Source · Select Committees · Treasury Committee
Recommendation 10
10
Rejected
Institute five-yearly reviews with public consultation for tax reliefs, committing to remove ineffective ones
Recommendation
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. (Paragraph 51) Tax Reliefs 19
Government Response Summary
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 undesirable uncertainty for taxpayers.
Government Response
Rejected
HM Government
Rejected
The Government again strongly agrees with the Committee about the need for consultation and structured review of tax reliefs. The extensive monitoring of reliefs undertaken by HMRC and the annual process of The Finance Bill ensure that this is already achieved. The Government also has concerns that the Committee’s specific suggestion would give rise to additional uncertainty for taxpayers. As outlined above, the Government keeps all tax reliefs under review. New proposals are carefully scrutinised as part of the tax policy making and legislative processes. In some cases, where reliefs are intended to simplify the system and alleviate burdens by removing taxpayers from the system, HMRC does not collect data, to minimise reporting requirements and achieve the simplification intent. In other cases, HMRC monitors day-to-day uptake of reliefs. HMRC publishes detailed information around the largest 36 non-structural reliefs and has published evaluations of 26 reliefs since 2015. The evidence from this activity feeds directly into decisions by the Government on whether to retain, amend or remove reliefs. While sunset clauses have also been used where appropriate (for example Energy Saving Materials relief), the Government also notes that a system of 5-yearly reviews for all tax reliefs would create new inherent uncertainty at the latter stages of that cycle for all taxpayers who may be claiming or considering claiming a relief.