The tax department will have its budget slashed by 5%, the Chancellor has announced in his spending review say Northampton accountants Harris & Co.
Addressing parliament, George Osborne announced actions which included a 1% reduction in departmental resource budgets in both 2013 to 2014 and 2014 to 2015, which he expects will provide a £2.3bn saving for the government.
And while HMRC has not been exempted from the cuts – the tax authority will see its departmental programme and administration budget go from £3.2bn to £3.1bn for 2015-2016 – it is expected to increase its target for additional revenues to a total of £24.5bn, which is £1bn more than the previous year.
‘When it comes to Her Majesty’s Revenue & Customs, despite the fact that this department will see a 5% reduction in its resource budget, we are committed to extra resources to tackle tax evasion.
‘The result is that we expect to raise over £1bn more in tax revenues from those who try and avoid paying their fair share,’ Osborne said.
In addition, he said the government would borrow £49bn less this year, down from £157bn the previous government borrowed.
Commenting on the Comprehensive Spending Review (CSR), Michael Izza, ICAEW chief executive, said: "Today"s Comprehensive Spending Review missed an opportunity to review the UK Government"s finances. The Chancellor’s statement only provided a one dimensional view and failed to look at spending in the context of tax receipts and other income.
"Also disappointing are the additional cuts to HMRC. These could have significant implications on collecting money from tax payers as well as adding additional burdens to businesses, who already find interacting with HMRC a struggle.
"Whilst businesses are already playing their part in creating jobs and driving economic growth, the additional cuts will have an impact on businesses that have customers in the public sector. We will need to do more to help and support these businesses identify new markets and customers.