HMRC faces budget cut and higher targets

HM Revenue & Customs is to see its budget cut from £3.4bn in 2014/15 to £3.3bn in 2015/16 in last month’s government spending review, whilst also being given a £1bn increased target to raise £24.5bn from tax avoidance and evasion in the same period.

The announcement of spending cuts appears inconsistent with the many recent statements the government has made that tax evasion is a priority at the highest level both nationally and internationally.

The spending review paper states HMRC will focus on frontline tax collection services and cut £130m through improved productivity and further digital transformation, reducing inefficient manual processing and dealing with error.

A statement from HRMC said;

“We have to take our fair share of efficiencies, but recognising the vital and critical role of HMRC in bringing in money, ministers have agreed that HMRC’s reduction is lower than most other departments.  We will do more for less, bringing in an extra £24.5bn by 2015/16 through even more effective policing of the tax rules.”

However, some will be sceptical of HMRC’s ability to manage efficiency through technology given the recent failure of high profile projects.  A report by the Public Accounts Committee in April also drew attention to the lack of resources at HMRC, particularly in its fight on tax avoidance, in comparison to the resources large multinationals can devote to ensure that they minimise their tax liability

Despite the fact that the chancellor remains ‘committed to extra resources’ to tackle tax evasion, the lack of clarity as to where these resources will come means HMRC is under more pressure than ever to deliver.

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