HMRC accused of failing to properly monitor tax reliefs

HM Revenue and Customs (HMRC) have been accused by MPs of failing to adequately monitor tax relief systems.

The Public Accounts Committee (PAC) believes HMRC is underestimating the number of tax reliefs available and is failing to count the total cost with any clarity.

In the PAC’s report it claims HMRC is failing to assess whether any tax reliefs are being abused, how many actually exist nor how much they cost.

According to HMRC, 398 tax reliefs exist, but the Office for Tax Simplification counts as many as 1,140, with those reliefs costing the Treasury more than £100bn.

Margaret Hodge, chair of the PAC, said: “HM Treasury and HMRC do not keep track of those tax reliefs intended to influence behaviour.

“They do not adequately report to parliament or the public on whether reliefs are working as intended and what they cost and whether they represent good value for money.

“HMRC does not effectively monitor changes in the cost of tax reliefs, so is slow in identifying instances where a relief is being exploited for a purpose parliament did not intend.”

An HMRC spokesperson defended the tax authority’s recent record of cracking down on tax evasion and additional revenues:

“As a result of our compliance efforts and the £1bn extra investment over this Parliament, we have secured more than £100bn in additional revenues in the past five years to pay for essential public services, raised penalties for tax evasion to 200 per cent of tax owed and increased prosecutions five-fold.”

The PAC report calls on HMRC to publish an up-to-date inventory of tax reliefs, how much they cost and what they aim to achieve.


Image: UK Labour

Date published 26 Mar 2015 | Last updated 26 Mar 2015