HMRC writes off £5.2 billion tax
Jun 29 2012
Taxes totalling almost £5.2 billion were written off by HM Revenue and Customs (HMRC) last year, according to a report published by official auditors.
Meanwhile, HMRC's accounts for 2011/12 showed it overpaid between £2 billion and £2.5 billion in tax credits, and underpaid up to £290 million as a result of fraud and error, the report by the National Audit Office (NAO) said. A target of reducing the level of fraud and error to 5% of tax credit entitlements was missed.
The chairman of the influential House of Commons Public Accounts Committee, Margaret Hodge, said she was shocked by "the sheer scale of waste and mismanagement" at HMRC.
Over the last two years, the report found there had been a "large increase" in the amount of tax which HMRC has decided not to pursue - including £756 million worth of income tax in 2011/12 alone. Total tax debts being pursued stood at £13.3 billion at the end of March, down from £15 billion the year before.
The department met its target of reducing tax credit debts from £4.7 billion to £4 billion by March this year, but only after writing off old debts totalling £1.7 billion. It estimates that between £2.3 billion and £4 billion of tax credit debt is unlikely ever to be recovered.
The 2011/12 total of £5.17 billion in write-offs and remittances - debts which have been dropped because they are too small to be worth pursuing or would cause hardship if collected - included £1.5 billion in income tax, £1.9 billion in VAT, £653 million in National Insurance and £503 million in corporation tax.
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