The UK government’s revenue people failed to collect £46.8 billion in owed tax in 2023/2024, according to… HMRC itself!
That makes the official tax gap 5.3%, with HMRC bringing in £829.2bn (the other 94.7%).
Interestingly, HMRC says this is better than the tax gap in 2022/23, which was 4.8%, but has now been revised up to 5.6% (£46.4bn).
HMRC is blaming small businesses for the largest proportion of the tax gap (60%) – this figure was 48% in 2019/20. Corporation tax accounts for 40% of the total tax gap too!
It claims the main ‘behavioural reasons’ for the overall tax gap are failure to take reasonable care (31%), error (15%), and evasion (at just 14%).
Exchequer Secretary to the Treasury, James Murray, said that in its first year in office Labour set out plans to raise an extra £7.5bn through “the most ambitious ever package to close the tax gap”.
Dawn Register, Head of Private Client Services at BDO LLP said: “The most alarming trend is the deterioration in Corporation Tax compliance. The Corporation Tax gap has ballooned to 15.8% of theoretical liabilities, making it the single largest component of the tax gap at 40% of the total. This is a dramatic increase from the 24% share Corporation Tax represented of the tax gap just five years ago in 2019-20.” And, 10 years ago the corporation tax gap was 10%!
