HC Deb 23 November 1988 vol 142 c1W
Mr. Redwood

To ask the Chancellor of the Exchequer what has been the outcome of the pilot study into a wider issue of personal tax returns by the Inland Revenue.

Mr. Lamont

The pilot study, which took place during 1987 and 1988, was designed to test the Keith committee's suggestion that issuing personal tax returns to every employee known to the Inland Revenue would be effective in bringing to light previously unreported sources of income.

The findings suggest that a general issue of personal tax returns would not be an effective way of uncovering income which would not otherwise be taxed. In a very large majority of cases it would not bring to light any information affecting the taxpayer's liability and about 20 million taxpayers would be troubled unnecessarily. About 0.7 million—some half of them in the black economy—might be expected to disclose income which would not otherwise be taxed; the amounts disclosed would generally be small and the total tax yield from the issue of the returns might not be much more than the cost of issuing them and handling them when completed. The findings also suggest that about 0.7 million taxpayers might be expected to claim additional reliefs; the amounts claimed would generally be small and in some, or possibly most, cases no relief would be found to be due after the claim had been examined.

The Inland Revenue will continue to issue returns to all taxpayers who it thinks might pay too much or too little tax in the absence of a return. But whether or not a return has been issued, it is the obligation of all taxpayers to report any income they receive which has not been taxed, and the Inland Revenue will be taking steps to remind taxpayers of this obligation. In the light of the pilot study, however, it does not propose to send returns to employees more widely.