NEWS

Tax gap at record high

The UK’s tax gap rose to a record to £39.8 billion in 2022/23, up by £1.7 billion as small businesses accounted for almost two thirds of unpaid tax, according to HMRC’s data.

The tax gap was 4.8%, which is the difference between the amount of tax that should be paid to HMRC and what is actually paid.

There was a significant rise in the amount of corporation tax not being paid by small businesses. This has risen to £10.9 billion, up from £3.7 billion five years ago.

The tax gap for corporation tax was £13.7 billion, up almost £3 billion from the previous year. This figure has soared in the last five years from £5.6 billion in 2018/19 and is the worst total ever recorded.

John Barnett, Chair of CIOT’s Technical Policy and Oversight Committee, said: ‘Critics of HMRC can point to a record amount – nearly £40 billion – not being collected, but HMRC can legitimately point out that they are bringing in a record share of the expected tax take.

‘That both these things can be true simultaneously tells us more about current tax levels than anything else.

‘These figures show there is plenty of work for HMRC to do in a range of areas to reduce the tax gap. However, we should not lose sight of the fact that their record, collecting more than 95% of tax due, compares well internationally.’

27/06/2024