The UK’s tax gap, the difference between the amount of tax due and the amount collected, is one of the lowest in the world.
Today’s figures reinforce the significant progress that HMRC has made in reducing the tax gap from 8.3% in 2005-06. If the tax gap had remained at the 2005-06 level of 8.3%, it would have grown to £47 billion and the country would have been £11 billion a year poorer.
This year’s tax gap figures highlight the positive impact that HMRC’s digital transformation is having in making it easier for people to pay the right amount of tax.
In particular, the introduction of Real Time Information for the Pay As You Earn (PAYE) system has led to more accurate recording of information on payroll taxes, and the shift to VAT online has helped bring the VAT gap in 2014-15 to its lowest level of £12.7 billion. The benefits to individuals and businesses will continue to grow as HMRC makes further progress on its digital transformation.
The Financial Secretary to the Treasury, Jane Ellison said:
“This government is committed to tackling tax evasion and avoidance wherever it occurs.
“The UK has one of the lowest tax gaps in the world. By investing £1.8 billion since 2010 in boosting HMRC compliance capabilities, we’ve brought our tax gap down to its lowest ever level. And to make it even easier for people to pay the right tax in the future, we’ve invested £1.3 billion in new digital tools.”
HMRC’s Chief Executive, Jon Thompson, said:
“These figures show we have successfully maintained a downward pressure on the tax gap in 2014-15, while collecting record revenues of £518 billion.
“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.
“But if we are to ensure a fairer and more effective tax system, and more money for public services, we must keep up the pressure on the tax gap by relentlessly pursuing the small minority who seek to cheat their taxes through evasion, aggressive avoidance and organised crime.”
HMRC has one of the most robust and transparent tax gap estimates in the world, with its methodology scrutinised by the International Monetary Fund and the National Audit Office. No other country publishes such a level of detail on an annual basis.
In 2014-15, HMRC collected record revenues of almost £518 billion – almost £12 billion more than in the previous year – as a result both of a growing economy and our effectiveness in clamping down on tax evasion and fraud. HMRC also secured almost £27 billion in record compliance yield.
The government has invested an additional £1.8 billion to tackle tax evasion, avoidance and non-compliance since 2010. This includes taking action to clamp down on the organised crime gangs behind the illicit trade in tobacco and alcohol, increasing resourcing on compliance, and an additional £1.3 billion to transform HMRC into one of the most advanced tax administrations in the world.
This action has helped HMRC secure around £130 billion in compliance yield since 2010 and bring in more than £2.5 billion from offshore tax evaders since 2010.