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HMRC brings tax gap down to 5.6%

HMRC brings tax gap down to 5.6%

The tax gap for 2017/2018 stood at 5.6 per cent, HM Revenue and Customs has confirmed.

  • Maja Garaca Djurdjevic
  • June 21, 2019
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In the 2017/2018 financial year, HMRC collected 94.4 per cent of all the tax due under the law, cutting the tax gap below 7.2 per cent for the first time since 2005/2006.

The tax gap is the difference between the amount of tax that should, in theory, be paid to HMRC, and what is actually paid, the Tax Office explained.

“The UK’s low tax gap underlines both how the vast majority of people are paying the correct amount of tax, and how effective HM Revenue and Customs has been in its efforts to clamp down on tax evasion and avoidance,” said Jesse Norman MP, Financial Secretary to the Treasury.

Moreover, the HMRC revealed that avoidable mistakes are costing the Exchequer over £9.9 billion a year, with £3 billion of this attributable to VAT alone.

HMRC launched Making Tax Digital in April this year for VAT-registered businesses, with turnover above the VAT threshold, requiring them to keep digital records and submit their VAT return using compatible software. So far, over 400,000 businesses have joined the service.

HMRC said it expects this service to reduce tax lost due to avoidable errors by ensuring businesses make fewer mistakes, thanks to the improved accuracy that digital records provide and the fact that information is sent directly from those records to HMRC, helping to eliminate transposition errors. 

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