Child benefit cut piles pressure on HMRC

Chancellor George Osborne’s move to cut child benefit for higher-rate tax
payers could pile yet more pressure on an already creaking HMRC, which is facing
further cuts.

Child benefit to families with a parent earning over £44,000 annually will be
axed from 2013, producing an estimated saving of £1bn a year. However, instead
of these payments being stopped, the money will be clawed back through the PAYE
and self assessment systems.

The new system will add an extra layer of complexity to individuals’ tax
affairs and likely increase the strain on HMRC, which recently miscalculated to
the amount of tax owed by six million people. The taxman is currently undergoing
a significant cost-cutting program, due to be completed next year.

“There is a play-off between complexity and fairness,” Grant Thornton’s Mike
Warburton told the Telegraph.

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