HMRC is rated as poor, the Insolvency Service has a busy year and and there are new settlement terms for disguised remuneration loan charge
Unsurprisingly for many business owners, HMRC’s performance was rated as poor recently by external examiners. The Insolvency Service has stepped up its support for people in debt and HMRC have released new guidance for individuals who wish to settle their disguised remuneration loan charge liability under new settlement terms.
External examiners mark HMRC’s performance as ‘Poor’
The latest annual report from the Charter Stakeholder Group remains highly critical of HMRC’s service performance, with scores either stagnant or deteriorating across most standards. Alongside poor scores for responsiveness and ease of use, the report highlights overwhelmingly negative feedback on Making Tax Digital (MTD).
The Charter Stakeholder Group monitors HMRC’s performance against the HMRC Charter, a set of service standards. The 2025-26 assessment was based on a survey of 719 taxpayers and agents who were asked to rate HMRC’s performance against each standard on a scale of one to 10.
Of the seven charter standards assessed, only one recorded an improved score compared with 2025.
The poor score is a blow to the government that set out a plan to replace a paper-heavy agency with a ‘world-class’ digital-first organisation. Around £7 billion was committed to modernising HMRC’s old computer systems and infrastructure. This would reduce the headcount in customer contact functions and increase compliance team numbers to bring in more revenue. The technology would be able to respond to customers faster and more accurately, reduce the tax gap of about £59 billion and deter fraud.
Unfortunately, the latest report shows HMRC failing on all levels.
Key findings
Being responsive
Being responsive was HMRC’s lowest-scoring charter standard for the third year in a row, with an average score of 2.8 out of 10, down from 3.0 the previous year.
Tax agents were more critical than taxpayers generally, giving HMRC a score of 2.6. The respondents highlighted persistent postal delays, poor first-time resolution, limited helpline expertise, no effective case tracking or escalation and slow complaints handling.
In particular, there was a feeling that there was one rule for HMRC and another for taxpayers, with an imbalance between HMRC’s response times and the deadlines it imposes on taxpayers.
Making things easy
This category scored 3.25, making it HMRC’s second-worst performing standard. Nearly two-thirds of respondents rated HMRC at three or below and more than a quarter gave a score of one.
Tax agents were particularly critical of HMRC’s continued push towards online tools while their agent-dedicated phone line was staffed with people with insufficient technical knowledge and a lack of understanding of how agents work.
Getting things right
Getting things right scored 3.97, down from 4.1 in 2025. Almost one-fifth of all respondents gave a score of one. Respondents said HMRC staff often lacked sufficient training and expertise and that helpline services provided inconsistent guidance.
A recurring observation was that correcting HMRC errors often requires multiple contacts and lengthy delays.
Accountability
Nearly 82% of respondents felt HMRC were not sufficiently accountable for meeting the Charter requirements, noting that they would be more likely to address declining customer service if they were properly accountable under the Charter. HMRC face no penalties for failing to meet standards.
Digitalisation and transformation plans
Nearly 89% of respondents felt HMRC had not done enough to keep Charter standards central to its Transformation Roadmap and that digitalisation was being prioritised over fairness, accuracy and support.
Making Tax Digital
Probably unsurprising to anyone in business, the feedback on Making Tax Digital (MTD) was overwhelmingly negative. Respondents described it as, at best, poorly designed and generally not fit for purpose.
In complete contrast to HMRC’s ongoing trope, the common concerns included its extra cost and administration, software dependence, quarterly reporting burdens and a lack of confidence in HMRC’s ability to cope with the demands of MTD.
The general feeling was that MTD was uncommercial, offered little practical value and failed to reflect or support the realities of small businesses and agents.
The other charter standards
Other charter standards scored slightly higher, although most ratings still fell slightly compared with the previous year. The scores were:
- Keeping your data secure: 6.86 (7.03 in 2025).
- Recognising that someone can represent you: 6.31 (6.01 in 2025).
- Mutual respect: 5.89 (5.98 in 2025).
- Treating you fairly: 5.25 (5.34 in 2025).
If you have any tax concerns, problems implementing MTD or dealing with HMRC, please get in contact. We’d be happy to help.
Insolvency Service has a busy year
The Insolvency Service has released its annual report showing stronger enforcement activity while improving support for people in debt.
Two key takeaways from the report were the increasing use of Artificial Intelligence to tackle abusive phoenixism and continued tackling of COVID-19 fraud.
Overall, the Insolvency Service returned £42.7 million to creditors and the wider economy in 2025-26. It handled 11,668 insolvency cases, processed 70,633 redundancy payments and approved 48,344 Debt Relief Orders.
Enforcement activity also increased with 1,153 directors disqualified for misconduct, an increase of 11%. There are 185 live company investigations, up 39% on the previous year, with 163 criminal prosecutions completed.
