Recommendation 3

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.