HMRC should step up use of IT to slash tax collection costs

National Audit Office report recommends dramatic increase

HMRC could save £10m if it makes better use of IT

HMRC is being urged to dramatically step up its use of IT in dealings with personal and company tax advisers in a bid to slash tax collection costs.

The recommendation from the National Audit Office (NAO) is contained in a report looking at the way the tax authority interacts with advisers, and includes the suggestion that computerised data should be used to differentiate between agents meaning sanctions could be applied to poor performers.

The report also suggests using internet registration of agents, with the threat that poor performers be deprived of privileged access to HMRC information systems or deregistration.

Some £2.6bn of self-assessed tax was under-declared by taxpayers using advisers in 2007-08, and £900m of self assessed corporation tax.

The report concedes difficulties with upfront costs involved in greater use of electronic communications at a time of cuts but estimated it could save at least £10m in running costs per year.