The UK tax gap – the difference between what should be paid and what is actually being received – remains at its lowest for five years, new figures have revealed.
However, the amount of money going into the nation’s coffers is still £33bn shy of what it should be.
Publishing the figures, HMRC says that the roll-out of Making Tax Digital (MTD) for businesses will help to narrow the gap, as companies get things “right first time”.
The gap may still be large but Mel Stride, Financial Secretary to the Treasury, said: “Had the tax gap remained at its 2005/06 level the UK would have lost £71bn in revenue destined for public services, enough to build 200 hospitals.”
The new figures show that, in 2017/18, 94.4 per cent of all tax due was paid. Taxpayer errors and “failure to take reasonable care” made up £9.2bn of the lost cash with “criminal attacks” accounting for £5.4bn.
And the Corporation Tax gap has fallen from 12.5 per cent in 2005/06, to just over eight per cent.
In its statement HMRC said: “The majority of customers want to get their tax right, but today’s figures show that too many are still finding this hard, with avoidable mistakes costing the Exchequer over £9.9 billion a year.
“£3 billion of this is attributable to VAT alone, which underlines the importance of the action HMRC has been taking with Making Tax Digital.
“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 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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