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UK tax gap falls in 2014/15

The UK tax gap between the amount of tax due and that actually collected fell to 6.5% in 2014/15, according to figures by HMRC.

The tax gap was 8.3% in 2005/06.

The government points to the introduction of real time information (RTI) for PAYE and the shift to VAT online as providing more accurate recording of tax information for individuals and businesses. 

Further findings:

  • the VAT tax gap fell to £10.3%, equivalent to £12.7 billion
  • £518 billion in tax revenue was collected, £12 billion more than in the previous year
  • £27 billion in compliance yield was secured.

Jon Thompson, chief executive at HMRC, said:

“The UK is an honest and compliant country when it comes to tax, as the vast majority of people and businesses pay what they owe, when they owe it. We should be proud that we meet our obligation as a nation in willingly paying for our public services, which is why we have one of the lowest tax gaps anywhere in the world.”

In a report released in April 2016, The Public Accounts Committee stated that the way HMRC reports its performance makes judging its effectiveness difficult:

“HMRC told us that its performance in addressing tax fraud was good. But HMRC’s assessment of the tax gap shows that the level of tax fraud has remained virtually static over the last 5 years, at around 3% of all tax liabilities. 

“The impact that HMRC claims for its work far exceeds any reduction in the tax gap.”

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