It's been revealed that H M Revenue & Customs' bad debt in 2009-10 was £10.9 billion.
According to HMRC's accounts the provision was £10 billion in 2010-11 and £11.5 billion in 2009-10. They did not, as far as I can see (and I've searched) disclose a write off figure.
In earlier years write offs of about £4 billion a year were considered normal.
So why the increase? Well that's easy to explain. If you sack your debt collectors your bad debt goes up, and that's exactly what HMRC under the direction of Dave Hartnett has been doing. In 2005 HMRC had 100,000 staff. By 2015 it will be 50,000. Many of these were debt collectors.
Total HMRC staff costs in 2010-11 were just over £2.2 billion. Seeking to reduce that has cost many, many times that sum.
No wonder the tax profession, HMRC staff unions and anyone trying to deal with HMRC agree that HMRC is understaffed. Now we know the cost.
When will sanity prevail and more spending on staff at HMRC be sanctioned? It's the only way to solve the tax gap.
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Those of us in the profession know that there are substantial numbers of people who have not paid their taxes but HMRC seem to lack the will even to politely ask for the money, let alone insist on taxpayers taking serious steps to pay.
Aren’t you missing the impact of the recession and subsequent rise in insolvencies for the rise in bad debt?
No
So do tell us what the impact is of the recession and subsequent rise in insolvencies? You haven’t considered it at all have you?
Given how long it takes HMRC to recognise debt as bad I think the impact had yet to happen in 2009 – 10
But you do anyway miss the point and I am sure deliberately. First debt always rises if you do not have debt collectors and HMRC is still sacking them. Second, if this much of the tax gap was bad debt the rest is wildly misstated.
Now stick to the issue
This isn’t bad debt but is effectively debt written-off. Debt written-off in 2009-10 was almost certainly debt incurred in the boom years, so there are no grounds to think that the recession is properly relevant, something that is even more alarming.
“Debt written-off in 2009-10 was almost certainly debt incurred in the boom years”
Evidence?
Having just looked at the accounts you linked, I am staggered at the earnings of the senior officials in 2009-10. Phil Pavitt got £1.6m, Kenny £940k, Strathie £875k, Eland £750k and every one else between £450k and £700k. Absolutely unbelieveable.
In addition there are 6 non-exec who took home £230-240k in 2009-2010.
Can you read accounts?
Strathie got £175k
All your data is wrong
Very, very weird comment – except it proves your incompetence. I think the delete key has been proven to be needed in your case