According to official figures £35bn of tax was uncollected in 2009/2010 which is a £4bn improvement on 2008/2009 figures…


The government are continuing to close the tax gap on uncollected tax in the UK.


The tax gap has recently dropped to £35bn due to a 2.5% reduction in value-added-tax (VAT) rates from December 2008 for 13 months – which saw VAT rates cut from 17.5% to 15%.


Commenting on the tax gap dropping to 7.9% in the 2009/2010 tax year, Exchequer Secretary, David Gauke, said:


“Although these numbers show continued progress by HMRC in reducing the tax gap, there is no room for complacency.


“Just in the last few weeks we have challenged offshore tax evaders, closed tax avoidance loopholes and created a new HMRC unit to ensure that the wealthier members of society pay their way.”


In a bid to reduce the large tax gap of £35bn in the UK, the government have funded HMRC with £917m to reduce uncollected tax by £7bn a year by 2014/2015.


In response, HMRC have recently announced over 2,000 job postings for special tax investigation units that will focus solely on combating tax avoidance and tax evasion in the UK.


Last year tax avoidance accounted for 14% (£5bn) of uncollected tax, whilst tax evasion totalled 12% (£4bn) of the tax gap.


The Revenue’s secretary for tax, Dave Hartnett, said:


“The tax gap is the result of a wide range of behaviours and the challenges are constantly changing, but these figures show we are continuing to tackle non-compliance.


“The tax gap has reduced from 8.5 per cent of total liabilities in 2004-2005 to 7.9% in 2009-2010 and we have almost doubled compliance revenues since 2005 to 14bn.”


But how did the Revenue manage to build up a £35bn tax gap?


2009/2010 figures show that the following tax was uncollected:


    • £1.8bn due to ‘moonlighting’ and people not declaring income on a second job







    • £11.8bn of VAT



According to current figures, those guilty of tax evasion and tax avoidance in the UK have cheated the tax system of roughly £100m per day.


If tax bills are set to rise, due to HMRC’s discrepancies, it is hard working families and honest tax payers that will suffer.


Value-added-taxes (VAT) have already risen from 17.5% to 20% and more people than ever are being charged the higher tax rate of 40%.


In their bid to tackletax avoidance and tax evasion, the Revenue are set to investigate 350,000 of the UK’s wealthiest tax payers and are stamping down on tax avoidance within premiership football clubs.


    • 2007/2008 = £40bn



    • 2008/2009 = £39bn



    • 2009/2010 = £35bn



But is the gap on uncollected tax closing fast enough?


Kevin Kinsella Jnr, of KinsellaTax, said:


“In their efforts to reduce the tax gap in the UK, HMRC need to make sure that honest tax payers get a fair deal and are not expected to increase their tax payments to recover the Revenue’s mistakes.


“I don’t think it is a good result at all to admit there is £35bn uncollected tax in the UK. It would certainly cause a major investigation by audit if this happened in industry.


“Sometimes HMRC want to take the common sense approach. Recently we offered HMRC a package that would have brought £40m, but it was turned down. Amazing. No wonder there is £35bn tax still outstanding.


“With the governments new strategy on tackling tax evasion and tax avoidance by targeting Britain’s most wealthy tax payers, businesses, footballers and those hiding money offshore. I would hope to see the tax gapdrop considerably more in next year’s figures.”


Are you unsure if you or your business is paying the right amount of tax?



If your income tax or corporation tax returns are undertax enquiryby HMRC you should always seek professional advice from aHMRC tax enquiryexpert.



KinsellaTax staff consists of ex-HM Inspector of Taxes and ex-HM Custom and Excise Officers, fully experienced in HMRC investigations.



Call us now on 0800 471 4546 to speak to one of our Tax Evasion and Tax Avoidance enquiry experts or click here to fill in an online tax enquiry form.


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