TaxPersonal TaxEXCLUSIVE: Spend to Save to survive £1bn shortfall

EXCLUSIVE: Spend to Save to survive £1bn shortfall

The Inland Revenue will retain its Spend to Save program until a full review is carried out later this year - despite an expected shortfall of almost £1bn from its target.

The three-year program had been expected to finish at the end of March, but Revenue officials have stated it will remain in place until final figures are calculated and a full review is carried out.

When its targets were set for the 1999/00 financial year, the Revenue had been expected to spend £187m to create savings of £1.95bn. But Accountancy Age revealed in January that the saving figure would be nearer £1.1bn.

Claire Gough, the program’s compliance management team leader, said this week that level of shortfall was still expected. ‘The formal part of the program will be continued into next year,’ she said. ‘Tax collection and compliance projects that have been carried out under the project will continue in the same way.’Final figures for the program are expected to be published in the annual Revenue Board report, due in October, although officials have suggested they may be released as early as July.

None of the 2,000 staff recruited for the initiative are expected to be made redundant or moved out of the program’s umbrella until the reviews are completed.

It is possible that some aspects of the program could continue under a different name even the review decides it should not continue in full.Many accountants slammed the decision to retain spend to save, even for the time being.

Chris Oates, Ernst & Young’s London director of tax investigations, said: ‘Spend to Save has been an abject failure. The problems the Revenue has had is that income tax self-assessment and corporation tax self-assessment have not lived up to expectations and have missed a lot of their targets. My guess is that Spend to Save will be buried in September.’

Brian Baker, HLB Kidsons head of tax investigations, questioned whether the Revenue should keep pouring money into a failed initiative.

‘The 1999 Inland Revenue annual report showed that for every £1 spent on tackling non-compliance under income tax self-assessment they received only 30p. That in itself is an indication that the Revenue is not as efficient as it might be and raises the question of whether it should continue down that track,’ he said.

Observers have also predicted the Revenue will not risk losing face by making the 2,000 staff recruited for the initative redundant.

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