Billions of pounds that could be spent on fixing public services and filling the “black hole” in the UK’s finances is being lost through unpaid taxes, MPs have warned.
An “eye-watering” £42bn is outstanding in tax debt, with about 5% of tax owed each year failing to be collected by HMRC, according to the Commons Public Accounts Committee.
The Liberal Democrats labelled the amount “absolutely staggering” as the country battles a cost of living crisis and the biggest outbreak of industrial action in a generation – with multiple sectors striking over pay in the face of high inflation and stretched public finances.
In his Autumn Statement in November, Chancellor Jeremy Huntannounced a raft of tax hikes and spending aimed at making £54bn worth of savings.
But Dame Meg Hillier, chair of the committee, said: “The eye-watering £42bn now owed to HMRC in unpaid taxes would have filled a lot of this year’s infamous public spending black hole.”
MPs on the committee criticised ministers for not doing more to claw back the money owed to the public purse.
Dame Meg said HMRC will only employ more staff to tackle compliance over the next few years and that is “not fast enough to dent the tax gap at a time of huge public sector spending pressures”.
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According to the 22-page document, £731.1bn was collected in taxes and duties in 2021-22.
Although this was the highest on record as the UK emerged from the pandemic, the committee said more could be done to claim unpaid taxes.
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Sky’s Economics and Data Editor Ed Conway unpicks the impact of a year shaped by the cost of living crisis and the mini budget.
The report said that for every £1 that HMRC spends on compliance activities, it recovers £18 in additional tax revenue – and the government “is missing the opportunity to recover billions in lost revenue by not resourcing compliance”.
MPs warned more is now owed in tax debt than before the pandemic, with the debt also expected to fall more slowly than previous years as taxpayers feel the effects of the cost of living crisis.
Dame Meg said HMRC is “settling for trying to recover less than a quarter of estimated losses in schemes such as furlough”.
“We recognise the problems HMRC faces – due to poor controls, the horse has bolted – but we believe there is a moral duty to pursue fraud,” she said.
“HMRC must ensure dishonesty is not seen to create advantage.”
HMRC ‘have 6,000 fewer customer service staff than five years ago’
The Chartered Institute of Taxation (CIOT) welcomed the report and said the current levels of service being provided by HMRC are not acceptable.
The CIOT said HMRC has 6,000 fewer customer service staff than five years ago and the government “appear to have cut staff numbers anticipating efficiencies and time savings from digitalisation that have not yet arrived”.
Susan Ball, president of the CIOT, said members tell them every day “of the delays they face getting answers and action from HMRC”.
She said: “It is crazy that people trying to get help from HMRC on paying the right amount of tax find it so difficult to get through, especially when an estimated £3bn a year is lost to the Exchequer from non-deliberate taxpayer error.
“The first principle of compliance surely has to be making it easy for willing taxpayers to comply with their obligations.”
Christine Jardine, the Liberal Democrat Cabinet Office spokeswoman, said: “This government is losing absolutely staggering amounts of money through its incompetence and inability to collect the tax it’s owed.
“We need to see serious action to close this tax gap black hole.
“Ministers need to immediately get a grip on this situation, anything less would be a failure for millions of people who are struggling with the cost of living crisis.”
The Met Office has put yellow weather warnings over snow and ice in place from this afternoon covering much of the UK.
It had a number of yellow warnings in place on Thursday across the country, but most were initially set to expire by 11am, with only a snow and ice alert in Scotland remaining until midnight.
But it has now updated its map to show yellow ice warnings for much of the Midlands, North West England, Eastern England, Wales and Northern Ireland from 4pm on Thursday until 10am on Friday, while the snow and ice warning for Scotland has been extended to 10am on Friday.
A separate yellow warning for ice is in force from 3am on Friday until 11am, covering South West England and parts of South Wales.
It comes as large swathes of the country deal with disruption caused by the freezing weather, with temperatures expected to fall as low as -16C on Thursday night both in the northeast of England and Scotland, the Met Office has said.
