Source · Select Committees · Public Accounts Committee
Recommendation 3
3
The exchequer departments are not transparent with Parliament on which tax reliefs need to change...
Conclusion
The exchequer departments are not transparent with Parliament on which tax reliefs need to change taxpayer behaviour for government objectives to be achieved. Tax reliefs that are designed to change behaviour require more attention 6 Management of tax reliefs than those which are intended to simply benefit a specific group because it is uncertain how taxpayers respond to tax incentives. The objectives of a tax relief are not always clear. It is difficult for Parliament to scrutinise a tax relief if the exchequer departments do not set out what they intend the relief to achieve. In 2019, HMRC completed a provisional assessment of which tax reliefs had behavioural objectives, but it has not finalised that assessment or published it. While this assessment would help parliamentarians, there is also a need for information on the specific objectives of each relief which aims to change behaviour. In its public reporting, HMRC describes reliefs but does not state their objectives. Recommendation: HMRC should, within three months, publish a list of all new and existing reliefs with objectives that include changing behaviour and specify the objectives of each. Recommendation: For any new or amended tax reliefs HM Treasury should identify in the Budget’s supporting documents whether they are intended to change taxpayer behaviour and how the government will measure whether that objective has been met.
Government Response
Not Addressed
HM Government
Not Addressed
3: PAC conclusion: The exchequer departments are not transparent with Parliament on which tax reliefs need to change taxpayer behaviour for government objectives to be achieved. 3a: PAC recommendation: HMRC should, within three months, publish a list of all new and existing reliefs with objectives that include changing behaviour and specify the objectives of each. 3.1 The Government agrees with the recommendation. Target implementation date: Autumn 2021 3.2 The government will explore the best way to collate and publish the objectives of non-structural tax reliefs, many of which have been in place for a long time. It will take time for the government to consider the best way to present this information in an accessible way. This work will take place through the course of 2021. 3b: PAC recommendation: For any new or amended tax reliefs HM Treasury should identify in the Budget’s supporting documents whether they are intended to change taxpayer behaviour and how the government will measure whether that objective has been met. 3.3 The Government agrees with the Committee’s recommendation. Target implementation date: Autumn 2020 3.4 The government is committed to continuing to improve transparency and will aim to ensure that the Tax Impact and Information Notes (TIINs) for new tax reliefs and changes to existing reliefs specify where they are intended to change behaviour. The information in TIINs is reviewed by Ministers ahead of publication. 3.5 The government will measure the impact of tax reliefs through monitoring and evaluation. The 29 government has committed in this response to establish and publish the criteria it will use to determine which reliefs to evaluate. HMRC also agrees that there is scope to publish more cost estimates and the results of a more structured programme of internal evaluation analysis performed from 2021, subject to Ministerial approval.