The new head of HM Revenue and Customs, Mike Clasper, has made 'closing the tax
gap' one of four top priorities he has set the tax authorities.

The others are improving data security, raising the 'customer experience'
and providing a new sense of direction for HMRC staff.

He spelled out his objectives in a foreword to the HMRC Autumn Report for
2008 in which he described these priorities as 'central'.

Direct tax gap estimates showed that between 1999 and 2003 it increased from 11% to 15% of liabilities before declining slightly at a time when there was an overall increase in SA liabilities related to the self-employed.

The report said the percentage VAT gap had fallen between 2002-03 and risen
in 2005-06 before falling again, with the reducing trend related to a
decline in Missing Trader Intra Community Fraud, estimated to have fallen
from £2.5 - £4.5bn in 2006-06 to £0.5 - £2bn in 2007-08.

Estimates showed the gap for income tax and national insurance collection from firms with up to 500 employees has declined slightly from 1.1% of liabilities in 2003-04 to 1% in 2004-05.

The gap estimated for corporation tax, covering firms not dealt with by the Large Business Service, has varied between 15% and 18% between 2001 and 2003 but fell to 9% in 2004, but the report warned of substantial sampling error and suggested the gap is stable.