Manchester Airport has warned passengers of delays after temporarily closing its runways due to “significant levels of snow”.
In a statement on Thursday morning, the airport said: “Our runways are temporarily closed due to significant levels of snow, as our teams work hard to clear them as quickly as possible.”
The airport announced its runways had reopened at 10am, but warned “as a result of the earlier closure, some departures and arrivals may still experience delays”.
“The safety of our passengers remains our top priority. Thank you for your understanding and patience,” it added.
The A30 in Cornwall was closed westbound between the A3047 junctions Avers and Tolvaddon on Thursday morning following a multiple vehicle collision, according to National Highways, after an amber warning for snow and ice was in place yesterday.
It said at 8.45am that emergency services were at the scene while traffic built on the roads.
Devon and Cornwall Police and Devon County Council Highways had earlier warned of roads closing and motorists being stationary for “long periods of time” in a joint statement.
Snow ploughs became stuck in queues of traffic caused by “minor incidents”, the statement added.
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All of the warnings in place across the country are yellow, meaning there is a danger of injury from slips and falls and some disruption to travel expected.
A yellow warning for snow and ice is in place for the following regions from 4pm on Thursday to 10am on Friday:
Other yellow warnings which covered much of the country on Thursday morning have now expired.
They included a warning for snow and ice affecting Cornwall, much of Wales and parts of northwest England until 11am, an ice warning for parts of southern England and south-east Wales until 10.30am and a fog warning for Northern Ireland until 9am.
Travel disruption to road and rail services are likely on Thursday in the warning areas, as well as the potential for accidents in icy places, the forecaster said.
As icy conditions persist, motorists are being urged to stick to major roads that are most likely to have been gritted.
Car insurer RAC said it has seen the highest levels of demand for rescues in a three-day period since December 2022.
Former Scotland rugby captain Stuart Hogg has been handed a community payback order and a non-harassment order for abusing his estranged wife over the course of five years.
The sportsman admitted shouting and swearing, tracking her movements and sending her messages which were alarming and distressing in nature.
At Selkirk Sheriff Court on Thursday, he was given a community payback order with one year of supervision and a five-year non-harassment order.
Sheriff Peter Paterson warned Hogg the sentence was an “alternative to custody”.
A court heard how he berated Mrs Hogg for “not being fun” after going on drinking binges with his colleagues, and once sent more than 200 text messages to her in the space of a few hours which caused her to suffer a panic attack.
Hogg had been due to stand trial at Selkirk Sheriff Court last November, but pleaded guilty to the abuse which was said to have taken place at various locations including Hawick in the Scottish Borders and Bearsden in East Dunbartonshire.
At Jedburgh Sheriff Court in December, he was initially handed the five-year non-harassment order and fined £600 for breaching bail conditions by repeatedly contacting Mrs Hogg last June.
The former Glasgow Warriors and Exeter Chiefs, who plays for French club Montpellier, now lives abroad and is said to be in the process of getting a divorce.
Prosecutor Drew Long said the couple moved to Exeter in 2019 with their three young children, who were all under three, but Hogg’s behaviour “deteriorated” as he went out partying.
Mr Long said Hogg would “shout and swear and accuse Mrs Hogg of not being fun” for not joining in drinking, and that her family “noticed a change in her”.
In 2022, Mrs Hogg went on a night out and was bombarded with text messages from the rugby player which “caught the attention of the people she was with”, the prosecutor said.
The following year, the couple moved to Hawick in the Borders, but Hogg used an app to track his wife and “questioned her whereabouts” while she was dropping the children off.
In 2023, she decided to leave the sportsman and sought advice from a domestic abuse service.
Mr Long said in September of that year, Hogg “sent in excess of 200 texts in a few hours despite being asked to leave her alone”, which led to Mrs Hogg having a panic attack.
On 21 February 2024, police were called due to Hogg “shouting and swearing”.
