Recommendation 25

In March 2015, we concluded that there was inadequate assessment of the value for money of tax reliefs.45 In 2017, HM Treasury began to make assessments of the value for money of tax reliefs and by 2019 had assessed the value for money of 63 tax reliefs.46 We asked HM Treasury how it assessed value for money. It explained that in considering a proposal for a tax relief it first tried to establish the ultimate objective and consider alternative ways of achieving that objective, such as through spending or regulation. It said it then looked at the relief’s cost, likely impact including on behaviour, possible levels of deadweight loss47 and the potential for fraud and abuse. It also explained it looked at how the relief would interact with the wider tax system, and then it made an overall assessment of the likely consequences of the new relief.48 HM Treasury’s value for money assessments of tax reliefs also often compare actual costs to the forecast cost of tax reliefs. HM Treasury’s assessments of the value for money of tax reliefs contain information which could help Parliamentary scrutiny of tax reliefs. However, HM Treasury does not publish its value for money assessments as it asserts these to be policy advice to ministers which do not represent the formal position of the department.49 44 Qq 28–29, 36 45 Committee of Public Accounts, The effective management of tax reliefs, Forty-ninth Report of Session 2014–15, March 2015 46 C&AG’s report, paras 2.13, 3.8 47 The amount of relief going to taxpayers’ whose behaviour is unchanged. 48 Q64 49 C&AG’s report, paras 19, 3.13, Figure 15 16 Management of tax reliefs 3 Responding to problems with tax reliefs