HMRC has published the annual Measuring Tax Gaps publication showing that the tax gap estimate was 5.3% for the tax year 2019/20 representing £35bn, compared to 5% for 2018/19 (£33bn).
Other findings include:
there has been a long-term reduction in the overall tax gap, falling from 7.5% in 2005/06;
the total tax gap for VAT is £12.3bn, and the statistics show there has been a long-term reduction in the VAT gap from 14.0% in the 2005–06 tax year to 8.4% in 2019/20;
43% (£15.1bn) of the tax gap is attributed to small businesses;
failure to take reasonable care accounts for the largest proportion of the tax gap at 19% (£6.7bn), whereas avoidance accounts for the smallest proportion at 4% (£1.5bn); and
the inheritance tax gap has decreased from an estimated £425m (7.4%) in 2018/19 to £350m (6.3%) in 2019/20.
Any impact of the covid-19 lockdown and economic downturn on the tax gap is likely to be first seen in 2020/21.
HMRC has published the annual Measuring Tax Gaps publication showing that the tax gap estimate was 5.3% for the tax year 2019/20 representing £35bn, compared to 5% for 2018/19 (£33bn).
Other findings include:
there has been a long-term reduction in the overall tax gap, falling from 7.5% in 2005/06;
the total tax gap for VAT is £12.3bn, and the statistics show there has been a long-term reduction in the VAT gap from 14.0% in the 2005–06 tax year to 8.4% in 2019/20;
43% (£15.1bn) of the tax gap is attributed to small businesses;
failure to take reasonable care accounts for the largest proportion of the tax gap at 19% (£6.7bn), whereas avoidance accounts for the smallest proportion at 4% (£1.5bn); and
the inheritance tax gap has decreased from an estimated £425m (7.4%) in 2018/19 to £350m (6.3%) in 2019/20.
Any impact of the covid-19 lockdown and economic downturn on the tax gap is likely to be first seen in 2020/21.
