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UK tax gap falls to 6 percent in 2015-16

UK tax gap falls to 6 percent in 2015-16

The 2017 edition of HMRC’s report Measuring Tax Gaps has been published.


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HMRC have published their report measuring the UK’s tax gap for the years 2015-16. The ‘tax gap’ is the difference between the amount of tax that should, in theory, be collected by HMRC, and what is actually collected. The report shows a decrease in the tax gap from 6.1 percent to 6 percent of total tax liabilities, with key findings showing that the majority of the gap relates to income tax, National Insurance contributions, capital gains tax and VAT. Taxpayer behaviours have also remained largely consistent, with the key causes of the gap being failure to take reasonable care, legal interpretation, evasion and criminal attacks.

Some of the key findings from the report include:

  • The 2015-16 Self Assessment tax gap of £7.9 billion is over 20 percent of the total theoretical Self Assessment tax liabilities. The report attributes the majority of this gap to underpayment by small businesses (sole traders and small partnerships). 
  • The Corporation Tax gap is down to £3.3 billion, almost halving in the last ten years.
  • The VAT gap is down to 9.8 percent, its lowest level since 2010-11.
  • The percentage of the tax gap attributable to avoidance is down to £1.7billion, excluding BEPS-type arrangements. 
  • Following the release of HMRC’s recent report on the hidden economy, this tax gap has been revised downward.

For further information please contact:

Chris Davidson

Kevin Elliott


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