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UK 'Tax Gap' Shrinks

by Robert Lee, Tax-News.com, London

22 October 2012


The UK government has welcomed a marginal drop in the 'tax gap' between the revenue collected and the tax due, with HM Revenue and Customs (HMRC) warning that it will continue to pursue its crackdown on tax avoiders.

The tax gap for the 2010-11 tax year has been estimated by HMRC at GBP32bn (USD51.6bn). This equates to 6.7% of the tax due, and is down from 7.1% the previous year. According to the Exchequer Secretary David Gauke, HMRC collected a total of GBP468.9bn in revenue last year, with GBP13.9bn generated by HMRC's anti-avoidance work.

The overall tax gap figure is compiled from 30 separate estimates for different taxes, and is also broken down under the reasons why each tax has not been collected. Among the reasons are tax evasion and avoidance, taxpayer error, the hidden economy, criminal activity and business insolvency.

Welcoming the improvement, Gauke said: “Every pound of tax that is not collected puts a greater burden on honest taxpayers and public services, so the government and HMRC will continue to work together to make it harder for individuals and businesses not to pay the taxes that are due. We are determined to reduce the tax gap and have made GBP917m available to help HMRC tackle avoidance and evasion.”

Lin Homer, Chief Executive of HMRC, added to this warning, stressing: “Our determination to support the honest majority and to crack down on evasion, avoidance and fraud have kept downward pressure on the tax gap. We are determined to do more and we are devoting increasing resources to pursuing those who do not pay the tax they owe, while making it easier for people and business to comply with their tax obligations.”

TAGS: individuals | compliance | tax | business | tax compliance | tax avoidance | law | United Kingdom | tax authority | revenue statistics

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