Save content
Have you found this content useful? Use the button above to save it to your profile.
Mind the gap | AccountingWEB | Small businesses responsible for 60% of tax gap
istock_simona-flamigni_mind-the-gap

Small businesses responsible for 60% of tax gap

by

The tax gap has increased to a record £39.8bn, according to statistics released by HMRC, which pinned the blame on small businesses for 60% of the taxes not collected last year.

20th Jun 2024
Save content
Have you found this content useful? Use the button above to save it to your profile.

 HMRC today has released the figures of the 2022 to 2023 tax gap, which is their calculation of the tax due, but not collected. The tax gap is estimated to be 4.8% of total theoretical tax liabilities, meaning that HMRC collected 95.2% of all tax due. 

The percentage remains consistent with the last couple of year’s estimates. However, the amount has risen from £35.8bn to £39.bn. While the overall total percentage uncollected hasn’t changed, the tax gap from small businesses has actually increased. 

According to the figures, small businesses are responsible for £24.1bn (60%) of the tax gap by customer group, meaning they're responsible for the lion’s share of the theoretical unpaid tax. In comparison, wealthy customers and individuals only account for 5% each.

The amount landing at the door of small businesses has increased in the past few years from 44% of the overall tax gap in 2018 to 2019. Last year, the share of the tax gap attributable to small businesses was 56%. 

As a comparison to other ‘customer’ groups: 

  • Mid-sized businesses account for 11% of the overall tax gap in 2022 to 2023.
  • Large businesses have fallen from 15% of the overall tax gap in 2018 to 2019 to 11% in 2022 to 2023.
  • The combined share of the tax gaps attributed to wealthy customers and individuals accounts for 9% of the overall tax gap in 2022 to 2023.
  • The amount attributed to criminals has fallen from 15% of the overall tax gap in 2018 to 2019 to 9% in 2022 to 2023.

John Barnett, chair of CIOT’s technical policy and oversight committee, said: “While large businesses and wealthy individuals are often accused of not paying enough tax these figures suggest that their total share of the tax gap is only a quarter of that of small businesses."

Given failure to take reasonable care and error make up nearly half of the overall tax gap, Barnett said "it is reasonable to surmise that a lot of this is due to small business owners making mistakes with their tax," adding that there "is work to be done on educating and helping small business owners to understand their tax obligations better". 

Tax gap estimates

HMRC has also estimated the value of the tax gap by each type of tax in 2022 to 2023:  

  • Corporation tax is 13.9% of the theoretical liability, or £13.7bn in absolute terms - no change from the previous year
  • Income tax, national insurance contributions and capital gains tax is 3.0% of the theoretical liability, or £13.7bn in absolute terms
  • VAT is estimated to be 4.9% of theoretical liability, or £8.1bn in absolute terms - no change from the previous period.

Avoidance

The tax gap has played a pivotal part in the economic plans of all the major parties during the general election campaign. 

The Conservative Party said in its manifesto that it plans on raising £6bn a year through tackling tax avoidance and evasion, while the Labour Party matched the same amount in its manifesto saying it will target “large businesses and the wealthy” as part of its plans to close the tax gap. 

The tax gap statistics give whichever party gets the overall majority in the election some clues as to where they should look first if they want to reduce the tax gap and clamp down on tax avoidance. 

Avoidance is the smallest proportion of the tax gap at 4%. Half of the avoidance tax gap, is attributed to corporation tax at a value of £1bn. This figure has increased from £0.8bn in 2021-22 and £0.7bn in 2020-21.  

The next largest share of the avoidance tax gap is £0.5bn in income tax, national insurance and capital gains tax. This figure has remained the same since 2019-20. 

The rest of the estimated £1.8bn of the avoidance tax gap is made up from £0.1bn in ‘other taxes’ and £0.1bn in VAT. 

Carelessness

In a guide to the tax gap published ahead of today’s announcement, the Chartered Institute of Tax (CIOT) explained that £11bn of the tax gap is a result of evasion or other illegal activity, but the largest contributor to the tax gap - responsible for over £17.8bn of it - is taxpayer mistakes (categorised as error and carelessness). 

The CIOT said the increase in tax lost to taxpayer error and carelessness could be due to a number of factors from the increasing complexity of the tax system to worse HMRC customer service and the inadequacy of published guidance or even changes in how the tax gap is calculated. Meanwhile, evasion and avoidance accounted for £7.3bn.

