{"id":2841,"date":"2026-08-24T01:55:58","date_gmt":"2026-08-24T01:55:58","guid":{"rendered":"https:\/\/taxinvestigation.co\/new\/?p=2841"},"modified":"2026-08-24T01:56:01","modified_gmt":"2026-08-24T01:56:01","slug":"the-bishop-the-curate-and-hmrcs-annual-report","status":"publish","type":"post","link":"https:\/\/taxinvestigation.co\/new\/the-bishop-the-curate-and-hmrcs-annual-report\/","title":{"rendered":"The bishop, the curate and HMRC\u2019s annual report"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><em>Tony Monger works his way through HMRC\u2019s latest annual report, so you don\u2019t have to<\/em>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In 1895, the humorous magazine Punch published a cartoon that became so famous that it gave rise to a popular English phrase. I was minded of this when I sat down to read my way through the Executive Summary and accounts of HMRC\u2019s annual report for 2025 to 2026. I shall explain.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Executive Summary begins with a foreword by the Chair of the HMRC Board, Dan Tomlinson MP, in which he records how pleasing it is to see the progress that HMRC has made in the year and how he is \u201cencouraged by the progress HMRC has made in improving customer service this year\u201d. The Executive Summary goes on to list the headlines and it does indeed look good, so good in fact that they print all the important numbers in an extra large typeface. The big ones are:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>\u00a350.2 billion yielded from compliance work in 2025 to 2026.<\/li>\n\n\n\n<li>Over 1,600 new compliance officers joined in 2025 to 2026.<\/li>\n\n\n\n<li>Debt as a proportion of receipts down to 4.7% from 5.0% in the previous year.<\/li>\n\n\n\n<li>85.1% of adviser attempts handled, up from 71.5% in the previous year.<\/li>\n\n\n\n<li>Average telephone wait times down to 12 minutes and 35 seconds from 18 minutes 38 seconds in the previous year.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">I could go on, but you get the idea.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As a former tax investigator myself I\u2019m always interested in the compliance yield so I thought I\u2019d have a little dig in the report to see how that \u00a350.2 billion is made up and there\u2019s a very helpful chart on page 15 of the report. Here it is:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1038\" height=\"545\" src=\"https:\/\/taxinvestigation.co\/new\/wp-content\/uploads\/2026\/08\/image-edited.png\" alt=\"\" class=\"wp-image-2846\" srcset=\"https:\/\/taxinvestigation.co\/new\/wp-content\/uploads\/2026\/08\/image-edited.png 1038w, https:\/\/taxinvestigation.co\/new\/wp-content\/uploads\/2026\/08\/image-edited-300x158.png 300w, https:\/\/taxinvestigation.co\/new\/wp-content\/uploads\/2026\/08\/image-edited-1024x538.png 1024w, https:\/\/taxinvestigation.co\/new\/wp-content\/uploads\/2026\/08\/image-edited-768x403.png 768w, https:\/\/taxinvestigation.co\/new\/wp-content\/uploads\/2026\/08\/image-edited-150x79.png 150w, https:\/\/taxinvestigation.co\/new\/wp-content\/uploads\/2026\/08\/image-edited-696x365.png 696w\" sizes=\"auto, (max-width: 1038px) 100vw, 1038px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">As you can see, it is helpfully split into five coloured blocks, the largest (the top one) being for \u00a316.1 billion which is attributed to \u2018Upstream operational yield\u2019. What\u2019s that, I hear you ask. Well, the small print under the chart helpfully explains \u201cUpstream operational yield: estimated impact of operational activities undertaken to promote compliance and prevent non-compliance before it occurs.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">What this means is things like \u2018nudge letters\u2019, where HMRC writes out to various taxpayers in various businesses or sectors and tells them things that they should or should not do. They give an example on page 16 of the report where they are talking about modernisation and say:\u201c\u2026throughout 2025 to 2026, we worked with commercial software providers and agents to support 3.2 million small businesses to correctly claim business expenses by setting digital nudges that provided advice whilst the customer completed their return. This approach, alongside targeted communications to 1.2 million customers, led to more accurate reporting and brought in \u00a336.4 million additional revenue in 2025 to 2026, with the full impact of around \u00a3250 million over five years.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">So, basically, they are estimating how much extra tax they\u2019ve saved by telling taxpayers what they can claim. Isn\u2019t that marvellous? To think that there were that many small businesses who were claiming expenses that they weren\u2019t entitled to! Why, it\u2019s almost akin to a bank installing a new alarm and telling the shareholders \u201cwe\u2019ve saved \u00a3250 million over the next five years which is what we estimate bank robbers would have stolen from us if we hadn\u2019t installed an alarm\u201d.