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HMRC continue to attack UK tax gap

Figures released by HMRC in January this year state that the UK ‘tax gap’ for 2011/12 has increased by £1 billion and now stands at an estimated £35 billion a year.  However, estimates from Tax Research UK believe that the actual figure should be much higher and is in fact closer to £120 billion.

Official Treasury estimates indicated £11.4 billion of VAT, £15.3 billion of income tax, £4.7 billion of corporation tax and £2.5 billion excise duties were not collected in 2011/12 with the balance being made up of other taxes and National Insurance. HMRC believe that almost 30%, the equivalent of £10.5 billion, of this uncollected amount is made up of tax evasion, fraud and other criminal activity.

HMRC has also admitted that there is up to £25 billion of late paid tax by companies and individuals at any specific time.

Tonmoy Kumar, Manager of the Accounts Department of ABDS comments:
“HMRC have used £1 billion of funds set aside by the Government to set up focused compliance work across all taxes and duties, including setting up more than 60 regional taskforces across the UK since May 2011 and using specialised campaigns targeting specific trades or professions from plumbers and electricians to doctors, dentists and barristers. They have also increased and updated agreements with other countries allowing them to receive bank details to reduce the ability of individuals to hide money ‘offshore’. “

These tactics have led to HMRC claiming an estimated £12 billion of previously under declared tax from enquiries in the last year. HMRC have also recruited an additional 2,000 staff as they attempt to increase the levels of enquiries as a main spearhead to their strategy.

Tonmoy Kumar continues:
“It seems clear that HMRC wish to look at as many entities as possible and that Small Businesses and Sole Traders are very much fair game, quick and easy to enquire into and clearly HMRC are seeing a return on all of this effort and investment.”

If you need any help and advice on HMRC campaigns and the benefits of belonging to the ABDS Fee Protection Scheme, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar NOW to discuss how ABDS can help

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail:

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The Tax Gap is the difference between the amounts of tax that should, in theory, be paid against what HMRC actually collect in a year

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