HM Revenue & Customs chief executive Lin Homer is to be questioned by MPs over calculation errors that meant HMRC overstated how much it had recouped in owed tax.
The Treasury select committee has called Homer to give evidence next week after a report from the National Audit Office, published yesterday, revealed HMRC had over estimated the amount of tax it had collected by £1.9bn a year. She will then face the public accounts committee the week after.
HMRC had agreed with the Treasury to claw back £2bn in extra tax in 2011/12 and 2012/13. But the NAO’s report pointed out the baseline against which this was measured was set £1.9bn below where it should have been.
The NAO report says: “While not diminishing the focus and energy HMRC has put into maximising revenue from its compliance work, this made the original targets easier to achieve. For example, in the first year HMRC agreed to deliver an incremental improvement of £2bn. As the baseline against which it was measuring was set £1.9bn too low, the incremental improvement required to meet the target was in reality only £100m.”
TSC chair Andrew Tyrie says: “HMRC appears to have overstated its performance. The committee will be discussing this and other matters with HMRC at its meeting on Tuesday.”
HMRC still met the targets it had agreed with the Treasury but by setting the baseline too low it reported exceeding them by more than it actually had.
As a result it HMRC and the Treasury have now agreed even higher targets for the future, though these are now being reviewed by HMRC.
An HMRC spokesman says: “We regret an historic error made in 2011 when we wrongly calculated the baseline against which our performance was measured. We have corrected this error and even against the corrected baseline we have still exceeded our targets. We will work closely with the NAO to prevent this happening again”.