UK tax gap 'remains low'

New data published by the government has revealed that the UK tax gap for 2017/18 stands at 5.6%, meaning that HMRC collected 94.4% of tax due in 2017/18.

28 Jun 2019

New data published by the government has revealed that the UK tax gap for 2017/18 stands at 5.6%, meaning that HMRC collected 94.4% of tax due in 2017/18.

The tax gap is the difference between the amount of tax that should be paid to HMRC and what is actually paid, and arises for a number of reasons. According to HMRC, many taxpayers 'fail to take reasonable care when calculating and submitting their tax return', while others 'fail to understand the 'legal interpretation' of what is required'.

These behaviours constitute the largest proportion of the tax gap, while criminal attacks, tax evasion and avoidance make up the rest.

The tax gap for income tax, national insurance contributions (NICs) and capital gains tax stands at 3.9% for 2017/18. Meanwhile, the tax gap for VAT shows a 'long-term reduction', totalling 9.1% for 2017/18 – a significant drop from 2005/06's figure of 12.2%. The tax gaps for all other taxes, including duty-only excise tax, corporation tax and avoidance tax, have also decreased since 2005/06.

Commenting on the report, Jesse Norman, Financial Secretary to the Treasury, said: 'The UK's low tax gap underlines both how the vast majority of people are paying the correct amount of tax, and how effective HMRC has been in its efforts to clamp down on tax evasion and avoidance.'

Self-assessment tax returns are notoriously complex, and many individuals can be susceptible to making errors. That is where we can provide assistance – contact us for more information.

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