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PAC attacks HMRC tax reliefs

The Public Accounts Committee has taken HM Revenue and Customs to task over its tax expenditures provisions via allowances and reliefs because of the potential for discrepancies. Whilst the present government has been in power, a number of tax breaks have been established in a bid to help burgeoning industries and bring about changes in behaviours.

A recent example is tax reliefs awarded to video game developers, which now fall in line with the movie industry. The European Commission investigated the proposal of a 25 per cent tax relief on a maximum 80 per cent of a qualifying games production company’s budget before giving it approval.

The debate heavily revolved around semantics, with the first part establishing a definition of tax expenditure.

Lin Homer, Chief Executive of the HMRC, said that £37 billion of the £101 billion of revenues that the UK forgoes each year is accounted for by zero-rated VAT.

Homer said:

“We’ve tried to capture the widest range possible in this space.”

Sir Nicholas Macpherson, permanent Secretary for HM Treasury, told the committee:

“These things tend to merge into each other and are very much in the eye of the beholder. At the margin, it can merge with public spending, for example.”

Ian Swales, a member of the committee, questioned how compatible the reliefs are with the Office of Tax Simplification, which received sympathy from Homer.

She said:

“There is a good deal more we can do to make tax simpler.”

Business owners will no doubt be in agreement with that last statement, as will their accountant in Liverpool or wherever in the UK they are based.

Posted by Louise
April 17, 2014
HMRC

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