Ahead of next week’s Budget, a group of MPs have said that Mr Osborne’s individual revenue forecasts in December’s bundle of anti-avoidance tactics were “each vulnerable”.
The package in question, consisting of actions pursuing a figure of £2.1bn from false self-employment, was calculated by Mr Osborne to collect £6.8bn, the Treasury Select Committee declared.
However the committee considers the forecasts – projected to pocket £520m in 2014/15 alone – to be “inherently extremely uncertain”.
The cross-party collection of MPs have taken evidence from six groups of finance experts before reaching their conclusions; one of which advises officials to “look again” at the method the government used to obtain projections from avoidance measures.
The Office of Budget Responsibility, recommended by the MPs to run the review, has already admitted that the yield from anti-avoidance prevention is usually “more uncertain than that from other policy measures.”
They have also accepted that there is a ceiling on what can be learned from previous procedures in analysing whether costings on how much income can be generated for the Exchequer are appropriate.
Additionally, “even after the event it is often very difficult to establish how much a particular measure has raised,” Andrew Tyrie, the Treasury Select Committee Chairman, commented.
He added: “The OBR should look again at how the government accounts for projected revenues, based on previous experience. Where that is not possible, it should limit the extent to which the government may account for such projected gains.”
Mr Tyrie wants lessons to be learnt from the huge deficit in revenue from a UK-Swiss tax agreement, which was originally expected to bring in £5.3bn, but now only projected to raise £1.9bn over the next five years.
“Forecasts of additional revenue from many anti-avoidance measures are inherently extremely uncertain,” said Mr Tyrie, citing the package unveiled in December.
“The committee warned in its report on the Autumn Statement 2012 that the forecast revenues from the UK-Swiss agreement…were subject to uncertainty and that the proceeds may not meet expectations. These concerns appear to have been justified.”
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