Senga Prior, chair of the ATT technical steering group, said: “While all political parties talk of raising funds by tackling tax avoidance and evasion, HMRC’s estimated figures appear to show that it is self assessment taxpayers, especially individuals and unincorporated  businesses failing to take reasonable care and making errors with their submissions that actually account for the largest proportion of the tax gap.

"There is no magic quick fix or headline grabbing answer to this problem, but a starting point would be improving HMRC customer services and providing access to agents to the full range of digital services available to their clients in conjunction with simplification of the tax system."

Replies (49)

Please login or register to join the discussion.

avatar
By Justin Bryant
20th Jun 2024 17:19

Yes; the tax gap is very obviously mostly undeclared cash in hand work (but it's far sexier for the likes of DN/RM, in terms of self-promotion, to totally ignore that massive elephant in the room and to instead drone on about the peanut element due to (alleged) tax avoidance - which I assume basically none of us see these days and is pie in the sky in terms of the political manifestoes that claim there is £6bn annual tax avoidance/evasion they'll collect, but 90% of that £6bn must be evasion surely).

And what about the -ve tax gap i.e. unnecessarily overpaid tax?

Thanks (7)
Replying to Justin Bryant:
By Ruddles
20th Jun 2024 19:01

Justin Bryant wrote:
… to instead drone on about …

Oh, the irony.
Thanks (10)
Replying to Justin Bryant:
avatar
By Justin Bryant
27th Jun 2024 11:25

These helpful ICAEW graphics put it all in context:
https://www.icaew.com/insights/tax-news/2024/jun-2024/tax-gap-closes-as-...

Thanks (0)
avatar
By FactChecker
20th Jun 2024 18:12

This whole game (a version of 'pin the tail on the donkey' where no-one's even sure that there's any donkey in the first place) is as farcical as it's always been.

"the tax gap, which is (HMRC's) calculation of the tax due but not collected" ... and that 'calculation' is, as they're happy to admit, "estimated" (as indeed are all the 'allocations' of those estimates).

So another case of ... 'what results do you want?' ... 'oh OK, well here they are'!

Thanks (16)
Replying to FactChecker:
avatar
By FactChecker
20th Jun 2024 18:21

BTW might be worth getting a statistician to cast an eye over the above figures.

Leaving aside the reliability or otherwise of the figures, they need to be interpreted with a bit more rigour.
For instance:
"small businesses are responsible for .. 60% of the tax gap by customer group; .. (whereas) wealthy customers and individuals only account for 5% each."

So how do those %ages align if set against the ratios of those groups by volume of taxpayers?
Hmm ... looks like a smaller %age of smaller business are 'contributing' to the supposed tax gap, than the %age of wealthy customers doing their bit to keep the gap in play!

Thanks (6)
avatar
By adam.arca
20th Jun 2024 18:24

I don’t doubt there’s a tax gap and I don’t doubt that it’s massive but I don’t give any credence to spuriously accurate numbers such as 4.8% / £39bn.

The only relevance of such numbers is not the absolute numbers themselves but the trend: I’d love to know what the tax gap was, calculated on the same basis, 20 or 40 years ago. And whilst I’m not in any fashion defending tax evasion, we also have to consider that there will always be a tax gap, there will always be cash in hand, and that to a certain extent that has to be accepted as the cost of living in a (nominally) free society: that freedom also means the freedom to choose to be a criminal.

But if it’s true that 60% of the tax gap arises from small businesses, then three obvious points come to mind.

Firstly, we’re back to cash in hand. So what happened to the Revenue’s boots on the ground who used to monitor the markets etc looking for the black market economy?

Secondly, it’s apparent to the meanest intelligence that the average taxpayer just isn’t frightened of the Revenue any more because literally their only contact these days is some PAYE foul up and / or some moron on the helpline or chatbot. The Revenue couldn’t appear more incompetent if they actively tried being useless. So get more enquiries going and get people worried again.

And thirdly (and against my natural inclination to allow the market to dictate), clearly a lot of issues arise with the self represented who haven’t got a clue and also with poor representation by “accountants”: perhaps it really is time to insist that only accountants subject to the overview of a professional body can prepare accounts.

Thanks (10)
avatar
By Verified
20th Jun 2024 21:45

The comment suggests that CIOT appears to take the figures at face value.

Who is holding public bodies to account these days?

