UK reaches record low tax gap of £36bn
25th October 2016 | News
The UK tax gap fell to a record-low 6.5 per cent in the 2014-15 financial year, totalling £36bn, according to the latest official statistics from HM Revenue and Customs (HMRC).
The tax gap, which is the difference between the amount of tax collected and the amount of tax due, stood at 6.9 per cent in 2013-14.
HMRC states that the long term trend of the tax gap is downwards, arguing that if the tax gap had remained at its 2005-06 level of 8.3 per cent, it would have reached £47bn by now.
HMRC’s comprehensive breakdown of the data indicates that half of the current tax gap (£18.3bn) is attributed to SMEs, with larger businesses accounting for a quarter (£9.5bn), criminals (£4.8bn) and individuals (£3.4bn).
More than two-fifths (43 per cent) of the tax gap is made up of uncollected income tax, National Insurance contributions and capital gains tax, while VAT losses total £12.7bn, along with missing corporation tax at £3.7bn.
HMRC insists the hidden economy remains the biggest reason behind the existence of the UK tax gap, accounting for £6.2bn, followed by £5.5bn due to failure to take reasonable care; £5.2bn due to legal interpretation; £5.2bn due to outright tax evasion; £4.8bn due to criminal attacks; £3.6bn due to non-payment and £3.2bn due to error accounts.
Jane Ellison, financial secretary to the Treasury, said: “The UK has one of the lowest tax gaps in the world.
“By investing £1.8bn 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 £1.3bn in new digital tools.”
If you’re wanting to take responsibility over the tax your business owes, your local TaxAssist Accountant can help. We work with everyone from sole traders to limited companies, supporting your business to meet its accounting requirements whilst demonstrating meaning and value from your financials.
If you’d like to arrange a consultation with your local TaxAssist Accountant, simply call us on 0800 0523 555 or drop us a line using our online enquiry form.