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The Revenue will have to trim 15% off its resources budget while being expected to collect additional billions through investigations into illegal tax dodging, George Osborne told Parliament today.
In his spending review statement to the Commons this lunchtime, the Chancellor claimed there was 'a need to address the situation under the last government where the gap between the taxes owed and the taxes paid grew considerably', and he confirmed that HMRC is to receive an extra £900 million funding for work combating tax evasion and tax fraud: news that was first announced last month by the chief secretary to the Treasury, Danny Alexander. It is expected that the investment will raise £7 billion in missing revenues
The taxman will, however, be expected 'to find resources savings of 15% through the better use of new technology, greater efficiency and better IT contracts,' said Mr Osborne, who criticised the previous administration's attempts to sign up banks to a code of practice on taxation.
'I have asked the Revenue how many of our leading 15 banks actually signed up. The answer is four; four out of 15,' said the Chancellor, who added that he had instructed HMRC to work with the banking sector to ensure the remaining financial institutions have implemented the code by the end of November.
Neal Todd, a senior tax partner at City law firm Berwin Leighton Paisner, criticised the spending review's trimming of the Revenue's resources budget.
'Given the complexity of the current tax code, the cuts... threaten the department's ability to operate effectively,' he said. 'A diminished HMRC can only administer the system fairly if the tax system itself is simplified.
'The key to long-term prosperity is growth. A simpler and internationally competitive tax regime is vital to attract business and investment to the UK.'
Senior BDO tax partner Stephen Herring said he was 'sceptical' that the required savings could be made by the taxman.
'Generating ongoing efficiency savings requires a more active approach to tax policy simplification, enabling resources to be released for combating tax evasion and improving the service provided by HMRC to both businesses and individual taxpayers,' he remarked.
