By Matthew Barrett
Follow Matthew on Twitter
A new report released today by the TaxPayers' Alliance (TPA) for the 2020 Tax Commission (a joint project by the TPA and Institute of Directors) shows that Her Majesty’s Revenue and Customs (HMRC) has given up on collecting £27.4billion in tax revenue over the last five years.
The TPA report, "How the taxman loses billions every year" (which is available to read here in pdf format), suggests that tax simplification would help avoid errors of such scale – and would help reduce the deficit more quickly.
HMRC gives up trying to collect billions in tax in the form of remissions and write-offs every year. The report describes remissions and write-offs:
- "Remissions are debts capable of recovery but HMRC has decided not to pursue the liability, for example, on the grounds of value for money or official error"
- "Write-offs are debts that are considered to be irrecoverable because there is no practical means for pursuing the liability (e.g. after bankruptcies)"
The report's key findings are:
- Over the last five financial years, £27.4billion of tax revenue has been lost by HMRC through remissions or write-offs
- That represents more than £1,000 per household lost in tax over the last five years
- £5.9 billion was lost in 2010-11
- Over the period studied, £4.4 billion has been lost in Income Tax alone
Matthew Elliott, Chief Executive of the TaxPayers' Alliance, said of the findings:
"It's ludicrous that our complex and unwieldy tax system means the taxman gives up on billions every year. Taxes are a challenge to administer and a burden on families and we need systematic reform to produce a simpler tax code. Some of this uncollected tax will be down to the recession but there is clearly a long term problem as well. Tax shouldn’t be so taxing that even HMRC can’t keep on top of it."