The Labour Party will conduct an in-depth review into the numerous tax breaks currently offered to UK businesses. The aim is to determine whether these reliefs are "helping or hindering" families and companies, Shadow Chief Secretary to the Treasury Seema Malhotra said.
Speaking to the Observer, Malhotra said that business reliefs – which allow firms to adjust how much they owe the taxman – should face the same analysis as government spending.
"The big test really is to see whether economic policy is helping or hindering businesses and families. So that's why we've started to look at the different types of incentives to invest business has," Malhotra said. "A Labour-run Treasury would want to ensure that tax expenditures would be subject to the same rigorous analysis and review as other expenditure."
Malhotra insisted that the purpose of the exercise is to gauge the effectiveness of the government's support for businesses and that it would be central to Labour's economic policy-making. Labour will also conduct separate reviews into the work of the Bank of England and the Inland Revenue. "Why don't we look again at how the economy is governed?" Malhotra asked.
Malhotra also insisted that the formation of economic policy will involve the party more widely. "The place we're in now is really a story still being written, with Jeremy as leader," she said. "You don't go from leadership campaigns to saying that you've shifted everything. You go through negotiations, we've got our policy committee – so we're at a very early stage."
Earlier this month, HMRC came under fire from MPs for its customer service. Previously described as "abysmal", parliament's cross-party Public Accounts Committee tore into the tax authority for its service, saying its state is "now even worse — to the extent it could be considered a genuine threat to tax collection". A report from the committee also slammed HMRC for its failure to publish an analysis on the pros and cons in relation to business reliefs.