Recommendations & Conclusions
10 items
1
Conclusion
Twentieth Report - Tax Reliefs
Accepted
The tax system is too complicated. The huge and seemingly ever-expanding suite of tax reliefs is an important factor in that complexity. We welcome, and will monitor, the Treasury’s commitment to simplifying the tax system. That simplification cannot merely focus on proposed new policies.
Government response. The government affirms its existing commitment to simplifying the tax system, with the Chancellor taking personal responsibility and a mandate for officials to focus on both new and existing rules, stating that most reliefs work well and reviews are already …
HM Treasury
2
Recommendation
Twentieth Report - Tax Reliefs
Rejected
We recommend that the Government undertake a comprehensive and systematic review of existing tax reliefs to look for opportunities for simplification. In doing so, they should in particular look for ways of making it easier for taxpayers to adhere to the rules.
Government response. The government rejects the recommendation for a comprehensive and systematic review of tax reliefs, arguing it would not be an effective use of resources and would create significant uncertainty. It states it is already committed to simplifying the tax system …
HM Treasury
3
Conclusion
Twentieth Report - Tax Reliefs
Acknowledged
Tax reliefs account for considerable reduction in tax revenue. They require adequate data to be collected and published to inform proper policymaking or accountability. However, the evidence shows that this is not happening. The disparity between scrutiny of tax reliefs and that of equivalent direct public expenditure is stark.
Government response. The government agrees on the importance of collecting and publishing data on tax reliefs, stating that HMRC already provides extensive costings and evaluations. It commits to expanding these where possible, while also explaining limitations regarding structural reliefs and taxpayer burdens.
HM Treasury
4
Recommendation
Twentieth Report - Tax Reliefs
Rejected
There are 1,180 tax reliefs, but HMRC only publishes estimated cost data for 365, leaving 815 uncosted. We recommend HMRC publish cost data for all tax reliefs from the 2025/26 tax year onwards.
Government response. The government agrees on the importance of publishing tax relief data but rejects publishing cost data for all reliefs. It argues that for many structural reliefs, the data is unavailable or would impose disproportionate burdens on taxpayers, and highlights significant …
HM Treasury
5
Recommendation
Twentieth Report - Tax Reliefs
Rejected
We recommend the Treasury reclassify tax reliefs as Government expenditure. This would subject reliefs to established value for money assessment, leading to improved scrutiny and ultimately better policy.
Government response. The government rejects reclassifying tax reliefs as government expenditure, stating that existing parliamentary scrutiny and Green Book principles via the Joint Tax Relief Framework are sufficient, and such reclassification is unnecessary and inappropriate given the qualitative difference between tax and …
HM Treasury
6
Recommendation
Twentieth Report - Tax Reliefs
Rejected
We recommend that Government consider how to ensure that the relevant delivery department takes more responsibility for the budgeting for each non-structural tax relief, those designed to promote particular behaviours, in conjunction with the Treasury. This would be intended to promote increased Ministerial accountability and subject such reliefs to levels …
Government response. The government rejects the recommendation for delivery departments to take more responsibility for budgeting non-structural tax reliefs, stating that existing parliamentary scrutiny, Green Book principles, and the Joint Tax Relief Framework are sufficient, and that tax reliefs are qualitatively different …
HM Treasury
7
Recommendation
Twentieth Report - Tax Reliefs
Accepted
Tax reliefs have been abused. The most straightforward way to reduce opportunities for such abuse is to simplify the tax system. Where tax reliefs are maintained, we recommend the Government monitor them for indications of abuse as part of ongoing review processes. The Government should seek and favour external consultation …
Government response. The government states it already meets the recommendation, affirming it takes abuse seriously and actively monitors tax reliefs. It details existing processes including inter-departmental collaboration, seeking external consultation, continual monitoring of costs and take-up, and using various tools to address …
HM Treasury
8
Conclusion
Twentieth Report - Tax Reliefs
Rejected
Political pressure, including through lobbying, tends to promote both the creation of new tax reliefs and the retention of existing reliefs. Tax reliefs long detached from their original policy purpose clutter an ever more complex tax system. We are concerned that there is no routine within Government to identify and …
Government response. The government is already committed to simplifying the tax system and keeps all tax reliefs under review. They do not feel a review of the kind recommended by the Committee would be an effective use of limited resources, saying constant …
HM Treasury
9
Conclusion
Twentieth Report - Tax Reliefs
Rejected
We have taken evidence on several options for seeking to remove outdated tax reliefs from the statute book. A “one in, one out” rule for tax reliefs would be a blunt instrument which could reduce flexibility in policy-making. Sunset clauses have their place, but tax relief expiry dates can act …
Government response. The government rejected the recommendation for a formal five-yearly review system for tax reliefs, stating it already keeps tax reliefs under review and that such a system would be an ineffective use of resources and create uncertainty for taxpayers.
HM Treasury
10
Recommendation
Twentieth Report - Tax Reliefs
Rejected
We recommend that the Government institutes a system of five-yearly reviews, incorporating public consultation, for tax reliefs. Where these reviews find tax reliefs which no longer achieve policy objectives, are vulnerable to abuse, or have estimated costs significantly higher than expectations, then the Government should commit to removing those reliefs. …
Government response. The government rejects instituting a system of five-yearly reviews for all tax reliefs, arguing that extensive existing monitoring by HMRC, annual Finance Bill processes, and previous evaluations already achieve the objective of scrutiny, and that the proposed system would create …
HM Treasury