost £30 billion in tax revenues in the latest financial year because of the pandemic, according to its annual accounts.

In its 2020/21 annual report, HMRC reported that it had collected £608.8 billion in tax revenues, which is down from £636.7 billion collected in 2019/20.

HMRC said the drop was due to the ‘unprecedented economic circumstances caused by COVID-19, and because pandemic restrictions meant HMRC had to reduce its compliance activity’.

The reduction in compliance activity resulted in a drop of 18% in the additional tax generated by HMRC’s work tackling avoidance, evasion, and other non-compliance. This fell from £36.9 billion to £30.4 billion. The tax authority has estimated that the tax gap is now 5.3%.

HMRC reported that it delivered £60.7 billion in grants through the Coronavirus Job Retention Scheme (CJRS).

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.’

Internet link: GOV.UK

The UK government marked the inaugural Tax Administration and Maintenance (TAM) Day with the publication of 30 papers covering a wide range of tax issues.

Chancellor Rishi Sunak made the commitment to have a TAM Day in the Autumn Budget. The aim was for a dedicated day for the administration and maintenance of the UK tax system. The 30 publications released by the government on TAM Day (30 November) include Calls for Evidence, Draft Regulations, Policy Papers and Corporate Reports.

The government has set out further detail on the conclusions to its review of business rates, including more frequent revaluations, improvement relief, exemptions for green technology, and administrative reforms.

A report on Research and Development (R&D) tax reliefs was published, providing further details on announcements made at the Budget which included refocusing relief in the UK; targeting abuse; and supporting innovation by expanding qualifying expenditure to capture cloud and data costs.

Additionally, an update on reforms to Small Brewers’ Relief was published, which will see the government invest around £15 million of additional funding into the craft brewing sector.

Jim Harra, HMRC’s First Permanent Secretary and Chief Executive, said:

‘As we continue our work to improve the tax system for UK taxpayers and clamp down on avoidance and evasion, we know that an open dialogue with our stakeholders is vital.

‘With thanks to the tax profession for their views, we can now announce the next steps for how we will simplify the legislative framework and raise standards in the tax advice market. We are also announcing new areas on which we are inviting views, including reforming Income Tax Self-Assessment registration for the self-employed.’

Internet link: GOV.UK

The standard three-day waiting time for Statutory Sick Pay (SSP) will be reinstated for coronavirus (COVID-19)-related claims from 25 March 2022, unless the government intervenes.

Under standard rules in the UK, employers do not have to pay SSP to an employee until the fourth qualifying day in the Period of Incapacity for Work (PIW). The PIW is a period of sickness lasting four or more consecutive calendar days, not all of which may be qualifying days.

During the COVID-19 pandemic, the government suspended the three-day wait for COVID-related SSP, meaning that employers must pay it from the first qualifying day.

The amendment to the SSP rules was made in the Coronavirus Act 2020 which is due to expire after two years. This means that, unless there is an intervention to continue the measure, COVID-related SSP waiting time will automatically revert to three days on 25 March 2022.

Frank Haskew, Head of the Tax Faculty at the Institute of Chartered Accountants in England and Wales (ICAEW), said:

‘The SSP rules were not really designed with a highly infectious global pandemic in mind, which is why the current easements have been welcome.

‘While some employees who are ill from coronavirus or required to self-isolate may be unable to afford not to go to work unless they are paid SSP for the first three days, there are also small businesses where the unreimbursed cost of paying three days’ coronavirus-related SSP to employees is a real burden.’

Internet links: ICAEW website

HMRC has warned taxpayers completing their 2020/21 tax returns to ‘be on their guard’ and stay vigilant in regard to tax-related scams.

Nearly 800,000 tax scams were reported in the last year, HMRC revealed. It said that fraudsters use self assessment to attempt to steal money or personal information from taxpayers.

In the last year, HMRC received almost 360,000 bogus tax rebate referrals. HMRC will send more than four million emails and SMS messages this week to self assessment taxpayers, prompting them to think about how they intend to pay their tax bill.

It is warning taxpayers ‘not to be taken in’ by malicious emails, phone calls or texts, and to not mistake them for genuine HMRC communications.

Myrtle Lloyd, Director General for Customer Services at HMRC, said:

‘Scams come in many forms. Some threaten immediate arrest for tax evasion, others offer a tax rebate. Contacts like these should set alarm bells ringing, so if you are in any doubt whether the email, phone call or text is genuine, you can check the ‘HMRC scams’ advice on GOV.UK and find out how to report them to us.’

The self assessment deadline is 31 January 2022.

Internet link: HMRC press release

A single person will need post-tax annual income of £10,900 for a minimum standard of living in retirement, according to the Pensions and Lifetime Savings Association (PLSA).

The minimum retirement living standard is based on the Joseph Rowntree Foundation’s Minimum Income Standard and covers a typical retiree’s basic needs plus enough for some social activities, such as a week of holiday in the UK, eating out once a month, but not including running a car.

That spending budget increases to £16,700 for a couple and also includes subscriptions and services such as getting a haircut.

The moderate retirement living standard includes a two-week holiday in Europe and more frequent eating out. This was assessed to require a budget of £20,800 for a single person, £600 higher than two years ago, and £30,600 for a couple, up £1,500.

The annual budget needed for a comfortable retirement living standard has increased since 2019 by £600 to £33,600 for one person and £2,200 to £49,700 for a couple.

This covered items such as regular beauty treatments, theatre trips and annual maintenance and servicing of a burglar alarm.

Nigel Peaple, Director of Policy and Advocacy at the PLSA, said:

‘The pandemic has emphasised the importance of economic security as well as social and cultural participation in retirement.

‘We hope the updated standards will encourage people to think about whether they are saving enough for the retirement lifestyle they want and, in particular, whether they are making the most of the employer contributions on offer in their workplace pension.’

Internet links: PLSA website