Source · Select Committees · Public Accounts Committee
Recommendation 12
12
HMRC collects and reports data on who benefits from some tax reliefs.
Conclusion
HMRC collects and reports data on who benefits from some tax reliefs. For example, HMRC reports annually on the number of people gaining from entrepreneurs’ relief 13 Written Evidence MTE0002 – Mr Richard Wild, Chartered Institute of Taxation, published 10 June 2020 14 C&AG’s report, paras 3.4 and 3.5 15 Qq 40, 63 C&AG’s report, para 3.3, footnote 39 16 Q 41; Letter from Jim Harra, Chief Executive and First Permanent Secretary, HMRC, 26th June 2020 17 Q 63 18 Qq 32, 47; Written Evidence MTE0003 – Management of tax reliefs, Ruari Grant (Senior Public Affairs Associate, Standard life Aberdeen), and C&AG’s Report, para 9 and Figure 3 19 Qq 33, 47–48 20 Qq 47–48, 51 Management of tax reliefs 11 and how much they gain.21 In March 2020, as part of the 2020 Budget the Chancellor announced that he was reforming entrepreneurs’ relief on the basis that the relief was expensive, ineffective and unfair. The relief cost over £2 billion a year and nearly three quarters of the cost benefited just 5,000 individuals.22
Government Response
Not Addressed
HM Government
Not Addressed
2.1 The Government agrees with the Committee’s recommendation. Target implementation date: December 2021 2.2 HMRC recognises the importance of publishing more information to aid understanding of the use of tax reliefs. HMRC already publishes statistics about groups and sectors benefitting from some major tax reliefs, such as the sectors and regions of claimants of R&D tax credits, Patent Box and Employment Allowance. HMRC also publishes information on the number of claimants of Entrepreneurs’ Relief (now Business Asset Relief) by claim size. The evidence from HMRC’s statistics on Entrepreneurs’ Relief and the evaluation of the relief published in 2017 helped inform the changes to the relief at Budget 2018 and Budget 2020. 2.3 By the end of 2021 HMRC will improve the accessibility of this information in its statistics and publicly report more information on the groups and sectors benefiting from the most significant non- structural reliefs where the data is available to do this. HMRC will not be able to assess the groups and sectors benefiting from all significant reliefs due to data limitations. For many reliefs, taxpayers do not need to indicate on their tax return that they are claiming them. This includes VAT relief for construction of new dwellings which taxpayers do not have to indicate on their returns that they are claiming. Where claims are required for reliefs, HMRC collects a limited amount of information about the characteristics of claimants. HMRC weighs the costs to taxpayers of providing data against the benefits of generating analysis. Where HMRC does not hold sufficient data on their use, the collection of data on these reliefs and claimants would increase the administrative burden on taxpayers.