The UK’s tax gap, the difference between the amount due to H.M.Revenue and Custom (HMRC) and the amount it manages to collect, rose by £1billion between 2011-12 and 2012-13.
The figures show that 6.8 per cent of payments due went uncollected during the last financial year, up from 6.6 per cent the year before that.
But dig a little deeper into the figures released towards the end of last month and something more interesting becomes apparent. Of the money not paid only nine per cent, around £3.1 billion, was down to tax avoidance.
As a comparison almost £5.9 billion (17 per cent) was lost to due to the hidden economy, £5.4 billion was lost to criminal attacks (15.4 per cent) and as much as £4.1 billion (12 per cent) was lost due to simple errors.
Experts have said they feel that HMRC needs to put “more effort” into investigating and prosecuting tax evasion which, unlike avoidance, is illegal as it involves fraud or deliberate concealment.
While the Chartered Institute of Taxation has said that HMRC are not “doing enough” to tackle simple taxpayer error and carelessness and wants to see “simplification measures” to make the process easier.
In fact tax avoidance has dropped from both the £3.4bn in the previous tax year, and the estimate of £4bn published a year ago.
In response David Gauke, the Financial Secretary to the Treasury, said: “There’s still more work to do but our continued drive to tackle avoidance means that avoidance is down.”
Many in the industry hope that the Chancellor, George Osborne, will reveal far-reaching reforms to unpaid tax collection in his autumn statement next month, which will be focused on bringing in the larger amounts of unpaid tax from evasion, criminal attacks and errors, rather than just seeking to tackle avoidance.
