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Registered to carry out audit work Association of Chartered Certified Accountants.

www.auditregister.org.uk under number 8011438

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Blog

UK’s tax gap continues to fall

Adrian Mooy - Monday, August 20, 2018

 

 
Figures released by HM Revenue & Customs (HMRC) show that the UK’s tax gap is continuing to fall.

 

The Revenue has revealed that the tax gap for the 2016-17 tax year was 5.7 per cent, down from six per cent in the previous year and 7.3 per cent in 2005-06. It says that, had the tax gap not fallen, a total of £71 billion less tax would have been collected last year.

 

The figures show that of the total tax that was unpaid, the largest proportion was from small businesses, with £13.7 billion not paid.

 

According to HMRC, taxpayer error was nearly twice as likely as criminality to be the culprit for missing tax, with errors costing the Revenue £9.2 billion in lost income, while criminality cost £5.4 billion.

 

Meanwhile, Income Tax, National Insurance and Capital Gains Tax had the biggest tax gap at £7.9 billion. The VAT gap, on the other hand, has fallen from 12.5 per cent in 2015-06 to 8.9 per cent in 2016-17.

 

Mel Stride, Financial Secretary to the Treasury, said: “These really positive figures show that the tax gap is the lowest in the last five years, which reflects the hard work that HMRC and I have been doing to ensure we support businesses to pay the right tax at the right time and clamp down on tax evasion and avoidance.

 

“Collecting taxes is essential for funding our vital public services such as the NHS – indeed, had the tax gap remained at its 2005/06 level the UK would have lost £71 billion in revenue destined for public services, enough to build 200 hospitals.”

 

Jon Thompson, Chief Executive of HMRC, added: “The UK is the only country in the world to regularly publish their tax gap in detail and at 5.7 per cent, it remains at its lowest for five years. I am pleased that the downward trend shows HMRC and HM Treasury’s continued hard work to tackle evasion and avoidance is working.

 

“HMRC is also working hard to help taxpayers get their tax right by offering support and investing in digital services to improve businesses’ record keeping and reduce errors.”

 

The Revenue is now touting the forthcoming launch of its flagship Making Tax Digital programme as the latest weapon in its arsenal as it looks to reduce the tax gap further.

 

Making Tax Digital for VAT

Adrian Mooy - Thursday, August 16, 2018

HMRC has published further information on Making Tax Digital for VAT (MTDfV).

 

The VAT notice sets out some further details of the MTDfV regime, which will ultimately require taxpayers to move to a fully digital tax system.

 

 
Under the rules, businesses with a taxable turnover above the VAT threshold (currently £85,000) will be required to keep digital records for VAT purposes using 'functional compatible software' and provide their VAT return information to HMRC via an application programming interface.
 
This notice explains:
 - the digital records businesses must keep and the ways to record transactions digitally in certain special circumstances
 - what counts as 'functional compatible software', and when software programs do and do not need to be digitally linked where a combination of programs is used.

 

The new rules have effect from 1 April 2019, where a taxpayer has a ‘prescribed accounting period’ which begins on that date, and otherwise from the first day of a taxpayer’s first prescribed accounting period beginning after 1 April 2019.

 

 

Link:  https://www.gov.uk/government/news/hmrc-publishes-more-information-on-making-tax-digital


 


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