Commenting on HMRC’s Measuring tax gaps 2019 edition, published today, CIOT President Glyn Fullelove said:
“The Government is likely to be disappointed that progress in reducing the tax gap seems to have stalled, albeit at what are historically, and internationally, fairly low levels.
“Estimating the tax gap is a complex and necessarily imprecise process so we should be careful not to read too much into small year on year changes. But a sustained fall of three quarters in the share of the potential tax take being lost to avoidance since 2005 is significant and a tribute to the actions of successive governments as well as a change of culture around what is regarded as acceptable behaviour.
“These figures suggest that tax evasion and other illegal activity are costing the Exchequer seven times as much as tax avoidance. The CIOT has long argued that HMRC need to focus more on investigating and prosecuting those who seek to evade tax. The government are right to have put extra resources in this direction in recent years, as well as tackling artificial and abusive attempts to avoid tax.
“The numbers in this report illustrate the complexity of the tax system. Nearly £10 billion of the tax gap relates to taxpayers inadvertently not getting things right, through what HMRC categorise as error or a failure to take reasonable care. As some other parts of the tax gap have fallen these have remained stubbornly high.
"The CIOT suggests that HMRC should focus on customer service as a direct way to help large numbers of ordinary taxpayers who find themselves confronted by ever more complex tax law and increasing compliance obligations. If the tax authority needs more resources to help taxpayers to pay the correct sums, we believe they should get it."
Notes for editors
- Measuring tax gaps 2019 edition - tax gap estimates for 2017 to 2018 can be found here.