This paper examines the corporation tax forecasting techniques used by the
Institute for Fiscal Studies. For current year forecasts a judgemental forecast is
found to have performed better than relying solely on a simple model or
information on the receipts available so far in the current financial year. For
longer time horizons the judgemental forecast has performed slightly less well
than the modelled forecast. While forecasts made later in the financial year have
led to more accurate estimates of receipts in the current year no evidence is
found that this has improved the accuracy of longer run forecasts. In the short
term inaccuracies in the modelling process are found to be more important than
errors in forecasting growth in corporate profits. However the latter is still an
important component of errors and one that grows substantially in relative
importance as the forecast horizon increases
