Tax gap remains at £34bn

22 Oct 15

Latest figures from Revenue & Customs have found the tax gap in the UK stood at £34bn in 2013/14, around 6.4% of all revenue due.

In its examination of the revenue owed to the Treasury, the tax collection agency found that the gap, which is the difference between the amount of tax due and the amount collected, remained unchanged in cash terms compared to 2012/13.

The gap has remained mostly unchanged since 2005/06, when it stood at £37bn. However, it has fallen as a percentage of liabilities since 2005/06, when it stood at 8.4%.

Financial secretary to the Treasury David Gauke said the reduction in the percentage tax gap represented an additional £57bn in cumulative tax collected over the subsequent eight-year period.

“The UK has one of the lowest tax gaps in the world, and this government is determined to continue fighting evasion and avoidance wherever it occurs,” he said.

“If the tax gap percentage had stayed at its 2009/10 value of 7.3%, £14.5bn less tax would have been collected.”

The tax gap is made up of £14bn of unpaid inheritance tax, national insurance contributions and capital gains tax, while there is also an estimated £13.1bn in unpaid capital gains tax. Corporation tax that should be paid makes up £3bn, while excise duties account for £2.7bn. Other taxes amount to £1.1bn.

HMRC estimated that £6.2bn is lost through the so-called hidden economy of black market transactions, while £5.1bn is lost through criminal attacks. Around £4.4bn is lost through direct tax evasion and £2.7bn through avoidance, as well as £2.6bn though error.

According to the figures, HMRC brought in £505.8bn in 2013/14, including £23.9bn through compliance measures that would have otherwise have been lost to the Exchequer.

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