Will making tax digital solve the tax gap?
What percentage of self-assessment tax returns with business income underdeclare the amount of tax due? 5% or 10%? According to the latest tax gap estimates the figure is 43% with over 20% of them underdeclaring tax liabilities by at least £1 000. Can that really be the case? It is an estimate derived from HMRC’s random enquiry programme and while the report acknowledges there must be some statistical uncertainty there clearly is an issue here. What is most surprising is that this figure has increased quite significantly from 28% in 2019. Has the standard of tax compliance really deteriorated to this extent? It is also worth noting that the figure for errors in self-assessment returns not including business income is 25% of all returns – that is still an increase though not to the same extent.
In the accompanying press release HMRC chair James Murray ...
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