Source · Select Committees · Public Accounts Committee
Recommendation 13
13
We asked HMRC what assessment it had made to determine who benefited from another large...
Conclusion
We asked HMRC what assessment it had made to determine who benefited from another large tax relief, the VAT relief on the construction of new dwellings. HMRC forecast that the relief cost £15 billion in 2018–19. We asked whether the relief would distinguish between the benefit of someone spending large sums of money to build a single house, compared to another spending the same amount of money to build many more houses for low-paid families. HMRC told us that this tax relief was intended to incentivise the construction of new dwellings and encourage housebuilding. It explained that it considered the test of whether this was a success to be based on whether the relief reached the intended target part of the economy rather than who benefited.
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.