The tax gap – the difference between the tax that should be paid to HMRC and the actual tax that has been paid – was 5.7 per cent for 2016 to 2017, the same as in the previous year.
The tax gap has steadily reduced since 2005 to 2006 when it stood at 7.3 per cent which is the equivalent of £71 billion. Today the tax gap amounts to £33 billion and is one of the lowest gaps in the world.
“These really positive figures show that the tax gap is the lowest in the last five years, which reflects the hard work that HMRC and I have been doing to ensure we support businesses to pay the right tax at the right time and clamp down on tax evasion and avoidance,” said Mel Stride, Financial Secretary to the Treasury.
Key findings from the Measuring the Tax Gap publication include:
small businesses made up the largest proportion of unpaid tax by customer group at £13.7 billion taxpayer errors and failure to take reasonable care made up £9.2 billion of unpaid taxes by behaviour, while criminal attacks made up £5.4 billion Income Tax, National Insurance Contributions, and Capital Gains Tax made up the largest proportion of the tax gap by tax type at £7.9 billion for 2016 to 2017, equivalent to 16.4 per cent of self-assessment liabilities.“HMRC is working hard to help taxpayers get their tax right by offering support and investing in digital services to improve businesses’ record keeping and reduce errors,” added Jon Thompson, HMRC’s Chief Executive.
It is hoped that the Making Tax Digital programme will also reduce to reduce the tax gap by preventing errors and failure to take reasonable care. HMRC anticipates that digital record keeping combined with a modern, more automated tax system will help business to get their affairs right first time.
