United Kingdom ‘tax gap’ falls to £34bn Steelers Lounge
The UK’s “tax gap” has fallen to £34 billion, according to HM Revenue & Customs (HMRC) following a series of crackdowns on evasion and avoidance by businesses and individuals.
The numbers show the shortfall fell to 6.4% from 6.8% of tax due for 2013/14, remaining static in cash terms at around £34bn.
The latest tax gap figures from HMRC are derived from a number of sources, with £5.1 billion of uncollected tax attributed to ” criminal attacks”; £4.4 billion from evasion; £6.2 million from the “hidden economy”; £2.7 billion from tax avoidance, £4.9 billion from “legal interpretation”; £4.1 billion from non-payment; £3.9 billion from “failure to take reasonable care”; and £2.6 billion attributed to “error”.
Financial secretary to the Treasury David Gauke said the reduction in the percentage tax gap represented an additional £57bn in cumulative tax collected over the subsequent eight-year period.
CIoT tax policy director John Cullinane said that HMRC needs to put more effort into investigating and prosecuting those who seek to evade tax.
Gauke acknowledged public anger over unpaid tax, but added that the government “can reassure the public that the proportion going unpaid is low and this government is dedicated to bringing it down further”.
The amount lost to tax avoidance, which is lawful but frowned on by the Government, and evasion – which is unlawful – was £7.1billion, more than was lost to the black market.
HMRC said its comparative records go back to the 2004/05 year, with the lowest tax gap figure recorded –
£31 billion – reported in the 2009/10 year. “While there is unlikely to be any meeting of minds on this point, what is clear is that there is no easy solution to closing this gap and no government should rely on closing the gap to meet their fiscal obligations”. Many of these are now receiving large tax demands that they have limited, if any, ability to pay and could be forced into insolvency.
“It’s therefore all the more surprising that the government is proposing changes to the way it deals with the tax affairs of large businesses which will impose disproportionate administrative burdens on the compliant majority”.
The UK Government invested nearly £1bn over the last spending review period to transform HMRC’s approach to compliance in a bid to close the tax gap.
“We are continuously looking for new ways to improve compliance and tackle non-compliance, whether by helping individuals do the right thing or by cracking down on offshore tax evasion by the wealthy or tax avoidance by multinationals”.