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But what\u2019s the next block in that chart? It\u2019s \u2018Upstream product and process yield\u201d at \u00a34.9 billion. It is described as \u201cestimated annual impact on net tax receipts of legislative changes to close tax loopholes and changes to our processes which reduce opportunities to avoid or evade tax\u201d. So that\u2019ll be legislation to stop tax avoidance and the like \u2013 in other words, another bank alarm system. Heck, these first two blocks of estimated savings \u2018upstream\u2019 make up over \u00a321 billion of the claimed compliance yield of \u00a350.2 billion \u2013 and, if you look at that chart again, they even boast about it at the top when they say \u201ccompliance yield from upstream activities [has] grown from 23.9% in 2019\/2020 to 41.8% in 2025\/2026\u201d.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">What about the rest of the claimed compliance yield? Well, the next two are (wait for it) \u2018Downstream\u2019 estimates. So the Future Revenue Benefit \u2013 another \u00a34.9 billion \u2013 is described as the \u201cestimated effect of our past compliance work on customers\u2019 compliance in the current tax year\u201d. (Translation \u2013 we put a sign up on the bank last year saying thieves would be prosecuted and we estimate that saved us billions.) The \u2018Forecast losses prevented\u2019 of \u00a312 billion is described as \u201crevenue that we prevented from being lost to the Exchequer through our compliance work, such as where a fraudulent or erroneous claim to a relief or repayment is either reduced or refused. It also recognises the estimated value of refused registrations, disruption of criminal activity and the revenue value of seized goods.\u201d (Translation \u2013 we didn\u2019t allow some people that we thought were crooks to open an account with the bank and it saved us a fortune).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Finally, we are left with a dark green block at the bottom which is valued at \u00a312.1 billion and that is entitled \u2018Cash expected\u2019. It is described as \u201cadditional revenue due when we identify past non-compliance, with a reduction to reflect revenue that we estimate will not be collected\u201d. So, eventually, that is the money they actually got in from investigating people and it is \u00a32 billion less than the previous year \u2013 and not even as much as they got in during 2023\/24. Hmmm, so maybe not quite as rosy as painted.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Let\u2019s move on from the Compliance yield to reduction in the debt as a proportion of receipts, which they say has dropped to 4.7% from 5.0%. On page 24 of the report they say: \u201cIn 2025 to 2026, we resolved around \u00a3102 billion of debt.\u201d Forgive me, but whenever I see some unusual phraseology \u2013 such as talk of a debt being \u2018resolved\u2019 \u2013 I become a little suspicious. What does this mean? Well, the report goes on to say that \u201ca resolution is when a debt is concluded during the year, most commonly through payment or losses\u201d. You have to go on another two pages to find out that \u201cit\u2019s not always possible to collect debts, and when we can\u2019t, they become \u2018tax losses\u2019 \u2013 which can be classed as \u2018write-offs\u2019 or \u2018remissions\u2019\u201d.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">So, some of these debts are simply written off. And we have to go back to page 26 to work out how much was collected and how much written off and we see that \u201cthe vast majority, around 82%, of resolutions in 2025 to 2026 were due to the debt being paid\u201d. They can\u2019t actually bring themselves to say it but that seems to suggest that 18% of the debts \u2013 almost one-fifth \u2013 were written off. In that light, the reduction from 5% to 4.7% doesn\u2019t seem quite so great.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Customer service \u2018strides\u2019<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Okay, let\u2019s look at customer service and those great strides in answering the telephone. Remember, the wait time used to be 18 minutes and 38 seconds and now it\u2019s only 12 minutes and 35 seconds, and 85.1% of calls are answered when it used to be 71.5%. Again, there is a helpful chart \u2013 or rather, two helpful charts, side by side \u2013 on page 33 of the report. To make sense of this, you have to understand what they mean when they talk about the \u201cproportion of adviser attempts handled\u201d. The small print explains that this is \u201cthe proportion of callers who got through to an adviser after hearing the automated messages and choosing to speak to an adviser\u201d. Here are the two charts:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1038\" height=\"584\" src=\"https:\/\/taxinvestigation.co\/new\/wp-content\/uploads\/2026\/08\/image-2-edited.png\" alt=\"\" class=\"wp-image-2845\" srcset=\"https:\/\/taxinvestigation.co\/new\/wp-content\/uploads\/2026\/08\/image-2-edited.png 