Recommendation 18

Some tax reliefs incentivise behaviour, while others represent a choice by government to reduce the tax burden on particular groups or sectors. In 2019, HMRC completed an assessment of reliefs with economic and social objectives, resulting in them being grouped into three broad categories reflecting the broad type of outcome they were designed to achieve. Around 40% are designed to incentivise a specific behaviour, 40% to benefit a specific group, and 20% to serve a social purpose. This internal assessment was provisional. HMRC told us that the exchequer departments want to focus attention with their evaluations on those reliefs that are designed to achieve behaviour change. The NAO found that while HMRC’s categorisation was useful in understanding the broad objectives of tax reliefs, it was not sufficiently detailed to be able to identify tax reliefs targeted at similar sectors or with similar objectives.32