MPs slam HMRC over scrutiny of tax relief

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MPs have criticised HM Revenue & Customs over its lack of scrutiny on whether tax reliefs are being used effectively and warned of a potential return to a “disastrous decline in customer service”.

In a report on HMRC’s performance, published today, the Public Accounts Committee says there are a “number of matters of concern” about the way the organisations collects tax revenues and delivers customer service.

It says: “It is essential that HMRC avoids repeating the mistakes it made two years ago when it reduced the number of staff in its personal tax service prematurely, resulting in a disastrous decline in customer service.”

The report adds: “We remain concerned that HMRC does not scrutinise effectively whether tax reliefs are being used as intended or provide Parliament with sufficient information on the costs of tax reliefs and their effectiveness.”

MPs raised concerns that tax reliefs are not visible enough to encourage proper public debate about where the UK chooses not to collect tax.

The report says HMRC’s current information on tax relief is scattered across different publications.

It says: “HMRC needs to do more. It should monitor whether the use and cost of tax reliefs is in line with Parliament’s intentions when the reliefs were enacted.

“HMRC still does not provide sufficient information to explain the impact that tax reliefs are having on behaviour.”

MPs also pointed to analysis by the National Audit Office which found that entrepreneurs’ relief was costing three times more than forecast.