Cracks showing at HMRC over its mounting workload, say MPs
THE CRACKS are showing at HM Revenue and Customs as the taxman struggles to cope with a daunting workload, MPs have warned.
Tax credit fraud and errors are expected to increase and the department has failed to grasp the costs of many taxation reliefs, according to the Public Accounts Committee (PAC).
MPs also issued a fresh warning that they continue to have “serious concerns” about the introduction of a new customs service and the impact of Brexit on UK borders. “HMRC has a daunting task as it prepares for the UK’s exit from the European Union, in whichever form that takes, whilst reprioritising its ongoing projects and day to day services,” the PAC report said.
“The committee recognises these challenges but we remain concerned about the risks to customs and borders post Brexit and the impact on British businesses.”
Staff and resources have been diverted to deal with customs and border demands which has left HMRC facing choices about its other work, MPs said.
The department has “deprioritised” action to cut fraud and error in tax credits because the system is being replaced by Universal Credit.
A 4.9 per cent loss in 2016/17, around £1.3bn, is expected to rise to six per cent this year, according to the report. Labour’s Meg Hillier, who chairs the PAC, said: “HM Revenue & Customs is under pressure and in some areas the cracks are showing.
“The authority expects fraud and errors in tax credits to exceed its target in successive years, driven in part by policy changes that have effectively removed HMRC’s incentive to bring fraud and errors under control.
“It lacks understanding of the costs of a vast swathe of tax reliefs, which means it cannot take an informed view on their value for money.”
Ms Hillier added: “Serious concerns remain over the new customs declaration service and operations at the border after Brexit.”