Tax  

HMRC in dark about tax allowance breaches

Jessica List, pension technical manager at Curtis Banks, added the lack of data made it "all the more illogical to have such a complex annual allowance system".

She said: "If HMRC is effectively relying on individuals to make sure they don't keep more tax relief than they are entitled to, the system needs to be simple enough for everyone to understand.

"It also seems that we should have certainty that the current limits on tax relief are being fully enforced before discussing changing the whole tax relief system in order to reduce the cost."

Malcolm McLean, senior consultant at Barnett Waddingham, was also surprised to hear HMRC did not have a tighter grip on this income.

He said: "This does raise the possibility of breaches occurring on a scale which could be much more extensive than they (HMRC) or anyone else might have envisaged, not so much in terms of deliberate fraud or abuse but more likely from a lack of understanding from the customer viewpoint as to the rules that apply.

"In my view all three of these allowances are unnecessarily over-complicated. It would be good if the chancellor found a way in his forthcoming budget of simplifying the rules on all the allowances instead of, as he may do, complicate them even further with yet more tax changes."

maria.espadinha@ft.com