The Tax Gap

The Tax Gap

The Tax Gap is the difference between the amount of tax that should be collected, and the amount of tax actually collected. It is the sum total of all of the evasion, avoidance and non-payment that leads to the loss of tax revenue to the government.

The UK government has been collecting data on the Tax Gap since 2005 and was forced to publish it after a long freedom of information battle with Private Eye magazine.

The estimate – now published annually by HMRC – has been criticised for underestimating the true tax gap. For example, the HMRC figures explicitly do not count tax avoidance by multinational companies through profit shifting, which is a major source of tax avoidance. The danger is that without an accurate picture of the Tax Gap, government can become complacent in the fight against tax avoidance.

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Mining the gap

TaxWatch analyses the latest tax gap data and examines manifesto pledges to narrow the gap to see whether they represent credible plans to increase tax revenues

HMRC’s 2024 Tax Gap report: Amount of tax going unpaid hits record high at £39.8bn in 2022-23

TaxWatch analyses the latest Tax Gap publication, noting it has reached £40bn in 2022-23 yet still doesn’t cover offshore matters

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

HMRC now says offshore tax gap data will be published in June 2024, two years after the government announced it and a year after the information was due.

Mind the gap: How to collect the right tax?

There are fundamental issues around the subject of compliance for HMRC, which needs, among other things, a proper workforce plan with trained and motivated staff able to deal with all aspects of compliance.

HMRC’s 2023 Tax Gap report: Proportion of tax going unpaid unchanged from previous year

The amount of tax lost in the 2021-22 financial year was 4.8% of the total tax owed, the same figure as the previous year.

Tax Gap Op-Ed in HMRC Magazine

We have recently had an op-ed published in the magazine HMRC Enquiries, Investigations and Powers.

HMRC publishes its 2022 Tax Gap – TaxWatch analysis

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

What gets measured gets done?

We ask whether the current metrics used by HMRC are sufficiently robust to allow Parliament and other interested parties to hold the government to account

HMRC Tax Gap on the rise, but figures leave more questions than answers

TaxWatch responds to HMRC’s latest “Tax Gap” figures – in cash terms the highest on record.