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Little change for tax gap in 2011/12

11 October 2013
Issue: 4424 / Categories: News , tax gap , Admin

Revised data for previous year means a fall of just 0.1%

The tax gap remained more or less level in 2011/12, falling just 0.1% from 7.1% the previous year, according to the latest HMRC figures.

But the value of the gap – the theoretical difference between money collected by the Revenue and the higher amount the tax system is expected to generate – rose over the same period by £1bn to £35bn. The estimated increase was due mainly to the growth of the VAT gap, reflecting the rise in the standard rate to 20%.

The latest numbers follow a revision of the 2010/11 data through which the gap’s supposed value rose from £32bn to £34bn, causing the percentage of total tax revenue to increase from 6.7%

Reasons cited by officials for the changes were access to operational data for a later year than was available at the time of the original publication, and an increase in the VAT gap following changes to the Office for National Statistics’ national accounts figures on which the total gap’s calculation was based.

The overall figure is compiled from around 30 separate estimates for different taxes and is broken down by type of tax, taxpayer group and behaviours, including evasion and avoidance, taxpayer error, the hidden economy, criminal attacks and insolvency.

It is regularly revised by the government to take account of improved collection methods and to make use of the latest available data. Existing estimates of the differences in beer and spirits duties were in joined in the latest numbers by a new calculation of the wine gap.

Issue: 4424 / Categories: News , tax gap , Admin
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