A recent report by the National Audit Office (NAO) reveals unpaid tax stands at a whopping £34 billion for 2014/2015. This is a £1 billion increase on the previous period.
Unpaid tax is termed the ‘tax gap’. HMRC estimates small-and-medium sized businesses to be the worst offenders, with 44% of unpaid tax owned by such businesses.
Sources of tax making up the shortfall
The NAO’s report reveals the precise sources of taxation making up this £34 billion deficit:
- 40% due to unpaid income tax. This accounted for £13.8 billion of the shortfall
- 21% due to tax avoidance and tax evasion. This accounted for £7.2 billion of the shortfall
- 17% due to the ‘hidden economy’ i.e. traders being paid ‘cash in hard’. This accounted for £5.9 billion of the shortfall
- 21% due to errors on behalf of the tax payer e.g. under-declaring income when claiming benefits such as tax credits. This accounted for £7.1 billion of the shortfall
Notwithstanding the above, HMRC received £517.7 billion in the 2014/2015 tax year. This was £11.9 billion or 2.4 % more than the prior period.
About our tax return service
Ensure you pay your tax bill correctly by engaging The Financial Management Centre’s tax return service. Also offered is a tax inspection and investigation assistance service. Complete the enquiry form or find the location of your nearest branch.