The pandemic changed the priorities and make-up of HMRC’s work, reducing its overall capacity for tax compliance work as staff were redeployed, the National Audit Office (NAO) said.

HMRC raised around £9bn less in tax revenue from its compliance activity since the pandemic began. Prior to the pandemic, tax revenues from HMRC’s compliance work were on average 5.2% of its total revenue.

This reduced to 5% in 2020-21, seeing a £1.5bn reduction. It then fell further to 4.2% in 2021-22, equating to a further £7.5bn reduction.

HMRC’s estimate of its compliance yield in 2021-22 was £30.8bn, down from a peak of £36.9bn in 2019-20.

Early in the pandemic, HMRC focused its resources on key priorities and redeployed some staff to new support schemes, which left reduced capacity for downstream tax compliance activity.