Call Now: 028 9040 7470
e: info@exchangeaccountants.com

Tax gap narrows

By October 27, 2015 Uncategorized

The tax gap for 2013-14 was 6.4% of tax due, continuing a long-term downward trend.

The tax gap, which is the difference between the amount of tax due and the amount collected, has fallen from 8.4% in 2005-06. This reduction in the percentage tax gap since 2005-06 represents an additional £57 billion in cumulative tax collected over the eight-year period.

The largest reduction is in the Corporation Tax gap which has halved since 2005-06, from 14% to 7% of relevant tax liabilities. There has been a sustained downward trend for both large and small businesses, with the overall reduction driven mainly by large businesses.

David Gauke, Financial Secretary to the Treasury, said:

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.

If the tax gap percentage had stayed at its 2009 to 2010 value of 7.3%, £14.5 billion less tax would have been collected.

There is understandable anger when individuals or companies are perceived not to be contributing their fair share, but we can reassure the public that the proportion going unpaid is low and this government is dedicated to bringing it down further.

The government invested almost £1 billion over the last Spending Review period to transform HMRC’s approach to compliance and close the tax gap. This investment contributed to the delivery of more than £100 billion in additional compliance revenues over the Spending Review period to the end of 2015-16.

In 2013-14, HMRC brought in £505.8 billion in tax revenue for public services and secured £23.9 billion of compliance yield – money that would otherwise have been lost to the Exchequer. HMRC has built on this and last year (2014-15) brought in a record £517.7 billion in tax revenue and secured £26.6 billion in compliance yield.