HMRC sees £32bn tax gap

THE tax gap – the difference between the total amount of tax expected and that which is actually paid – was £32 billion in 2020/21 – according to HM Revenue and Customs (HMRC).

At 5.1%, there has been no change in the tax gap compared to the previous year, HMRC said.

Small businesses were responsible for nearly half of the tax gap, at around £15.6 billion, according to HMRC’s data.

Criminals accounted for £5.2 billion of the gap, while mediumsized businesses made up £3.9 billion and large businesses accounted for £3.6 billion.

Individuals accounted for £2.5 billion of the overall tax gap, with wealthy customers accounting for £1.5 billion, according to the figures, which were rounded.

The tax gap for income tax, national insurance contributions and capital gains tax was £12.7 billion in 2020/21. VAT accounted for the second biggest chunk of the total tax gap, at £9.0 billion.

Corporation tax accounted for £5.6 billion of the gap, while excise duties made up £3.5 billion.

Around 4% of the tax gap involved “other taxes”, covering a range of levies including customs duty, insurance premium tax and inheritance tax.