Tax Liability (Hansard, 28 June 1989)

§ Mr. Norman Lamont

Extra-statutory concessions are operated locally and it would be disproportionately expensive, for the Departments and taxpayers, to collect the detailed information needed to determine precise annual costs. Most concessions are made to deal with what are, on the whole, minor or transitory anomalies under the legislation or to meet cases of hardship at the margins of the tax code. They generally apply to relatively few people and usually involve small amounts of tax in individual cases. There are, however, some exceptions—where the numbers of taxpayers benefiting from a concession and the amounts of tax involved in individual cases are larger.

The Inland Revenue has been able to estimate, in terms of broad orders of magnitude, the current annual revenue costs of most concessions appearing in its published booklet (IR1). The details are given in the table—references are to the numbers that appear in the booklet. The five largest concessions are all practices of long standing—A 1, A5 and A67 date from the 1940s, A63 from the 1960s and A65 from the start of North sea oil exploration.

Revenue Cost—£ million	Inland Revenue (Booklet IR1)
250 :	A63 External training course—expenses borne by employer.
200 :	A5 Expenses allowances and benefits in kind (mainly removal expenses and bridging loan costs borne by employers).
50–100 :	A67 Payments to employees moved to higher cost housing areas.
10–50 :	A65 Workers on offshore oil and gas rigs or platforms—free transfers from or to mainland.
	A1 Flat rate allowances for cost of tools and special clothing..
3–10 :	A2 Meal vouchers.
	A6 Miners: free coal and benefits in kind.
	A19 Arrears of tax arising through official error.
	A22 Long service awards.
	A27 Mortgage interest relief: temporary absences from mortgaged property.
	D2 Residence in the United Kingdom: year of commencement or cessation of residence.
	D22 (CGT) Relief for the replacement of business assets: expenditure on improvements to existing assets.
	D24 (CGT) Relief for the replacement of business assets: assets not brought immediately into trading use.
	D26 (CGT) Relief for exchange of joint interests.
	I2 Direct exports from tanker-loading fields.
	I5 Petroleum Revenue Tax instalments.

461W

Of the remaining 181 Inland Revenue concessions currently in operation, which include about 40 that are obsolescent and a further eight that are being legislated this year and/or are likely to become obsolescent as a result of legislation this year, the relevant revenue costs are thought to be:

Revenue Cost-£ million	Number of Concessions
0.5–3	13
0.1–0.5	30
below 0.1	85

This leaves 53 for which the costs are not known, although the majority of these are thought unlikely to involve significant amounts of tax.

Customs and Excise concessions are published in notice 748. They have 39 concessions currently in operation, of which nine are being legislated this year. They estimate that at least 10 of these—and almost certainly more—involve minimal negligible cost in terms of tax forgone.