The PAC and the merits of tax reliefs (Accountancy Age)

On Monday the Commons public accounts committee began its inquiry into “the variety of tax reliefs used in the UK and how they are administered” by questioning HMRC chief executive Lin Homer and Sir Nicholas Macpherson, permanent secretary at the Treasury.

The committee says on the Parliament website that it does not consider the formulation or merits of policy. Margaret Hodge, its chairman, said its role was to “test the effectiveness” of policies. She began by asking Homer: “How many tax expenditures are there?”

The National Audit Office had noted that tax expenditures provided “behavioural incentives to achieve economic and social objectives”. They were often an alternative to public expenditure and had similar effects.

But the number of tax expenditures – among the 1,128 reliefs identified by the NAO – was not a headline figure in the NAO report. The authors had highlighted instead the cost of tax expenditures, and that was estimated at £101bn.

Read more at Accountancy Age.