A new estimate of the UK’s tax gap is “flawed and muddled”, according to HMRC. Tax campaigner Richard Murphy’s report for the Public and Commercial Services Union (PCS) estimates the tax gap for 2013/14 at £119.4bn.
The PCS will launch the report later today at a fringe meeting at the Labour Party conference in Manchester. It claims that reductions in estimates of tax avoidance and tax debt have been offset by a significant increase in the estimated tax loss from evasion.
The report shows that tax evasion “now costs our economy more than £80bn a year”, the PCS said. It calls on the government to “tighten up legislation and reverse the counterproductive cuts in HMRC staffing”.
An HMRC spokesperson told AccountingWEB: “The PCS tax gap estimate is over-inflated, flawed and muddled. The IMF has endorsed HMRC's estimate of the gap at £35bn, which is in line with the Code of Practice for Official Statistics. Since 2011, we have brought in £60bn from tackling tax dodging alone.
“Ninety per cent of all tax liabilities are paid and the vast majority of UK taxpayers, both large and small, pay their dues. HMRC's ability to collect what's due is improving, which even the PCS recognises. We are not complacent and will continue to exert maximum downward pressure on the tax gap.”
Update at 16.45: The full report, which runs to more than 80 pages, is now available.