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HMRC can't collect the necessary taxes?


				26.06.2023
						The amount of taxes not collected by His Majesty's Revenue and Customs (HMRC) has grown to 36 billion pounds in the 2021/22 tax year.
According to HMRC, tax revenues have been significantly affected by the COVID-19 pandemic.

HMRC cites the main reasons for lost tax revenues as non-compliance with reasonable care (30%), errors (15%), evasion (13%), legal interpretation (12%), criminal encroachments (11%) and non-payment (9%, most of the taxes were written off as a result of insolvency).

The study also showed that the largest share of the tax gap by group falls on small businesses - 56 percent (20.2 billion pounds) of lost income. The share of criminals, large and medium-sized businesses accounts for about 11 percent of the total amount: respectively GBP4.1 billion, GBP3.9 billion and GBP3.8 billion.

The share of the tax gap attributable to wealthy clients and individuals is from 9 to 13 percent of the total tax gap in each of the last five years. In the 2021/22 tax year, this share will be 11 percent.
Income tax, national insurance contributions and capital gains tax account for 35% (12.7 billion pounds) of the total amount of taxes not received. However, HMRC says the new data has forced it to rethink its understanding of the role of corporate tax, which it estimates is the second largest component of the tax gap, accounting for 30 percent of lost tax revenue.

"The figures show that HMRC still collects about 95% of taxes due, which is quite comparable with international figures," says John Barnett on behalf of the Chartered Institute of Taxation (CIOT), noting that almost four times more taxes are lost due to errors than due to evasion. The fight against evasion remains the main success of efforts to close the tax gap.

Link to source: https://www.gov.uk/government/news/tax-gap-holds-steady-at-48
https://www.gov.uk/government/statistics/measuring-tax-gaps
https://www.tax.org.uk/tax-gap-steady-but-loss-to-errors-and-carelessness-rising

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