The National Audit Office (NAO) has found that HMRC compliance staff are recovering £130,000 less per employee than before the pandemic. Between 2015 and 2020, each compliance officer recouped an average of £1.4 million annually, which has now dropped to £1.27m.

In response, HMRC has hired more staff, increasing its workforce by 6% to 57,514 full-time employees in 2023/24. However, the NAO warned that productivity challenges remain, with IT issues and poor customer service hampering efficiency.

Taxpayers continue to rise, with 700,000 more expected to file self assessment returns for 2024/25, any by 2028, another 1.6m taxpayers are expected to enter the system.

Despite declining individual recovery rates, HMRC’s total tax take has risen, reaching £829 billion in 2023/24. Compliance and administrative costs for businesses now stand at £15.4bn annually, with £6.6bn paid to accountants, software providers, and other intermediaries.

IT remains a significant challenge, with HMRC spending £482m on upgrades since 2019/20 and ongoing operational costs rising to £785m. 

The NAO recommends setting benchmarks for compliance staff to return to historic productivity levels. To meet its target of generating an additional £2.7bn by 2029/30, each new compliance officer must recover £550,000 annually. While income tax self assessment remains the most expensive tax to administer, national insurance is the cheapest due to its lower risk of evasion.

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