Not CIOT it seems.
Journalists don't exist. They were replaced with SEO and advertorial writers a while back.

So I suppose HMRC gets to tell its story to everyone, unchallenged, which no doubts sows seeds in the civil service and with MPs for various laws and powers etc etc.

Thanks (12)
avatar
By jvenegas16
20th Jun 2024 23:48

Meanwhile, a series of errors by HMRC let Paul Baxendale-Walker escape a £14m penalty.

Thanks (7)
By Duggimon
21st Jun 2024 09:13

HMRC today has guessed that the tax gap is £39 billion. They have further guessed that 60% of this is the fault of small businesses.

HMRC have used a statistical approach to guess these figures but as they have been fundamentally unable to apply these methods in any meaningful way to tackle the collection of this missing tax, which is of course their job, we are left to speculate just how useful and accurate these methods are.

Thanks (15)
avatar
By JamesDS
21st Jun 2024 09:23

Seriously?
We collectively understand and accept that HMRC are incompetent, borderline corrupt and need tearing down rebuilding (along with much of the tax codes).

Yet, when they shout tax gap, we all listen and attend closely,and assume their "analysis" is worth more than the opinions of the deranged bloke with the megaphone on Oxford Street.

Thanks (12)
avatar
By Self-Employed and Happy
21st Jun 2024 09:27

Oh, but I thought MTD was the solution....that's what HMRC told us.

Another way of looking at it is that by their logic 40% of the tax gap should be very easy to find...

What is clear is that the public don't care about HMRC, they see the absolute shower of incompetence dribbling their way through investigations and one balls up after another and take their chances.

Thanks (7)
avatar
By Self-Employed and Happy
21st Jun 2024 09:27

Oh, but I thought MTD was the solution....that's what HMRC told us.

Another way of looking at it is that by their logic 40% of the tax gap should be very easy to find...

What is clear is that the public don't care about HMRC, they see the absolute shower of incompetence dribbling their way through investigations and one balls up after another and take their chances.

Thanks (3)
Replying to Self-Employed and Happy:
avatar
By GDavidson
21st Jun 2024 13:24

I don't understand how one of your posts gets 3 thanks and the other only 1 when they are identical?

Thanks (1)
Replying to GDavidson:
avatar
By FactChecker
21st Jun 2024 19:13

Democracy in action ?

Thanks (3)
Replying to GDavidson:
Rob Swan
By Rob Swan
22nd Jun 2024 04:23

It's an HMRC 'estimate' of thankfulness ;)

Thanks (1)
avatar
By Twickers Call
21st Jun 2024 09:33

Small businesses are the back born of this country and generating the most of the Revenue. Why don't you support small businesses to encourage the tax revenue. Instead shaming and blaming the small businesses for declining tax revenue. HMRC and the government are both to be blamed not opening their eyes to the truth. These people who are responsible for the growth of this country are not waking up to the truth that the small businesses produce 60% of the revenue..

Thanks (5)
avatar
By AndyC555
21st Jun 2024 09:33

There are of course plenty of hysterical claims (the tax gap is £85bn, no £100Bn, no wait its £120bn) all of which are a thin cover for the need to 'tax the wealthy'.

But as I've said elsewhere, if person A doesn't pay the right amount of tax, they have more in their pocket to spend with person B who will pay tax and still have more left over to spend with person C and so on. The money swirls around in the economy until it passes through someone who will pay tax on it.

I'm not saying that's right. Person A should be paying the right amount of tax. But the idea that there is some magic wand to wave which will suddenly fill HMG's coffers is fanciful.

Thanks (4)
Replying to AndyC555:
By Duggimon
21st Jun 2024 12:17

The tax gap is not the reason we should tax the wealthy, the reason for taxing the wealthy is that the poor have no money.

Thanks (6)
Replying to Duggimon:
avatar
By AndyC555
21st Jun 2024 14:05

No country ever taxed itself to wealth.

If the only idea some people have of how we make poor people wealthier is to take from the wealthy and give it to the poor, we disincentivise both groups.

How about.....I don't know, maybe put in place policies that will grow the economy.

Thanks (2)
avatar
By mkowl
21st Jun 2024 09:39

Its like the political debates on tax, arguing the toss over £20bn

OK £20bn is a lot of money but its 2% of the total taxes received in the year to March 2023 which was a staggering £1.055bn.