1038w, https:\/\/taxinvestigation.co\/new\/wp-content\/uploads\/2026\/08\/image-2-edited-300x169.png 300w, https:\/\/taxinvestigation.co\/new\/wp-content\/uploads\/2026\/08\/image-2-edited-1024x576.png 1024w, https:\/\/taxinvestigation.co\/new\/wp-content\/uploads\/2026\/08\/image-2-edited-768x432.png 768w, https:\/\/taxinvestigation.co\/new\/wp-content\/uploads\/2026\/08\/image-2-edited-150x84.png 150w, https:\/\/taxinvestigation.co\/new\/wp-content\/uploads\/2026\/08\/image-2-edited-696x392.png 696w\" sizes=\"auto, (max-width: 1038px) 100vw, 1038px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">Yes, we can see that the proportion of callers who actually decided that they wanted to speak to someone and were successful in getting through to a human increased from 71.5% to 85.1%. But hold on a second \u2013 look at the number of callers. They seem to be steadily reducing, year upon year. Last year there were 33.5 million and HMRC answered 71.5%, and in 2025\/26 the numbers dropped to 29.1 million and HMRC answered 85.1% of them.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">I know what you are thinking. What does that actually mean in terms of calls answered by HMRC \u2013 and the answer is very little difference. You see, 71.5% of 33.5 million is just under 24 million and 85.1% of 29.1 million is 24.7 million \u2013 So, not much of an improvement really. The major cause of the improvement is because fewer and fewer people are calling HMRC. Could it possibly be because people know they\u2019ll have to wait a very long time to get an answer? And let us not forget, there is a 15% slice of the population who hang on and hang on but don\u2019t actually get their call answered at all. And 15% of 29.1 million means that there were over 4.3 million people who rang HMRC in 2025\/26 and never got an answer.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">One can continue on through the HMRC annual report and find the same kind of \u2013 how shall I phrase it? \u2013 sleight of hand again and again. The language used seems very much intended to obscure the underlying truths, be that by claims for \u2018upstream\u2019 compliance yields to debts being \u2018resolved\u2019, or telephone calls answered being referred to as \u2018adviser attempts handled\u2019. But dig deep enough and the answers are there, and soon that optimistic and positive Executive Summary starts to sound like an old joke.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">And speaking of old jokes, let\u2019s return to that cartoon in Punch magazine in 1895. It featured a bishop and a nervous young curate eating breakfast. The bishop points out that the boiled egg that the curate is eating is rotten and the curate, in his anxiety not to offend the bishop replies: \u201cOh no, my Lord, I assure you, parts of it are excellent!\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The cartoon, entitled \u2018True Humility\u2019, gave rise to the phrase \u2018a curate\u2019s egg\u2019, meaning something that is both good and bad. In reality, of course, once you realise that parts of your boiled egg are rotten, the whole thing becomes very difficult to swallow \u2013 much like HMRC\u2019s Annual Report.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>\u2022 Tony Monger is a former HMRC Investigator and Investigation Team Leader<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Tony Monger works his way through HMRC\u2019s latest annual report, so you don\u2019t have to. In 1895, the humorous magazine Punch published a cartoon that became so famous that it gave rise to a popular English phrase. I was minded of this when I sat down to read my way through the Executive Summary and [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":2848,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[85],"tags":[],"class_list":["post-2841","post","type-post","status-publish","format-standard","has-post-thumbnail","category-august-september-2026-issue"],"_links":{"self":[{"href":"https:\/\/taxinvestigation.co\/new\/wp-json\/wp\/v2\/posts\/2841","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/taxinvestigation.co\/new\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/taxinvestigation.co\/new\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/taxinvestigation.co\/new\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/taxinvestigation.co\/new\/wp-json\/wp\/v2\/comments?post=2841"}],"version-history":[{"count":1,"href":"https:\/\/taxinvestigation.co\/new\/wp-json\/wp\/v2\/posts\/2841\/revisions"}],"predecessor-version":[{"id":2849,"href":"https:\/\/taxinvestigation.co\/new\/wp-json\/wp\/v2\/posts\/2841\/revisions\/2849"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/taxinvestigation.co\/new\/wp-json\/wp\/v2\/media\/2848"}],"wp:attachment":[{"href":"https:\/\/taxinvestigation.co\/new\/wp-json\/wp\/v2\/media?parent=2841"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/taxinvestigation.co\/new\/wp-json\/wp\/v2\/categories?post=2841"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/taxinvestigation.co\/new\/wp-json\/wp\/v2\/tags?post=2841"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}