UK’s tax gap climbs to £34bn

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Published: Thursday 16th October 2014 by The News Editor

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The gap between the amount of tax collected and the sum owed has grown to £34 billion, according to HM Revenue and Customs (HMRC).

Some 6.8% of tax that was due was not collected in 2012/13, compared to 6.6% in 2011/12, resulting in an increase of £1 billion in the gap.

Ministers insisted that the gap was lower now than under Labour but the Opposition seized on the figure to claim the Government was failing to tackle tax avoidance and evasion.

T he long-term trend is downward, with the tax gap falling from 8.5% in 2005/06, HMRC insisted.

HMRC attributed £3.1 billion of the gap to tax avoidance, down from £3.4 billion.

Some £14.2 billion of income tax, national insurance contributions or capital gains tax went uncollected, along with £12.4 billion of VAT.

Corporation tax made up £3.9 billion of the gap, with excise duties accounting for £2.9 billion.

The increase in the overall tax gap was due to an increase in the VAT gap of £0.9 billion and an increase of £0.3 billion in uncollected tobacco duty.

Financial Secretary to the Treasury David Gauke said: “Since 2010/11 the percentage tax gap has stayed lower than at any point under the previous government, saving the country £4 billion.

“Today’s figures show that there’s still more work to do but our continued drive to tackle avoidance means that avoidance is down.

“In 2012/13 HMRC achieved a compliance yield of £20.7 billion, rising to a record breaking £23.9 billion in 2013/14.

“The UK has one of the lowest tax gaps in the world but HMRC will continue to deploy its resources and skills to maintain the downward pressure that has proved so effective in recent years.”

Shadow exchequer secretary Shabana Mahmood said: “These damning figures show that this Government is totally failing to tackle tax avoidance and evasion. According to HMRC’s own assessment, the amount of uncollected tax rose again last year and has now gone up by £3 billion on George Osborne’s watch.

“At a time when working people face a cost-of-living crisis, our NHS is going backwards and the deficit is still high, it’s even more vital that everyone pays their fair share of tax.

“Labour has set out a clear approach to tackling tax avoidance, including measures to help raise revenues for our National Health Service. In contrast, George Osborne is failing to tackle the tax gap while giving the top one per cent of earners a £3 billion a year tax cut.”

Published: Thursday 16th October 2014 by The News Editor

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