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HMRC apologises for £1.9bn calculation error

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Lin Homer, HMRC’s chief executive, has apologised before the Treasury Select Committee for errors made by the department in the calculation of its targets.

The apology follows the publication last week of the National Audit Office’s report on HMRC’s 2013/14 accounts. The report revealed an error of as much as £1.9bn in HMRC’s baseline calculation, which led HMRC to report the trend in its performance in a way that inadvertently exaggerated the improvement since 2010/11.

Amyas Morse, head of the NAO, found the error ‘concerning’, but said that HMRC had been broadly successful in meeting its objective of securing additional tax revenue by investing in compliance projects, as measured by its estimates of compliance yield. Morse welcomed HMRC’s decision to invite the NAO to provide independent assurance on the data it publishes on compliance revenue in future, and the greater clarity and transparency about its performance that HMRC has provided in this year’s annual report.

The NAO report also showed that the UK/Swiss tax agreement, which came into force in January 2013, had brought in £1bn by 31 March 2014, suggesting revenues would fall well short of the £5bn HMRC had originally forecast it would collect by March 2016, but in line with its updated forecast of £1.7bn