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What is the Tax Gap?

What is the Tax Gap?

News Release issued by the COI News Distribution Service on 21 September 2011

The tax gap is the difference between the tax in theory that should be collected by HMRC and what actually is collected. At its formation in 2005 HMRC committed to reduce this gap.

In its 2010 Spending Review the Government made £917 million available to HMRC to tackle the tax gap and raise additional revenues of £7 billion a year by 2014-15.

The figures released today show the tax gap for 2009-10 is estimated to be 7.9 per cent of liabilities, around £35 billion, and is slightly down from 2008-09, when it was 8.1 per cent of liabilities. This is at the lower end of the range of countries who publish their tax gaps.

Exchequer Secretary, David Gauke MP: said

“Although these numbers show continued progress by HMRC in reducing the tax gap, there is no room for complacency. Just in the last few weeks we have challenged off shore tax evaders, closed tax avoidance loopholes and created a new HMRC unit to ensure that the wealthier members of society pay their way.

“We will continue to take action to prevent a minority of rule breakers dodging their responsibility to pay the right tax at the right time.”

Dave Hartnett, HMRC Permanent Secretary for Tax said:

“The tax gap is the result of a wide range of behaviours and the challenges are constantly changing, but these figures show we are continuing to tackle non-compliance. The tax gap has reduced from 8.5% of total liabilities in 2004/05 to 7.9% in 2009/10 and we have almost doubled compliance revenues since 2005 to £14bn

“HMRC staff have worked very hard to deliver these figures and we are going to do everything we can to achieve even more”.

NAT 75.11

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