A report from the Public Accounts Committee (PAC) has accused HM Revenue & Customs (HMRC) for not monitoring the tax reliefs properly for the taxpayers.

MPs also added that ‘HMRC doesn’t check if the tax reliefs are being abused by the applicants’. Moreover, lack of knowledge about the cost of tax reliefs on HMRC’s side has also concerned PAC.

Tax reliefs are designed to make the tax system fairer and encourage good behaviours. For instance, income tax personal allowance are intended to change behaviour of low earners and tax relief for pension contributions are encouraged for a business investment.

HMRC officially listed 398 kinds of reliefs. But, according to the Office of Tax Simplification (OTS), HMRC have used 1,140 kinds of reliefs in different circumstances. OTS has further added; every year around £100 billion in tax money is not claimed.

Chairman of the PAC, Margaret Hodge, said: ‘HM Treasury and HMRC do not keep track of those tax reliefs intended to influence behaviour. They do not adequately report to Parliament or the public on whether reliefs are working as intended and what they cost and whether they represent good value for money. HMRC does not effectively monitor changes in the cost of tax reliefs, so is slow in identifying instances where a relief is being exploited for a purpose Parliament did not intend.’

In response to the accusation, HMRC spokesman has highlighted saying ‘As a result of our compliance efforts and the £1bn extra investment over this Parliament, we have secured more than £100 billion in additional revenues in the past five years to pay for essential public services, raised penalties for tax evasion to 200% of tax owed and increased prosecutions five-fold’.

Despite the statement provided by HMRC, PAC still accuses them of being “too cosy” with big corporate firms and failing to prosecute serious tax dodgers.