HMRC publishes its 2022 Tax Gap – TaxWatch analysis

by | Jun 27, 2022

HMRC’s Tax Gap has increased for the second year in a row on a like-for-like basis.

The latest HMRC estimates of non-compliance are £32bn for 2020-2021, or 5.1% of total tax revenues. This is the same gap as a percentage as seen in last year’s publication covering 2019-2020.

However, this year’s figure includes a £0.7bn revision downwards to compensate for lower compliance activity during Covid. This means that on a like-for-like basis HMRC’s Tax Gap increased.

Of the £32bn total tax gap, at least £14.4bn, or 45%, of it is attributable to fraud. Fraud as a percentage of the total tax gap hasn’t been this high since 2016-2017. This is based on the limited data available, and the actual figure for tax lost to fraud will be much higher. 1TaxWatch’s methodology explaining how we arrived at this figure is explained in full detail in our assessment of the 2019-2020 figures, see our report  The Tax Fraud Gap – 2021 edition, … Continue reading

As TaxWatch has previously highlighted, HMRC’s tax gap publication significantly underestimates the true scale of non-compliance with the tax system. Profit shifting by multinationals appears not to be counted at all.

Estimates of error and fraud in the HMRC-administered Covid-19 support schemes are also not included in the figures and reported on separately. These run into the billions of pounds.

Our full analysis is available in a briefing here. HMRC’s publication is available here.

References

References
1 TaxWatch’s methodology explaining how we arrived at this figure is explained in full detail in our assessment of the 2019-2020 figures, see our report  The Tax Fraud Gap – 2021 edition, here http://13.40.187.124/tax_fraud_gap_2021/

Related stories

What should we learn from multinationals about how to tax billionaires? A tax gap long read

What should we learn from multinationals about how to tax billionaires? A tax gap long read

HMRC wants to offer the wealthiest taxpayers a dedicated tax ‘concierge’ service to help them pay their due taxes. It argues that this individualised and cooperative approach has already worked with large businesses, helping to end the bad old days of multinational tax avoidance.

But in fact the ‘tax gap’ is quietly rising for both large businesses and the wealthiest individuals. The new ‘wealthy compliance plan’ needs to draw the right lessons from large business compliance. These include the need for credible sanctions regimes to create the right incentives for cooperation; and the potential benefits of ‘country-by-country’ financial disclosure for billionaires as well as multinationals.

The best spent money in Whitehall?

The best spent money in Whitehall?

New figures show that HMRC’s efforts to make taxpayers pay the right tax brought in £22 for every £1 spent last year. That’s exceptional value for money. Nonetheless beneath the headline numbers there’s a more complicated story about how HMRC’s tax compliance efforts are changing.


Media

For media requests or any other enquiries, please contact:

Mike Lewis, TaxWatch Director

mike [at] taxwatchuk.org

+44 7940 047576


Newsletter

Enter your email address to subscribe to our newsletter.

Please wait...

Thank you - please click on the link in the email we've just sent to confirm your subscription.