The report showed that the Insolvency Service continued to modernise its services, including progress on a new digital Debt Relief Order service, investment in artificial intelligence and automation to improve the customer experience and the rollout of a new case management system to help investigators work more efficiently.
The problem with COVID
In May 2025, the agency was tasked with taking over the recovery of funds lost to COVID-19 fraud. It reported that 65% of its civil and criminal enforcement outcomes related to it. The Insolvency Service admitted that it anticipated a decline in case volumes as the schemes receded, but activity has remained consistent with previous years, “… reflecting sustained investigative effort and a continuing pipeline of complex cases”.
During 2025 to 2026, there were 773 Section 6 director disqualification outcomes and 55 bankruptcy restrictions and debt relief restrictions linked to COVID-19 financial support scheme misconduct. In the same period, there were 31 criminal convictions resulting in 25 custodial sentences.
Unfortunately, only £4.5 million was recovered.
Abusive phoenixism
The agency also indicated that it had plans to do more to tackle the issue of abusive phoenixism – where directors repeatedly abuse the dissolution or insolvency process to avoid paying creditors or for fraud. This causes significant harm to creditors, honest businesses and public finances.
With an increased technology budget and a quickening rollout of Artificial Intelligence systems throughout the service, phoenixism is firmly within its sights.
It planned to spend an additional £25 million to fund 50 more staff with tech backup dedicated to director misconduct. Cross-government work includes strengthened data-sharing with HMRC and Companies House, using a combined threat assessment to catch dodgy directors.
In 2025-2026, it completed 148 civil investigations into companies where abusive phoenixism was identified and civil or criminal investigations were ongoing into a further 64 companies.
As a result of the abusive phoenix investigations, 18 companies were shut down for trading against the public interest, 87 directors were disqualified and five directors were convicted of criminal offences.
Key achievements in numbers
- £42.7 million returned to the economy through distributions to creditors and debtors.
- 1,153 directors disqualified for financial misconduct.
- 70,633 redundancy payments processed for employees affected by employer insolvency.
- 48,344 Debt Relief Orders approved, helping vulnerable people access debt relief.
- 80,542 Breathing Space protections granted to people struggling with debt.
- A £25 million government investment announced to strengthen action against abusive phoenixism and director misconduct.
- The Insolvency Service’s full report can be found here:
New settlement terms for disguised remuneration loan charge
HMRC have released new guidance for individuals who wish to settle their disguised remuneration loan charge liability under new settlement terms. HMRC will write to those who are eligible to settle under the new terms.
The disguised remuneration loan charge is a UK tax measure that applies to outstanding loans made on or after 9 December 2010 as part of tax-avoidance schemes, when income was paid as a non-repayable loan to avoid Income Tax and National Insurance contributions.
After years of rancorous litigation and political debate, an independent review was undertaken last year, with the response published in conjunction with the Autumn Budget 2025 and legislation included in Finance Act 2026.
Nine recommendations were made by Ray McCann, who led the review. Of these, HMRC accepted all but one of them.
New terms
The new settlement scheme applies to those who have a disguised remuneration loan charge liability that has not yet been paid in full. This includes any settlements agreed after 1 June 2021.
The new terms include a maximum reduction of the settlement fee of £70,000 with another reduction for the scheme’s promoters’ fees. All loan charge liabilities will have an automatic deduction of £5,000, with late payment interest and penalties not included in the final liability.
Additionally, Inheritance Tax will not be collected on disguised remuneration schemes where trusts were used.
Employers and employees
Where an employer was responsible for deducting PAYE from the loan payments, HMRC will attempt to settle the liability with them if they still exist.
HMRC will also write and make an offer directly to the employee which they can accept or refuse if the amount they owe is £0 or they wish to settle now to avoid waiting for HMRC to try to deal with the employer. If the employee does not accept the offer, they will still have the opportunity to settle under the new terms at a later date should HMRC be unable to retrieve PAYE tax from the employer.
HMRC have already issued letters to those they believe are affected and a further letter will be issued with an offer to settle under the new terms. It will include the amount due for settlement, loan details and any other income used to calculate the settlement offer.
Options
A caseworker will be allocated to each individual and who will discuss settlement options and payment plans before any offer is accepted. Once an offer is accepted, an acceptance form must be completed and signed, which will be legally binding. Any open enquiries will be closed thereafter.
Even if there is nothing to pay, it is likely that HMRC will still require a formal signed acceptance of the offer and the form to be returned to them. For those who do not accept the offer, the full loan charge liability will be due.
If an individual believes they are affected but does not yet have a caseworker, HMRC can be contacted at: .
Should you have concerns about the disguised remuneration loan charge or communicating with HMRC, please get in contact. We’ll be happy to help you.