Billions lost in tax after HMRC staff shifted to work on Brexit and Covid fraud

Billions of pounds in tax have been lost because thousands of HM Revenue & Customs (HMRC) tax officials were shifted to work on Brexit and Covid schemes.

Treasury minister Victoria Atkins revealed that 1,040 officials were transferred to deal with problems relating to the UK’s departure from the EU, she said in response to ministerial questions.

Another 1,250 tax compliance officers – who would usually investigate tax dodging and non-compliance – were redeployed to work on Covid pandemic schemes last year.

It means the tax revenue recovered through compliance work was £30.8bn in 2021-22 – a slump of £6bn from the previous year.

The Liberal Democrats – who put the parliamentary question to the minister – said Rishi Sunak’s government was in “non-stop firefighting mode” after Brexit and Covid.

“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,” said the party’s Treasury spokesperson Sarah Olney.

Ms Olney said: “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.

“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,” she added.

With 9 per cent of tax compliance workers being transferred, HMRC closed a third fewer compliance cases last year than before the pandemic, according to the Lib Dems.

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 per cent.

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