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The UK’s tax gap estimate surged to a record £39.8 billion in 2022/23, with small businesses contributing to nearly two-thirds of unpaid tax, according to HMRC data. The tax gap, representing the difference between the tax that should be paid and what is actually paid, was 4.8%.
For small businesses, the corporation tax gap rose to £10.9 billion, while the total corporation tax gap was £13.7 billion. John Barnett, Chair of the Chartered Institute of Taxation’s Technical Policy and Oversight Committee, commented:
“Critics of HMRC can point to a record amount – nearly £40 billion – not being collected, but HMRC can legitimately point out that they are bringing in a record share of the expected tax take. That both these things can be true simultaneously tells us more about current tax levels than anything else. These figures show there is plenty of work for HMRC to do in a range of areas to reduce the tax gap. However, we should not lose sight of the fact that their record collecting more than 95% of tax due compares well internationally.”
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Despite having landmark powers since 2017 to impose hefty fines, HMRC has not fined a single enabler of offshore tax evasion in five years, according to data released through a Freedom of Information (FOI) request. The data, released to the Bureau of Investigative Journalism (TBIJ), suggests HMRC is failing to target creators of offshore tax evasion schemes, instead focusing on the clients of such schemes.
Michelle Sloane, a tax disputes partner at law firm RPC, remarked:
“Enablers were and still are a big focus for HMRC. But these figures show their rhetoric on tackling enablers is clearly not being followed through with action.”
An HMRC spokesperson defended their track record:
“We have a strong track record in tackling offshore non-compliance. Since the launch of our No Safe Havens strategy in 2019, we have secured almost £700 million from offshore initiatives.”
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About Accace Adept UK
We are a joint venture between Accace and Adept Advisory, established to pursue a long-term strategy of providing innovative Business Process Outsourcing (BPO) and advisory services to clients in the United Kingdom and South Africa. We joined forces to augment each other’s valuable insight, knowhow and practices, whilst combining our experience in complementary fields of expertise.
About Accace Circle
Accace Adept operates internationally as Accace Circle, a co-created business community of like-minded BPO providers and advisors who deliver outstanding services with elevated customer experience and erase the borders of service delivery. Covering over 50 jurisdictions with nearly 2,500 professionals, we support more than 15,000 customers, mostly mid-size and international Fortune 500 companies from various sectors, and process at least 200,000 pay slips globally.
