The publication revealed the tax gap for the 2012/2013 tax year stood at £34bn. James Quarmby, partner at Stephenson Harwood law firm, said that an estimation of the difference between the amount of tax due and the amount collected might give an idea of trends but is “limited” because of the varying ways to gauge the gap.
“Part of the problem is that calculating tax gaps isn’t a science. It’s a political football and difficult to calculate.”
Patchiness
George Bull, senior tax partner at Baker Tilly explained that the UK “seems to stand out as unique in that it publishes a methodology for calculating the tax gap and also publishes the results from its calculations”.
However, he said, when exploring the data of other regions, the “patchiness” of the information was interesting because it suggests tax authorities either regard tax gap figures as imprecise, or they think publishing the data does not help demonstrate how effective they are.
“They want it to look like they are doing well but not too well,” he said. “Tax authorities which publish anything in this area don’t want the tax gap to be too big and to be getting worse because it looks like it isn’t doing its job.
“But if the tax gap looks like it’s too small, it makes it more difficult for the tax authority to get more money to fix the gap.”
“Dangerous”
Meanwhile, Ray McCann, a partner at Pinsent Masons, suggested the figures may even go so far as to be a “dangerous” measure.
“[The published figure] cannot be correct, or at least it is capable of being misunderstood since it estimates the tax gap on a year by year basis, and so is not the total tax gap outstanding at any one point in time.”
He added: “It is also a dangerous measure since it gives the impression that tax avoidance and evasion are much more widespread in the UK than they are.”
