Costly complex tax system

Complex tax system drives up HMRC's admin costs National Audit Office (NAO) analysis shows that the UK's increasingly complex tax system is imposing significant administrative costs on both the Government and businesses. HMRC's administration costs for running the tax system rose by 15% - or £563m - in real terms between 2019/20 and 2023/24 to reach £4.3bn, while tax revenue increased at a similar rate, according to the NAO. Looking ahead, administrative expenses are projected to increase by £875m due to new tax rules and fraud detection efforts. The report also notes that "poor customer service performance" created "additional cost" for HMRC and taxpayers. Gareth Davies, head of the NAO, said: "Businesses and individuals deserve a modern, resilient and effective tax system to help them get their tax right first time." Reflecting on the report's findings, Sir Geoffrey Clifton-Brown, chair of the Public Accounts Committee, said: "Public trust in HMRC is being eroded as taxpayers find it difficult to deal with HMRC." Meanwhile, the analysis shows that the number of people paying income tax surged by 4.5m, with this driven by fiscal drag from frozen tax thresholds.