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Six times as much tax lost to fraud as to avoidance

by Susie Hughes at 16:10 22/10/15 (News on Business)

Official figures show that nearly six times as much tax revenue is lost as a result of illegal activity as through tax avoidance.

The figures come from the Government’s annual estimate of the ‘tax gap’. This is the difference between tax collected and that which, in HMRC’s view, should be collected. The Government estimate the gap at around £34bn a year in 2013-14, creating an estimated shortfall of 6.4 per cent of total tax liabilities. This total includes an estimated £2.7bn lost to tax avoidance, down from £2.8bn the previous year (that figure itself revised down from the estimate of £3.1bn published a year ago). However, £5.1bn was lost to criminal attacks, £4.4bn to evasion and £6.2bn to the ‘hidden economy’, a total of £15.7bn from illegal activity. John Cullinane, Tax Policy Director at The Chartered Institute of Taxation, said: “These figures suggest that tax evasion and other illegal activity are costing the Exchequer nearly six times as much as tax avoidance. "The CIOT has long argued that HMRC needs to put more effort into investigating and prosecuting those who seek to evade tax. The Government are right to have put extra resources in this direction, as well as tackling artificial and abusive attempts to avoid tax. Advertisement “It should be noted though, that HMRC’s avoidance figure does not include a lot of what gets described as avoidance in the newspapers, especially in relation to multinational businesses. This is because, as HMRC puts it, it 'is the result not of frustrating UK law but of exploiting the international tax framework'. “These figures also show how much is being lost to public funds as a result of errors and carelessness by taxpayers - more than £6 billion a year. HMRC are still not doing enough in this area. There should be a stronger focus on education and making it easier for people to complete their tax returns. Additional simplification measures would also help reduce errors as well as making avoidance more difficult. “£34 billion is a large amount of tax not to be collecting, but while the headline figure is unchanged it is a slightly lower share of the total tax HMRC think is due. The figure still compares well to international jurisdictions. The most recent estimate of the tax gap in the United States, for example, puts the tax gap there at more than 14 per cent of total tax liabilities, more than double the percentage share in the UK.” Tweet -- If you wish to comment on this article, please log in and use the Reply button below. Registering is free and easy - see 'Join Shout99'. - Susie Hughes © Shout99 2015

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Six times as much tax lost to ...	Susie Hughes - 22/10
Re: Six times as much tax lost...	skytraveller - 10/11
Re: Six times as much tax lost...	brianc - 17/11

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