Are we nearly there yet? In search of the elusive offshore tax gap

• Multiple delays to the publication of the offshore tax gap statistics, now a full year late
• TaxWatch had to use FOI powers to discover that the new date for this work is now June 2024 (gov.uk still shows Autumn 2023)
• Data on which this will be based is from CRS returns from 2018 onwards – the commitment to publishing an offshore tax gap followed media scrutiny of what HMRC was doing with this information

In June 2022 the then Financial Secretary to the Treasury, Lucy Frazer, said that HMRC would be producing a standalone offshore tax gap for individuals in Self-Assessment (SA) alongside the annual tax gap in the summer of 2023¹https://questions-statements.parliament.uk/written-questions/detail/2022-06-01/11839/. That tax gap publication, in June 2023, indicated that the offshore tax gap would be published in the autumn of that year. It was to be based on a Random Enquiry Programme (REP) conducted using data received through the Common Reporting Standard (CRS). As has been mentioned by many commentators since then, the offshore tax gap has not yet materialised. Until recently, HMRC was telling us that this would be published ‘in due course’. However, following recent a Freedom of Information (FOI) request, HMRC has now confirmed that it doesn’t expect it to be published until the tax gap data for 2023 is published, in June 2024. At this stage, we have not seen this date published anywhere else.

It seems clear that understanding the size of the problem would better enable HMRC to identify the resources required to tackle ongoing non-compliance in this area. The availability of CRS data from 2018 would seem to have provided the obvious opportunity to get a handle on this, and chase down any missing tax receipts.

So why did HMRC publicly announce a timetable for this, and then keep missing its own deadline? And, if they needed a REP to produce the figures, surely this should have been started much earlier, once the offshore disclosure facilities had concluded? CRS had been in the planning stages for many years, and its use for compliance was surely high on HMRC’s agenda. It’s worth noting that the planned publication was only announced following media coverage of HMRC’s lack of knowledge in this area, despite the receipt of huge amounts of CRS data.

Lastly, it’s far from clear whether this offshore tax gap is a new estimation of uncollected amounts already within the main Tax Gap figures, or whether it’s in addition to these amounts, which would increase the gap for individuals.

After almost two years of waiting, is this report still on the distant horizon or will we actually see it next month? We’ll believe it when we see it – and we’ll be scrutinising any figures carefully.

UPDATE 20/07/2024: The offshore component of the 2022-23 Tax Gap was consciously left out of the publication under the pre-election rules. TaxWatch has queried with HMRC how publishing part of the Tax Gap and burying a note mentioning the missing offshore component in a methodological annex meets the requirement for impartial and objective presentation of statistics under Cabinet Office guidelines (K.5 here). See related blog: TaxWatch analyses HMRC’s latest Tax Gap 2024 report – TaxWatch (taxwatchuk.org)