Govt more than £600m behind tax avoidance targets


Government measures to clamp down on tax avoidance are bringing in £615m less than originally forecast, according to an analysis from the Office for Budget Responsibility.

In an investigation of successive measures to clampdown on avoidance introduced since 2010, the OBR found that none of the plans had brought in more than expected, with many falling below targets.

Reviewing 39 announced changes introduced by the Conservatives since they first entered power in 2010, the OBR said: “Most measures are within £50 million of the original estimate either way, but that there have been five measures where the average yield is lower by more than £50 million a year.

“No measures have significantly outperformed the original costing.”

18 of the 39 measures were found to be yielding less than expected, producing a total shortfall of £834m, while 10 were exceeding forecasts by £219m, resulting in an annual overall shortfall of £615m.

In particular, the OBR found that plans to raise revenues through new disclosure facilities for Crown dependencies in Jersey, Guernsey and the Isle of Man would now raise around 20 per cent less than expected, equivalent to £50m a year.

Similarly, while a 2010 plan to reduce fraud and error in tax credits was expected to raise £350m, the OBR said it was instead generating savings of £200m.

And a crackdown on onshore employment intermediaries has also yielded £300m less than expected in the last two years, although the OBR adds this is expected to improve from 2016/17.

In his most recent Budget, the Chancellor promised to devote money raised from efficiencies at HMRC to further avoidance measures.

The analysis comes months after the Institute for Fiscal Studies accused the Conservatives, Labour and Lib Dem parties of using “made up assumptions” for increased revenue from avoidance clampdowns as part of their election campaigns.

A Treasury spokesman could not be reached for comment.