The Government's policy of writing off almost £4.6bn in unpaid taxes, in a year that has seen its tax take spiral because of the downturn, has been branded 'ridiculous" by a leading chartered accountant.
The Inland Revenue published its accounts for the year to the end of March last week, which showed the total tax take had fallen £22bn. Of that, the Government wrote off £4.1bn mainly in value added tax, as well as National Insurance contributions and corporation tax, last year because it is not practical to track the money down.
Angela Beech, the head of personal tax at Blick Rothenberg, said: "That is a lot of money that the revenue hasn't bothered collecting. It just seems ridiculous." The Government said the write-offs were debts considered "irrecoverable because there is no practical means for pursuing the liability".
Remissions hit £386m, mainly through tax credits. The Government describes remissions as "debts capable of recovery but HMRC has decided not to pursue the liability, for example, on the grounds of value for money or official error".
An HMRC spokesman said: "We collect almost all tax debt and write offs are relatively low. Our accounts show that in 2008-09 we only wrote off 1 per cent of total revenue and around 90 per cent of that was due to insolvency. HMRC can, does and will continue to pursue those who won't pay when they have the means to do so." The amount of corporation tax written off rose from £374m in the year to March 2008 to £596m, which Ms Beech speculated could be companies collapsing. She was also angered by HMRC's policy of putting aside £140m to top up benefits for staff opting to retire early. Ms Beech said: "The early retirement cost isn't living in the real world. Other companies don't have the luxury."Reuse content