HMRC’s failures have led to unwittingly misleading the taxpayer

Mistakes in setting targets

Her Majesty’s Revenue & Customs (HMRC) has admitted that it made a mistake which meant it set its targets for compliance yield £1.9bn too low over the 2010 spending review period. The mistake led HMRC to overstate its improvement since 2010 by a similar amount, overestimating how successful it has been in getting more people and businesses to pay the tax they owe. The fact HMRC did not know about this serious error in its calculations until the National Audit Office pointed it out paints a worrying picture.

Tracking performance

HMRC’s commitment to securing more tax revenue for the taxpayer should be commended, but its efforts to date are undermined by poor governance arrangements that have not picked up on this mistake. Put simply: it has not been able to track its performance accurately which is absolutely crucial to long term success. If HMRC can’t get its own numbers right, how can it ask the same of others? 

Misleading Ministers, Parliament and taxpayer

It is truly depressing that HMRC’s failure to take appropriate action has led to its unwittingly misleading Ministers, Parliament and the taxpayer. It is frustrating that time and time again my Committee has urged HMRC to get its house in order and ensure its governance arrangements and management information provide the solid foundations that it needs for tackling tax avoidance - a point made in our recent report on tax reliefs. 
I look forward to discussing this issue with department officials when they appear before us on 16 July 2014.

Relevant information

National Audit Office: HM Revenue and Customs 2012-13 Accounts (PDF 340 KB)