ARTICLE · 27 OCTOBER 2016

Weekly Tax Update - 24 October 2016

Smith & Williamson

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HMRC has published its 'tax gap' estimate for 2014/15 at £36bn or 6.5% of theoretical tax liabilities. £2.2bn or just 6.1% of the gap is avoidance.

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Smith & Williamson

1. GENERAL

1.1 Measuring the tax gap

HMRC has published its 'tax gap' estimate for 2014/15 at £36bn or 6.5% of theoretical tax liabilities. £2.2bn or just 6.1% of the gap is avoidance. The hidden economy, evasion and criminal attacks together account for £16.2bn or 40.8% of the gap.

The overall level of the gap has remained at roughly the same level for the last ten years in monetary terms. In contrast to the profile given in the media to the level of corporation tax paid by multinationals and big businesses, corporation tax accounts for only 10% of the tax gap, compared to 35% for VAT and 43% for income tax, NIC and CGT. As far as tax payer type is concerned, over half was down to SME's, which may account for the some of Government's concentrating on them for Making Tax Digital (MTD).

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