HMRC will see its budget cut by a further 5 per cent in 2015/16 but will be given higher targets for collecting money from tax avoidance and evasion.
Speaking in the House of Commons last week for the spending review, Chancellor George Osborne said HMRC will see its budget cut from £3.4bn in 2014/15 to £3.3bn in 2015/16.
At the same time it will aim to raise £1bn more than the previous year while cutting back office functions.
From 2015/16, the department will aim to raise £24.5bn a year from tax avoidance and evasion, compared to a £23.5bn target for 2014/15.
The Public Accounts Committee has slammed the lack of resources at HMRC, claiming it is “fighting a battle it cannot win” on tax avoidance.
The Treasury says HMRC raised £20.7bn in tax revenues in 2012/13, £2bn ahead of its target and over £6bn more than in 2010.
The spending review paper states HMRC will focus on front-line tax collection services and cut £130m through improved productivity and further digital transformation, reducing inefficient manual processing and dealing with error.
Worldwide Financial Planning IFA Nick McBreen says: “HMRC is under-resourced already. It is a big ask for the organisation to raise more money with less resources, which will have to come from a reduction in manpower.”