In the previous 2012-13 year the Revenue reported a tax gap, which is the difference between the amount of tax due and the amount collected, of £34bn (€47m, €52m). HMRC said this latest 2013-14 figure proves a continuing “downward trend”.
HMRC figures suggest that this has led to a fall from 8.4% against 2005-06, annual figures released by HMRC show.
Understandable anger
“The UK has one of the lowest tax gaps in the world, and this UK Government is determined to continue fighting evasion and avoidance wherever it occurs,” said David Gauke, financial secretary to the Treasury.
“If the tax gap percentage had stayed at its 2009-10 value of 7.3%, £14.5bn less tax would have been collected.”
“There is understandable anger when individuals or companies are perceived not to be contributing their fair share, but we can reassure the public that the proportion going unpaid is low and this government is dedicated to bringing it down further.”
£1bn investment
The UK Government invested almost £1bn over the last spending review period to transform HMRC’s approach to compliance in a bid to close the tax gap.
In the Summer Budget, the Chancellor of the Exchequer announced a range of new measures including £800m of investment to strengthen HMRC’s ability to tackle evasion, reduce avoidance and improve voluntary compliance.
George Bull, senior tax partner at Baker Tilly said the government should be congratulated on successfully bringing down the tax gap to its lowest level in nine years.
Stubbornly high
He said, however, that while the percentage of the tax gap has been reducing year on year, the value of uncollected tax remained “stubbornly high”.
“The £34bn in uncollected tax revealed in this latest report is very different to the £120bn figure quoted by Jeremy Corbyn in his recent leadership manifesto.
“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.
Flawed report
He said a report such as this will “always be flawed, because of the difficulty in trying to measure unknowns”.
However, he added that HMRC is “to be commended for trying to work out the percentage of the tax gap which takes account of the growth and contraction of the economy”.
“However, it is curious that the tax gap continued to decline during the financial crisis. Clearly individuals and businesses behaved in a much more honest way during this period than might have been expected.”
