The UK tax gap for 2016/17 stands at 5.7 percent, HMRC confirmed last week (15/06/2018).
Had the tax gap remained at its 2005/06 level the UK would have lost £71 billion in revenue destined for public services.
The tax gap is the difference between the tax that should be paid to HMRC and the actual tax that has been paid. The tax gap trend shows a long-term decline – it has reduced from 7.3 percent in 2005/06 to an estimated 5.7 percent in 2016/17, or £33 billion. This is the same percentage tax gap as for 2015/16, which has been revised down from last year’s estimate of six percent.
Mel Stride, Financial Secretary to the Treasury, said: “These really positive figures show that the tax gap is the lowest in the last 5 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.
“Collecting taxes is essential for funding our vital public services such as the NHS – indeed, had the tax gap remained at its 2005/06 level the UK would have lost £71 billion in revenue destined for public services, enough to build 200 hospitals.”
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 2016-17, equivalent to 16.4 percent of Self Assessment liabilities;
- The VAT gap showed a declining trend over time, falling from 12.5 percent in 2005-06 to 8.9 percent in 2016-17.
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