How Realistic Is Labour's Aspiration To Cut Tax Gap By £5bn?

10th April 2024

All agree that billions are missing from HMRC coffers but Rachel Reeves may not be looking for it in the right places - Larry Elliot in the Guardian

Each year His Majesty's Revenue and Customs know how much tax they would collect if all individuals and companies paid what they owed. They also know how much they have actually collected. The difference between the two figures is known as the tax gap.

In the last year for which data is available, 2021-22, the tax gap stood at £35.8bn, up £5bn on the previous year. The amount of tax owing also rose, from £642bn to £739bn, so in percentage terms the tax gap remained unchanged at 4.8%.

That figure has fallen over the past two decades. When Tony Blair was prime minister in 2005 it stood at 7.5%, and it was 7% in 2013 when David Cameron was prime minister.

The shadow chancellor, Rachel Reeves, is promising a crackdown on the minority of tax dodgers who fail to pay what they owe. On Monday she announced plans to cut the tax gap by £5bn by the end of the next parliament, which Labour says it can achieve by investing £555m so HMRC can employ more staff and modernise its systems. But how realistic is that aspiration?

A breakdown of HMRC's figures suggests that more than half of the tax gap - 56% - is accounted for by small businesses and the self-employed. Criminals, large businesses and medium-sized businesses each account for 11%, wealthy individuals account for just 5% and all other individuals the remaining 6%.

Read the full article HERE

If you have time then you can read the Wealth Report by Richard Murphy who is quoted in the Guardian article HERE
It spells out exactly where the money can come from.

[b]Check this out - reopen local tax offices[/]