NEWS
01/03/2012 06:44 GMT

HMRC Projects that Cost £98bn Failed To Increase Tax Revenues

A public spending watchdog has found two projects costing £98 million that were set up to boost tax collection rates failed to help rake in any extra cash.

The new systems at HM Revenue and Customs (HMRC) were expected to bring in £743m by the last financial year but had not delivered "any additional benefits".

In a report on tax compliance, the National Audit Office found delays in introducing the two case management schemes, Caseflow and Spectrum, were behind the failure.

It states: "The delays in delivering projects meant that HMRC has not delivered the forecast yield increases as quickly as intended.

"Two projects - Caseflow and Spectrum - received £98m of programme funding and were originally forecast to achieve net yield increases of £743m by 2010/11.

"At the end of 2010/11, the two projects had not delivered any additional benefits."

The report found overall improvements in the way the HMRC was tackling tax evasion.

Additional payments of £4.32 billion were recorded between 2006 and 2011, although that was short of its £4.56 billion target.

The Compliance and Enforcement Programme, made up of more than 40 projects, cost £387 million to this financial year.

However although the organisation is making better use of technology to identify evasion "it is not yet exploiting the full potential of the new systems".

The NAO also warned that the HMRC will not meet its future forecasts, which it branded over-optimistic, of an additional £8.87 billion by 2014/15 because of the delays in key projects.

NAO head Amyas Morse said: "This major programme has helped HMRC to increase tax yield substantially and has introduced ways of working which will strengthen HMRC's compliance work in future.

"The department could, though, achieve better value for money from its investment in compliance work by improved understanding of the impact of individual projects and ensuring that its staff have the capacity to exploit new systems to the full."

An HMRC spokesman said: "We welcome today's report, which recognises the progress we have made delivering a level playing field for all honest taxpayers by tackling the minority of taxpayers who seek to duck their obligations.

"In 2010/11, HMRC brought in an extra £13 billion by tackling non-compliance. The programme, which had more than 40 projects, is forecast to bring in a total of £13.2 billion by April 2015 and by the end of March 2011 it had already delivered £4.32 billion.

"We will continue to build on this, investing in more projects to tackle tax avoidance and evasion, bringing in additional tax revenues of £7 billion a year for the UK by 2014/15.

"We will also take forward the report's recommendations for improvement."