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HMRC Gets its Sums Wrong

Tax officials have been forced to apologise after the NAO found HMRC had incorrectly claimed it was bringing in billions of pounds in extra tax.

The discovery by the spending watchdog led PAC chair Margaret Hodge to question how tax inspectors could expect the public to file their own tax returns correctly when the tax office was making such errors.

The NAO found HMRC had reported that it exceeded its performance targets by £1.9bn in 2011-12 and £2bn in 2012-13. In fact, the tax office had brought in only £100m more.

The error arose because tax officials had set the baseline to measure their performance £1.9bn too low when it began the measurement process in 2010. Mrs Hodge said poor governance at HMRC meant the mistake had not been picked up.

“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?”

The discovery follows what has been HMRC’s best year for collecting tax revenues, bringing in £506m, or 6%, more than the year before – and almost £24bn in additional tax through its investigations into avoidance. The taxes which contributed to this increase were income tax and NI, which was 6% higher at £16.2bn, VAT, which rose 7% to £7.2bn, and stamp duties, which rose 35% to £3.4bn.

Source: Financial Times The Daily Telegraph The Independent The Guardian Daily Mail

We Say: We’ll mention this next time HMRC quibble over a discrepancy of a trivial few million on a tax return. But it’s not just on the numbers that HMRC sometimes make mistakes. At a recent Tribunal case where we were confronting HMRC, the first thing they had to do was apologise to the Chairman that their argument was based on … erm… the wrong legislation.

 

David Whiscombe

Consultant

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