The government has said conducting constant reviews into tax relief would not be the best use of resources and could create uncertainty for taxpayers.
In the government's response to the Treasury committee's report on tax reliefs, financial secretary to the treasury, Victoria Atkins, warned having too many reviews could end up "creating uncertainty for taxpayers".
She said while she “agrees with the committee’s intentions” the government does not see a review as the best use of resources.
MPs on the Treasury committee said there should be five-yearly reviews of tax reliefs and that reliefs which no longer align with policy, are vulnerable to abuse or cost more than expected should be removed.
The committee found, during an inquiry, that only 365 out of a total of more than 1,180 forms of active tax reliefs have been officially costed by HMRC.
This led to the cross-party group recommending costings for all tax reliefs from the 2025/26 financial year onwards should be published.
But Atkins said: "A full review of all tax reliefs would impose significant uncertainty on the tax system, putting revenue at risk and altering business behaviour whilst they waited for such a review to conclude."
She added that costing all tax reliefs is not possible without collecting significant additional data from taxpayers — putting further administrative burdens on them and "limiting our overall simplification and admin burden reduction efforts".
Atkins added: "Any regular time-based assessment of whether reliefs should continue to exist creates inherent instability and uncertainty in the latter years of that cycle for all taxpayers claiming or considering claiming a relief."
Atkins said the number of tax relief evaluations by HMRC in recent years had increased.
She went on to say: “I am of the view that that this ongoing activity already delivers the majority of the committee’s desired outcomes and that going further in the manner suggested would not always be the best use of resource and also have unintended consequences – whether that be the time of officials or the costs to external organisations and taxpayers.”
The government's response has been called “disheartening” by chair of the Treasury committee, Harriet Baldwin.
It comes after the committee said the tax breaks are "open to abuse" and complicate the system.
Baldwin said: “Our tax system is too complicated. It is disheartening to learn that the taxman has no plans to even measure the cost of benefit of hundreds of different tax reliefs – something that would help ministers simplify the tax system and target growth.”
tara.o'connor@ft.com
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