In a new report, the Treasury Select Committee concludes that the tax system is too complex and the scrutiny of existing reliefs is inadequate. This has contributed to the abuse of some tax reliefs, and in certain cases, fraud, the committee says.
The committee calls on the government to undertake a comprehensive and systematic review of existing tax reliefs to look for opportunities for simplification and to monitor for abuse and fraud.
While the overall cost is unknown, HMRC analysis found that 105 of the 1,180 reliefs cost the public purse a total of £195bn. During its inquiry, the committee heard that only 365 of those reliefs have official costings. The committee calls on HMRC to publish costings for all reliefs from 2025/26 onwards.
The committee’s report concludes that the disparity between scrutiny of tax reliefs compared to direct public expenditure is stark and recommend reliefs be reclassified as government spending. The government should consider how individual departments can take more responsibility for budgeting reliefs to increase ministerial accountability and oversight.
The committee also recommend the government institutes five-yearly reviews of tax reliefs and removes reliefs which no longer achieve policy objectives, are vulnerable to abuse or cost significantly more than expected.
Dawn Register, head of tax dispute resolution at BDO, welcomed the committee’s call for a thorough review of tax reliefs and supported their recommendation for greater simplification. ‘This would go a long way towards increasing transparency which would allow better targeting of reliefs and both legislative and enforcement action to curb their abuse,’ she said.
In a new report, the Treasury Select Committee concludes that the tax system is too complex and the scrutiny of existing reliefs is inadequate. This has contributed to the abuse of some tax reliefs, and in certain cases, fraud, the committee says.
The committee calls on the government to undertake a comprehensive and systematic review of existing tax reliefs to look for opportunities for simplification and to monitor for abuse and fraud.
While the overall cost is unknown, HMRC analysis found that 105 of the 1,180 reliefs cost the public purse a total of £195bn. During its inquiry, the committee heard that only 365 of those reliefs have official costings. The committee calls on HMRC to publish costings for all reliefs from 2025/26 onwards.
The committee’s report concludes that the disparity between scrutiny of tax reliefs compared to direct public expenditure is stark and recommend reliefs be reclassified as government spending. The government should consider how individual departments can take more responsibility for budgeting reliefs to increase ministerial accountability and oversight.
The committee also recommend the government institutes five-yearly reviews of tax reliefs and removes reliefs which no longer achieve policy objectives, are vulnerable to abuse or cost significantly more than expected.
Dawn Register, head of tax dispute resolution at BDO, welcomed the committee’s call for a thorough review of tax reliefs and supported their recommendation for greater simplification. ‘This would go a long way towards increasing transparency which would allow better targeting of reliefs and both legislative and enforcement action to curb their abuse,’ she said.
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