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NAO to monitor use of tax reliefs

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In a report describing the ‘landscape’ of tax reliefs in the UK, the National Audit Office has indicated that it intends to carry out future work evaluating how tax reliefs are developed, implemented and administered. The report also covers how the exchequer departments assess the performance of reliefs and how they assess, monitor and respond to the risk that reliefs are abused.

The NAO commented that monitoring arrangements for reliefs vary across HMRC, and that few evaluations are commissioned. There is also limited monitoring of changes in the cost of particular reliefs.

Amyas Morse, head of the National Audit Office, said: ‘Tax reliefs are a powerful, important and long-standing element in our public finance system. However, their implementation is subject to less independent scrutiny that that of other instruments of public policy. The intention of this report is to put Parliament in a position to consider whether the major elements in the management and responsiveness of the system of tax reliefs are working adequately or are in need of further attention.’

The NAO recognised, however, that HMRC is responding to the challenge of administering reliefs and of addressing the abuse of tax rules, for example in relation to avoidance by the wealthiest individuals.