£98m extra spending failed to rake in more tax

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A public spending watchdog has found two projects costing £98m that were set up to boost tax collection rates failed to help to rake in any extra cash.

The new systems at HM Revenue and Customs (HMRC) were expected to bring in £743m by the last financial year but had not delivered “any additional benefits”.

In a report on tax compliance, the National Audit Office found delays in introducing the two case management schemes, Caseflow and Spectrum, were behind the failure.

It states: “The delays in delivering projects meant that HMRC has not delivered the forecast yield increases as quickly as intended.

“Two projects – Caseflow and Spectrum – received £98m of programme funding and were originally forecast to achieve net yield increases of £743m by 2010/11.

“At the end of 2010/11, the two projects had not delivered any additional benefits.”

The report found overall improvements in the way the HMRC was tackling tax evasion.

Additional payments of £4.32bn were recorded between 2006 and 2011, although that was short of its £4.56bn target.

The Compliance and Enforcement Programme, made up of more than 40 projects, cost £387m to this financial year.

However although the organisation is making better use of technology to identify evasion “it is not yet exploiting the full potential of the new systems”.

The NAO also warned that the HMRC would not meet its future forecasts, which it branded over-optimistic, of an additional £8.87bn by 2014/15 because of the delays in key projects.

NAO head Amyas Morse said: “This major programme has helped HMRC to increase tax yield substantially and has introduced ways of working which will strengthen HMRC’s compliance work in future.

“The department could, though, achieve better value for money from its investment in compliance work by improved understanding of the impact of individual projects and ensuring that its staff have the capacity to exploit new systems to the full.”