A REVENUE and Customs (HMRC) programme designed to increase revenues and cut costs ended up costing the taxman over £800m as cash-generating compliance officers were sacked.
The programme, which ran from 2006 to 2011, found the tax-raising body reduced its headcount by 3,387 by 2008-9, saving £116m per year.
However, those staff cuts meant HMRC was forced to reduce its revenue forecasts over the period by £1.1bn, a National Audit Office report found – a net loss of £870m by 2011.
Tax lawyers described the loss-making programme as “disgraceful”.
“I despair – this is a revenue generating department, but acts as if its cost-cutting arm is not connected at neck to the revenue raising arm,” said George Bull, head of tax at Baker Tilly.
HMRC argued it is working on boosting productivity.
“Like most departments we have to deliver more for less, and have been reducing our workforce in line with our Spending Review settlement,” a spokesman said.
“However, in that settlement an additional £917m was made available to tackle evasion, avoidance and fraud. This is being used to increase our tax take from compliance work.”