HMRC apology over tax revenue error

The head of HM Revenue and Customs (HMRC) has apologised to MPs for an error which led tax officials wrongly to claim they were bringing in billions of pounds in additional tax revenue for the Exchequer.

HMRC chief executive Lin Homer revealed the mistake in the agency's annual report and accounts last week
HMRC chief executive Lin Homer revealed the mistake in the agency's annual report and accounts last week

The mistake, uncovered by Whitehall's spending watchdog the National Audit Office, meant that HMRC's performance targets for the amount of tax expected to be raised from 2010/11 onwards were set £1.9 billion a year lower than they should have been. Improvements in compliance levels in the two subsequent years were overstated as a result of the blunder.

HMRC chief executive Lin Homer revealed the mistake in the agency's annual report and accounts last week, and today apologised to MPs on the House of Commons Treasury Committee, saying that she accepted responsibility for setting the baseline level for tax yield too low.

Ms Homer said: "I have made clear that when the NAO undertook their audit, we and they did find this error of calculation in the baseline.

"Obviously I am very sorry that that error occurred and the reason for making it clear in my annual report is to account for that to Parliament and to apologise."

Ms Homer said that the HMRC received £1 billion in additional Government funding in return for meeting its targets, but said that this would have been achieved even if the baseline was not set too low. HMRC had not received any extra money from the Government as a result of the mistake, and staff bonuses had not been inflated because of it, she told the committee.

"What I would want to emphasise is that the achievement my staff made over those years has been what the Government asked of it, perhaps slightly more," said Ms Homer.

"To their credit, when the target was reached - which we now realise was softer than we had thought - they didn't stop, they kept going. That's the reason no money has been lost to the country.

"Tax inspectors, being of the nature that they are, didn't down tools at the target, they performed and got as much as they could in."