The Committee first reported on tax reliefs in June 2014, identifying areas of concern in what it described as “a substantial, complex and poorly managed element of the tax system”. The Committee were concerned about the lack of transparency and accountability for tax reliefs, inadequate management and controls, particularly of tax expenditures, and the responses of HMRC and HM Treasury to changes in costs of tax reliefs and failure to adequately inform Parliament.
Tax reliefs are an important part of public policy design. They can also make the tax system more complex and less transparent, and pose risks to the exchequer because costs can rise unabated. Some have been the focus of tax avoidance. Decision makers and Parliament therefore need information about how tax reliefs are working and which reliefs require their attention. However, HM Treasury and HMRC have not identified which tax reliefs are tax expenditures, intended to change behaviour. They also do not monitor or report their costs and benefits in a way that would allow wider government, Parliament or the public to know if such reliefs are working as intended. This inquiry will examine whether this creates a significant gap in accountability to Parliament for administrating public finances effectively and allows significant risks to go undetected: meaning that tax reliefs cost more than expected; that they are used in ways not intended by Parliament; or that they do not bring about intended behaviour change. This inquiry will also allow the Committee to explore progress made since its last report on the assessment, management and reporting of tax reliefs and their costs.
Further information