The UK's tax authority has been accused by MPs of failing to properly monitor the system of tax reliefs. A report from the Public Accounts Committee (PAC) says HM Revenue and Customs (HMRC) underestimates the number of tax reliefs and does not properly count their cost. The taxman does not check sufficiently to see if the reliefs are being abused, the MPs add. The PAC said that HMRC does not know how many reliefs exist or their cost. The huge burden of tax reliefs on the public purse is an issue that receives relatively little attention. These are exemptions from tax law that are either designed to make the tax system fairer, such as the income tax personal allowance, or which are intended to change people's behaviour, such as tax reliefs for pension contributions, the newly announced personal savings allowance, or the various reliefs to encourage business investment.

'Worrying lack of curiosity'

HMRC lists just 398 reliefs, but the Office of Tax Simplification has counted 1,140 that the committee says cost more than £100bn a year in forgone tax. Margarget Hodge, chairman of the PAC, said that HMRC and the Treasury displayed a "worrying lack of curiosity" about the true cost of all these tax reliefs.
She said both of the government departments had failed to measure if the reliefs provided value for money, or had led to taxpayers changing their behaviour in the way intended, such as by increasing their saving or investing. "HM Treasury and HMRC do not keep track of those tax reliefs intended to influence behaviour," Mrs Hodge said.....Read more here