Eight billion

Really ?

Didn't find your answer?

The Government says (and here one must qualify this by saying one can rarely believe what the Government says) that £8 bn a year is lost through innocent error and that's why MTD is being introduced to reduce errors by making life more complicated for the run-of-the mill trader.

Has anyone seen how this is calculated ?   It seems an awful lot.   Seven million SA returns, from which you'd need to exclude PAYE returns, folk who won't be in MTD anyway, folk who already use software, folk who don't make errors etc etc - maybe this £8 billion is down to 2 million folk, that's £4000 apiece.   Suppose they're small businesses and their marginal rate is 20% + 9% NI, that would work out at £14,000 of overlooked income every year.  On average.

It's a lot to overlook ........

Replies (6)

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By tom123
20th Dec 2016 09:44

The same maths was probably used to value HS2, or time lost in traffic jams - all spurious in my view.

If I get stuck in traffic, my work just sits on my desk waiting for me - it doesn't go away..

I blame economists (I had Patrick Minford, erstwhile of government, as a lecturer at Uni - and never really understood his lectures)

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Worm
By TheLambtonWorm
20th Dec 2016 10:34

That's certainly a lot of innocent errors.

Unless it's just two or three really rich blokes making a few mistakes.

More likely there was an innocent error in the £8bn calculation though - perhaps they need some new software for it.

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By Tim Vane
20th Dec 2016 12:35

The measurement of the tax gap is covered here:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/fil...

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Replying to Tim Vane:
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By Portia Nina Levin
20th Dec 2016 12:46

Tim Vane wrote:

The measurement of the tax gap is covered here:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/fil...

Speed read: it is less measured, and more made up by HMRC.

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By DMGbus
20th Dec 2016 13:21

The figure can vary as it is seemingly a conjoured up one.

In October I recall being told by someone from HMRC policy division told that it had reduced from £7.5bn to £6.5bn.

So why was MTD needed as tax gap will be gone in 6 or so years at that rate without MTD?

Presumably this last comment has been taken on board, so the tax gap has now mysteriously had to be increased ("updated" / "more accurately created") to £8bn to justify MTD?

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By Portia Nina Levin
20th Dec 2016 13:45

£5.2 billion is down to legal interpretation, apparently; which I assume means just having a differing interpretation to HMRC.

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