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Spending Review: HMRC told to make 5% cuts but raise more from tax avoidance

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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 today for the spending review, chancellor George Osborne said HMRC will seee 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.

The Public Accounts Committee has slammed the lack of resources at HMRC, claiming it is “fighting a battle it cannot win” on tax avoidance.

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 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 frontline tax collection services and cut £130m through improved productivity and further digital transformation, reducing inefficient manual processing and dealing with error.

Osborne said: “Despite the fact that this department will see a 5 per cent reduction in its resource budget, we are committed to extra resources to tackle tax evasion.

“The result is that we expect to raise over £1bn more in tax revenues from those who try and avoid paying their fair share.”

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There is one comment at the moment, we would love to hear your opinion too.

  1. Adam Harper, Director of Professional Development 2nd July 2013 at 9:31 am

    In the Autumn Statement it was thought that HMRC would be exempt from spending cuts so the outcome from the spending review certainly sends mixed messages with many believing that HMRC is fighting a war on tax avoidance that it can’t currently win without changes to legislation.

    It is vague to say ‘we can do more for less’ especially in the current economic climate in which public trust has been severely dented. It is difficult to understand how HMRC will be able to deliver much needed improvements in the administration of tax with fewer resources at its disposal. This news will be disappointing for taxpayers as they will undoubtedly question the serious implications this will have.

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