The ‘tax gap’ is the difference between the tax that should theoretically be paid to HMRC and the actual tax that has been paid.
Why has it fallen?
HMRC has been able to consistently keep the tax gap low. Overtime, the tax gap trend illustrates a long-term decline – reducing from 7.3% in 2005-06, to an estimated 5.7% in 2016-2017.
HMRC believe that the consistent decreasing is due to the suppression on tax evasion and avoidance. In addition, HMRC are making sure that they are supporting businesses, ensuring that they pay the right amount of tax at the right time.
What does this mean?
If the tax gap had remained at the 2005-06 level the UK would have lost £71 billion in revenue that had been destined for public services and equal to the amount required to build around 200 hospitals. Therefore, a significant decrease in the tax gap was needed.
The latest tax gap figures show the success HMRC has had in reducing revenue lost to the public. This year’s decrease of an estimated 5.7% is the equivalent to £33 billion.
How accountants can help?
D E Ball can offer advice and assistance for both personal tax and VAT related issues. Their Personal Tax Team can offer you advice on:
- Capital Gains Tax
- Inheritance Tax
- Benefits in Kind, Employee Pay Schemes and the use of Trusts
- Self Assessment Returns
- Employee Pay Schemes
- The use of Trusts
D E Ball also offer Value Added Tax Service provide a cost effective VAT service and work with a wide variety of businesses, providing varying levels of support from general advice to VAT return completion. For more information please visit https://www.deball.co.uk/