Tax Reliefs - Public Accounts Committee Contents

Annex 1

Good practice principles for the effective management of tax reliefs

We believe a framework for a well-designed tax relief, and system of reliefs, would include:

·  A clear definition of tax expenditures, so it is easy to understand the number and value of these types of reliefs and they can be monitored appropriately;

·  Assessing the effectiveness of tax expenditures, using the same basic principles as for spending programmes;

·  Establishing the policy objectives of a relief, so it is possible to evaluate the relief ;

·  Understanding the costs and benefits, including the costs of abuse;

·  Measuring behavioural change as a result of the relief's introduction, to assess whether it has resulted in the intended behaviour change;

·  Setting clear parameters for monitoring the cost and impact of reliefs, such as establishing what changes in costs will trigger feedback to policy makers;

·  A responsible attitude to promoting take-up, to ensure target groups can use the relief.

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Prepared 25 June 2014