By Daniel Hunter

MPs have accused HM Revenue & Customs (HMRC) of failing to properly monitor tax relief systems.

The Public Accounts Committee (PAC) said that HMRC underestimates the number of tax reliefs and does not count the cost properly. The tax authority also fails to sufficiently check if tax reliefs are being abused, the MPs said.

PAC said in a report that HMRC does not actually know how many tax reliefs there are, nor how much they cost.

According to HMRC there are 398 tax reliefs. But the Office for Tax Simplification counts 1,140. And those tax reliefs cost more than £100bn.

Margaret Hodge, chair of the Public Accounts Committee, said: "HM Treasury and HMRC do not keep track of those tax reliefs intended to influence behaviour.

"They do not adequately report to parliament or the public on whether reliefs are working as intended and what they cost and whether they represent good value for money.

"HMRC does not effectively monitor changes in the cost of tax reliefs, so is slow in identifying instances where a relief is being exploited for a purpose parliament did not intend."

An HMRC spokesperson said: "As a result of our compliance efforts and the £1bn extra investment over this Parliament, we have secured more than £100 billion in additional revenues in the past five years to pay for essential public services, raised penalties for tax evasion to 200% of tax owed and increased prosecutions five-fold."

The PAC report calls on HMRC to create an up-to-date list of tax reliefs, how much they cost and what they aim to achieve.

The Committee of MPs suggested that HMRC would be able to keep a better eye on tax avoidance if it monitored tax reliefs sufficiently.