In a hearing before the Public Accounts Committee, Jim Harra, chief executive of HMRC, said: ‘There is a much higher level of non payment than was previously the case post pandemic in a time sense.

‘We are now in a situation where we have got some serious economic challenges and very high level of indebtedness by small businesses, running at a much higher rate than we saw before the pandemic.

This is down to the distress those small businesses are experiencing rather than some attitudinal change in their approach to tax compliance. We haven’t seen a significant downturn in customers filing their returns on time but many more saying they are unable to pay.’

MPs questioned Harra about the level of outstanding tax debt which has risen from £42bn Q2 to £47bn Q3.