Tax gap remains low

Jul 8, 2019
Author: Hawsons
tax gap
HMRC has published a report showing that the UK tax gap in 2017/18 is estimated to be £35 billion.  This is 5.6% of total theoretical tax liabilities, and a small increase of 0.1% from 5.5% in 2016/17. HMRC therefore secured 94.4% of all tax due.

The tax gap is the difference between the amount of tax that should be paid to HMRC compared to what is actually paid. Further details in the report show:

  • the overall tax gap has fallen from 7.2% since 2005/06
  • the duty-only excise tax gap has reduced from 8.4 % in 2005/06 to 5.1% in 2017/18.
  • the corporation tax gap has reduced from 12.5% in 2005/06 to 8.1% in 2017/18.

Jesse Norman MP, Financial Secretary to the Treasury, said:

‘The UK’s low tax gap underlines both how the vast majority of people are paying the correct amount of tax, and how effective HM Revenue and Customs has been in its efforts to clamp down on tax evasion and avoidance.’

The report advises that the majority of taxpayers want to get their tax right, but many are still finding this hard, with avoidable mistakes costing the Exchequer over £9.9 billion a year. HMRC advise that £3 billion of this is attributable to VAT alone.

With the introduction of Making Tax Digital (MTD) for VAT, HMRC anticipates that the tax lost due to avoidable errors will be reduced because of the improved accuracy that digital records provide.

Internet link: GOV.UK news

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