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UK Tax Gap Falls To A Record Low

by Jason Gorringe, Tax-News.com, London

20 October 2016


The UK tax gap fell in 2014–2015 to its lowest-ever level of 6.5 percent, official statistics released on October 20 show.

The Government said the statistics demonstrate the significant progress that HM Revenue and Customs (HMRC) has made in reducing the tax gap from 8.3 percent in 2005–2006. It noted that if the tax gap had remained at the 2005–2006 level of 8.3 percent, the tax gap would have grown to GBP47bn (USD57.5bn) and the country would have been GBP11bn a year poorer.

The Government said this year's tax gap figure highlights the positive impact that HMRC's digital transformation is having in making it easier for people to pay the right amount of tax. In particular, the introduction of Real Time Information for the Pay As You Earn (PAYE) system has led to more accurate recording of information on payroll taxes, and the shift to VAT online has helped bring the VAT gap in 2014–15 to its lowest level of 10.3 percent (GBP12.7bn), it said.

The Financial Secretary to the Treasury, Jane Ellison, said: "This government is committed to tackling tax evasion and avoidance wherever it occurs. The UK has one of the lowest tax gaps in the world. By investing GBP1.8bn since 2010 in boosting HMRC compliance capabilities, we've brought our tax gap down to its lowest-ever level. And to make it even easier for people to pay the right tax in the future, we've invested GBP1.3bn in new digital tools."

In 2014 to 2015, HMRC collected record revenues of almost GBP518bn – almost GBP12bn more than in the previous year – as a result both of a growing economy and the agency's effectiveness in clamping down on tax evasion and fraud. HMRC also secured a record amount from compliance activities – almost GBP27bn.

TAGS: compliance | tax | value added tax (VAT) | tax compliance | tax avoidance | United Kingdom | payroll | VAT compliance matters

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