HM Revenue & Customs (HMRC) has published its 2024-25 accounts.

Here we share highlights from the C&AG’s Report on Accounts which sets out our factual commentary on HMRC’s performance in 2024-25, and the reasons and context for the C&AG’s qualification of his opinion on the regularity of HMRC’s 2024-25 Resource Accounts. You can read the full report in context in HMRC’s annual report and accounts.

See also HMRC’s Resource Accounts and Trust Statement.

Summary

HM Revenue & Customs (HMRC) is responsible for administering the UK’s tax system. HMRC’s strategic objectives are:

  • to close the tax gap;
  • to improve day to day performance and the overall customer experience;
  • to reform and modernise Tax and Customs administration;
  • to build a high-performing organisation, with a skilled and engaged workforce; and
  • to support wider government economic aims through HMRC’s work.

This report sets out our factual commentary on HMRC’s performance in 2024-25, together with the reasons and context for the Comptroller and Auditor General’s (C&AG’s) qualification of his opinion on the regularity of HMRC’s 2024-25 Resource Accounts. It draws on the findings from our statutory audit work in respect of HMRC during the period, including: the audits of HMRC’s financial statements; the adequacy of its systems for collecting revenue; and the value for money it achieved from its spending (see Appendix One). This report does not reach a separate conclusion on the value for money of HMRC’s expenditure.

Summary findings

Our findings are summarised below. For the context and evidence behind them, see the C&AG’s full report.

Total revenues

  • HMRC reported total tax revenues of £875.9 billion for 2024-25, the highest on record for the fourth successive year, representing a 3.9% increase on 2023-24.
  • HMRC estimates that the tax gap – the difference between the amount of tax that should be paid to HMRC, and what was actually paid – increased from £46.4 billion in 2022-23 to £46.8 billion in 2023-24. As a proportion of tax due, it has decreased from 5.6% to 5.3%.
  • HMRC estimates that the yield from its compliance activities in 2024-25 was £48.0 billion, up 14.9% from 2023-24 and £2.6 billion higher than its target.
  • Tax debt was £42.8 billion as at 31 March 2025, a fall of £0.2 billion (0.5%) from 31 March 2024, but remains significantly higher than pre-pandemic levels.
  • In customer services, HMRC’s performance data shows that its telephone performance improved in 2024-25, but remains below target. Its performance handling correspondence has improved, and digital performance remained stable with an increase in the number of customers using digital services.

Error and fraud in Corporation Tax research and development reliefs, Personal Tax Credits and Child Benefit

  • The C&AG has qualified his opinion on the regularity of HMRC’s 2024-25 Resource Accounts due to the material level of error and fraud in Corporation Tax research and development (R&D) reliefs.
  • HMRC’s revised estimate of error and fraud in Corporation Tax research and development reliefs for 2022-23 is £759 million (9.9% of related expenditure).
  • The C&AG has also qualified his opinion on regularity of HMRC’s 2024-25 Resource Accounts due to the material level of error and fraud in Personal Tax Credits.
  • The C&AG has also qualified his opinion on the regularity of HMRC’s 2024-25 Resource Accounts due to the material level of error and fraud in Child Benefit expenditure.

Conclusion

We recognise that no tax collection system can ensure that everyone meets their tax obligations. In fulfilling our statutory duties under the Exchequer and Audit Departments Act 1921, we conclude that overall, in 2024-25, HMRC framed adequate regulations and procedures to secure an effective check on the assessment, collection and proper allocation of revenue, and that HMRC duly carries these out. This assurance is subject to the observations on specific aspects of the administration of taxes in this report and our other reports to Parliament.

HM Revenue & Customs Annual Report and Accounts 2024-25

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