Brexit & EconomyHMRCTax gap closes to record low

Tax gap closes to record low

Statistics from HMRC reveal the UK tax gap fell to a record low of 6% in the 2015/16 tax year

The UK tax gap fell to a record low of 6% in the 2015/16 tax year, official statistics have revealed.

The newly published figure is half a percent lower than it was in 2014/15 and cements the UK’s claim to have one of the lowest tax gaps in the world. The UK remains the only country to measure and publish tax gaps every year covering both direct and indirect taxes.

The news has led HMRC to hail the introduction of 75 tax avoidance, evasion and non-compliance measures over the last seven years. These include:

  • introducing tough new criminal offences that make it easier to prosecute both evaders and companies that fail to prevent evasion, as well as significantly increasing penalties
  • introducing a new penalty for those who enable the use of tax avoidance schemes that are later defeated by HMRC
  • investing £800m in HMRC’s compliance operations, which are expected to bring in an additional £7.2bn in tax by 2020 to 2021

Reducing the tax gap plays a vital role in contributing to the UK economy. If it had remained at the 2005/06 level of 7.9%, the country would have been nearly £12bn a year poorer.

Commenting on the announcement, Jim Harra, director general, customer strategy and tax design at HMRC said: “HMRC’s online tax accounts and use of data increasingly help people get their tax right and prevent mistakes and fraud. This enables us to focus on tackling those who deliberately pay less than they owe. Measuring the tax gap gives us vital insights into where to direct our efforts, and tells us that our strategy is succeeding.”

Mel Stride, financial secretary to the Treasury and paymaster general added that these statistics indicate important strides in “tackling avoidance, evasion and non-compliance”, but that there is still more work to be done.

Earlier this week it was announced that HMRC has enjoyed a bumper year with tax receipts rising by 6.75% in the last 12 months.

 

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