He was taken into custody and thereafter placed on a bail order stipulating not to contact Mrs Hogg or to enter the family home.
The Crown Office and Procurator Fiscal Service (COPFS) said “no one should have to live in fear of a partner or former partner”.
Lynne Barrie, procurator fiscal for Lothian and Borders, added: “Stuart Hogg has now been convicted and held accountable for subjecting his estranged wife to years of domestic abuse.”
Hogg made his Scotland debut in 2012 and went on to make 100 appearances for his country.
He also made two appearances for the British and Irish Lions and was made an MBE for services to the sport in last year’s New Year Honours list.
She praised her family and friends, and also singled out those who had given her “a hi, a smile, a hug or even just a look to show they care”.
Mrs Hogg said she had thought “long and hard” about posting on Facebook, but added: “Now, it’s time to start my next chapter.
“To move on and to keep showing my kids every day that strength comes from unconditional love and support around you, and even when it hurts, love wins.”
Following the court case, Scottish Women’s Aid said coercive control – including stalking and micromanaging how women mother, where they go, what they wear and what they’re allowed to say – can be “more traumatic than a physical assault”.
Dr Marsha Scott, chief executive of the charity, added: “The sentence in this case, like so many handed down in Scotland, hardly meets the test of being proportionate when compared to the harm this man has caused.”
Liz Truss’ lawyers have sent a cease and desist letter to Sir Keir Starmer over his claims she “crashed the economy”.
The letter says Sir Keir’s continued claim the former Conservative prime minister crashed the economy with the September 2022 mini budget is defamatory and will “likely continue to cause serious harm to her reputation”.
It focuses on the Labour leader’s claims made in June last year during the general election campaign, and says accusations she crashed the economy were made with the purpose of damaging public opinion of Ms Truss as she stood as a parliamentary candidate.
Ms Truss, who stepped down as prime minister in under two months in charge, lost the South West Norfolk seat she had held since 2010 to Labour’s Terry Jermy in last year’s election.
Sir Keir’s spokesman said the prime minister has no plans to “moderate his language” based on the letter.
He also questioned whether Ms Truss will be writing to the “millions of people up and down the country” who shared Sir Keir’s view.
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The letter also says it is “false” to claim the mini budget crashed the economy and provides details of a definition of “crash of the economy” by Dr Andrew Lilico, an expert from right-wing thinktank the Institute of Economic Affairs and managing director of economic consultancy Europe Economics.
Market movement following the mini budget did not constitute a “crash”, the letter says, and accuses Sir Keir of displaying an “ignorance of basic economics” by doing so.
Following the mini budget, which included £45bn of unfunded tax cuts, the UK government’s long-term borrowing costs rose sharply by 0.3 percentage points over a day.
The pound then fell to record lows against the dollar, and there was another sharp rise in the cost of long-term government borrowing by 0.5 percentage points after then chancellor Kwasi Kwarteng hinted there would be further tax cuts.
This led to rising mortgage rates, with hundreds of products withdrawn, and an impact on UK pension funds.
Ms Truss’ lawyers blamed the interest rate changes on the Bank of England, “in particular by its poor handling of the liability-driven investment bonds (LDI) crisis, and its regulatory failures”.
It points out the Bank of England is independent of government and says: “Thus the relevant rate changes were not ’caused’ by our client.
“These facts were clear as early as May 2024, if not before.”
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‘Do you take any blame for your premiership?’
The letter argues there was “no rise in unemployment…no sustained loss of wealth”, and no “enduring economic impacts”.
It says Ms Truss and the mini budget did not play “a significant causal role in the financial market volatility of September/October 2022” and said almost everything, in fiscal terms, had been announced before the mini budget.
The letter requests Sir Keir “immediately cease and desist” from repeating she crashed the economy on an “amicable basis”.
“This request is made in the context of the basic levels of civility which is due between senior politicians, and we trust that you will respond accordingly,” the letter says.