TaxationWeb's Mark McLaughlin considers HMRC's publication of the Tax Gap.
HM Revenue & Customs published estimated figures in respect of the tax gap for 2011-12 the other day. For the record, the tax gap for that year is £35 billion, or 7% of tax due.
The publication of these figures will no doubt trigger seemingly endless debate on their validity. This has become something of a regular event - I seem to remember a series of articles on the tax gap in 'Taxation' the last time figures were published. for example. There's nothing wrong with debating the subject as such. The problem is that the estimated tax gap is just that - an estimate. There also seems to be disagreement among commentators about how the tax gap should be quantified. To my mind, the uncertainty renders the whole exercise of estimating the tax gap valueless.
Anyway, be prepared for another round of debate now that the latest figures have been published.
In the meantime, the tax gap is apprently showing a downward trend. And so it should - after all, the government has invested nearly £1 billion in what Exchequer Secretary David Gauke describes as "additional compliance initiatives", which I assume means attacking tax evasion and avoidance among other things.
I'm all for tax evaders being brought to justice, and aggressive tax avoidance schemes blocked.
However, if the government really wants to cut the tax gap, perhaps it should concentrate on ensuring that multinational companies pay their "fair share" of tax, in the same way that HMRC relentlessly pursues small businesses and the average taxpayer to pay their tax bills in full.
Best wishes
Mark McLaughlin
Managing Editor
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