21st November 2014
The National Audit Office (NAO) has criticised HM Revenue & Customers (HMRC) for ‘losing track’ of millions of pounds worth of tax reliefs and being unable to spot abuse of the system.
Tax reliefs are created to change consumer behaviour, such as encouraging saving or preventing individuals from gaming the system in other ways, but NAO said HMRC and the Treasury are not keeping track of where these reliefs are working or not.
It said: ‘The Treasury and HMRC do not keep track of tax reliefs intended to change behaviour, or adequately report to Parliament or the public on whether tax reliefs are expensive or work as expected.
‘We found some examples where HMRC and the Treasury proactively monitored and evaluated tax reliefs, but in general the departments do not test whether their aims for the reliefs are being achieved.’
It said that unless sufficient monitoring and analysis of tax reliefs and their impacts were done, they ‘cannot be value for money’.
The NAO, which monitors spending in government, looked at how HMRC administers 10 tax reliefs and found that it responded ‘with varying degrees of urgency’ when abuse was identified.