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News - 9 April 2014

Public Accounts Committee shocked over tax relief monitoring

Public Accounts Committee (PAC) chair Margaret Hodge said it is “shocking” that HMRC has no systematic evaluation or monitoring of whether tax reliefs are working as intended.

This statement was with regards to evidence which was given to the PAC by the Treasury’s Sir Nicholas MacPherson and HMRC chief executive Lin Homer on tax reliefs and how they are administered.

Stuart Coleman, Manager of the Tax Department of ABDS comments:
“Margaret Hodge in her opening question asked how many different tax expenditures there were. Lin Homer replied that the Office of Tax Simplification (OTS) had investigated 159. However, in a recent report from the National Audit Office (NAO), they identified 1,129 reliefs currently in operation, worth more than £100bn annually.”

In their report the NAO said that HMRC needed to do more to monitor the introduction and operation of tax reliefs as currently there was "inadequate information" about the effectiveness, cost and unintended consequences of particular reliefs.

Margaret Hodge continued her questioning and asked about the effectiveness of film tax relief. The committee heard that HMRC originally estimated the scheme would cost £30m, but by 2005/06 the actual figure was £700m following a steep rise in the number of claims.
Committee members said HMRC was too slow to react to signs of misuse.

Hodge also moved on to game tax relief, adding there was a clear purpose behind it - to provide additional support to the gaming industry.

“It’s a perfectly clear purpose. The personal tax allowance has a political purpose. But how much did it [game tax relief] cost you to put it in, how much has it gained and how much has it cost you in abuse?”

If you need any help and advice with your Tax compliance, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar to discuss how ABDS can help in all your financial planning and business advice.

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net

Brilliant with numbers   
Great with people  
Clear and precise with advice
Timely and cost effective 
In touch with issues that face our clients
Mindful of our client’s long term strategic goals

Helping Your Business is Our Business
 

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