Recommendation 27

In 2015, HMRC published a qualitative evaluation of entrepreneurs’ relief but it only interviewed 17 claimants as part of the evaluation.52 In 2017, HMRC published a larger quantitative evaluation of entrepreneurs’ relief which included interviews with 625 claimants. The 2017 evaluation found that at the point they invested, only 8% of claimants had been influenced by the relief.53 The Chancellor referred to the results of this evaluation when he announced a major reform of entrepreneurs’ relief in the 2020 Budget.54 Over the period April 2015 to March 2019 entrepreneurs’ relief cost £11 billion.55 We asked the exchequer departments why it had taken them so long to conclude on the value for money of entrepreneurs’ relief. HMRC responded that it had published information on the cost of entrepreneurs’ relief which had informed the public debate and that it was a matter for ministers to decide which tax reliefs to amend. HM Treasury said that it required careful preparation to change a tax relief. It also told us that the rules covering entrepreneurs’ relief had been changed following a review in 2017.56