Lin Homer, the HMRC’s chief executive, is due in front of the Public Accounts Committee (PAC) this afternoon as part of an evidence session looking at the effectiveness and costs of business tax reliefs, ssuch as capital allowances, R&D reliefs and SEIS
PAC will be questioning Homer and her team on the impact of the reliefs, areas of abuse and any unintended consequences of the way in which the reliefs operate.
The PAC’s session, scheduled for 3.15pm, will also hear evidence from Sir Nicholas Macpherson, permanent secretary to the Treasury. The committee will be exploring issues raised in a recent National Audit Office (NAO) report into tax reliefs and their administration which suggested that the schemes are used to abuse the tax system.
The NAO’s report identified 1,129 reliefs currently in operation, worth more than £100bn annually. It said ‘the value of tax at risk from the abuse of reliefs is unknown but likely to be significant’, and says HMRC’s own analysis of the tax gap suggests some £4bn is lost through tax avoidance schemes which exploit reliefs.
The NAO said HMRC needs to do more to monitor the introduction and operation of tax reliefs as currently there is inadequate information about the effectiveness, cost and unintended consequences of particular reliefs, including potential for tax avoidance
Margaret Hodge, PAC chair, said in a statement when the report was published: ‘Despite good intentions, every one of these reliefs is an opportunity for abuse or fraud. Six of the 19 types of tax avoidance schemes that HMRC specifically warns people not to use exploit tax reliefs. It is shocking that HMRC knows this and yet there is still no systematic evaluation or monitoring of whether reliefs are working as intended.’
Details of the session are available here: http://www.parliament.uk/pac