The tax gap may be 4% - too much if that is a verifiable figure - but putting on an auditor hat that would be below materiality

So much emphasis in the election debating about, in reality, marginal amounts

Thanks (2)
avatar
By David MacBean
21st Jun 2024 09:43

All these numbers seem very precise but tax evasion is hidden from view so some statistician must have to make assumptions, from some very large numbers, on what the general economy is doing. There’s no mention of how reliable this info is as most economists/statisticians give % of how likely or possible their projections are.
The other point is if a large amount of tax is lost because of poor record keeping by the self employed why is it these mistakes are always benefiting themselves & not a case of them paying too much tax which must be statistically possible?
I get the feeling this is subtle Gov propaganda for justifying MTD but I would agree if everyone paid their fair share of tax we’d all be better of but unfortunately human beings are not perfect & the frauds committed during the recent generous Gov assistance for Covid the country is full of conmen & fraudsters. What ever happened to the honest upstanding British spirit?

Thanks (2)
Rob Swan
By Rob Swan
21st Jun 2024 09:51

So Harra can honestly claim for HMRC that "All our metrics are 'OUTSTANDING''!"

Explains the gong ;)

Thanks (0)
avatar
By listerramjet
21st Jun 2024 10:03

Please stop linking evasion and avoidance. I know this is an HMRC tactic, but they are completely different things. FYI avoidance is legal arbitrage complying with the law, whereas evasion is the act of illegally understating a liability.

Thanks (8)
Replying to listerramjet:
avatar
By Open all hours
22nd Jun 2024 18:52

And Paul Lewis from BBC Moneybox should be suspended until he agrees to stop talking about ‘evoidance’

Thanks (1)
avatar
By AndrewV12
21st Jun 2024 10:24

'but the largest contributor to the tax gap - responsible for over £17.8bn of it - is taxpayer mistakes (categorised as error and carelessness). '

it's funny how client 'MISTAKES' always result in Businesses paying less tax.

Thanks (3)
avatar
By Karen whitehead
21st Jun 2024 10:26

Am I the only one that thinks regardless of the accuracy of these statistics that this will be worse under MTD? We will see more clients decide that they can submit themselves (or accountants that do not have the capacity to submit quarterly for all their clients requesting clients submit themselves) and the things that we see everyday that clients believe they can claim for or don't have to declare will not get corrected.

We deal with a lot of CIS workers and it is well known that on every building site there is one worker that sets himself up on 6th April and basically makes up the figures for the workers and submits their tax returns. My clients who are receiving back refunds of anywhere between £500 to £2000 are telling me their mates on site are getting back £4000 plus and claiming for the costs of their cars and all sorts - and why can't they do that. But HMRC seem to pay out these massive refunds with no checks. Surely the system should be picking up on excessive refunds?

Thanks (4)
ghm
By TaxTeddy
21st Jun 2024 10:28

The timing of this disclosure is interesting.

With the likelihood of a new government imminent, is it possible that a new minister might consider scrapping MTD as cost saving measure? If so, it's a good policy for HMRC to be able to point at their "findings" which "prove" that MTD will resolve the small business tax gap.

Just saying.

Thanks (4)
avatar
By richards1
21st Jun 2024 10:42

The French have part of the solution to "cash in hand". Its called cheque emploi. A taxpayer gets a tax break by paying the handyman with a cheque purchased from the government. The government then have an idea who is working in that part of the economy.
Plus they have auto - entrepreneur where the small business declares the level of turnover and the tax etc is fixed on that. Adjustments made at the yer end.

PLUS they have a lot more tax collectors.

Thanks (4)
By ireallyshouldknowthisbut
21st Jun 2024 11:07

The might like to do some tax investigations for small busineses then.

They only appear to do random ones now.

And those are staffed by very low grade staff who look at nothing much.

No fear, no compliance.

Thanks (1)
avatar
By AWebbie
21st Jun 2024 11:13

The statistics seem nonsense. There are apparently 5.51 million "small businesses" who are underpaying £23 billion of tax. That is over £4,000 each - implying additional undeclared income of perhaps £14,000 (at a 30% tax take). And that is an AVERAGE. Assuming only half are honest, the other half are trousering nearly £30k. Really?

Thanks (4)
avatar
By TomCurtisDTS
21st Jun 2024 11:20

HMRC are absolutely farcical, they are constantly 'pointing the finger of blame' at anywhere but themselves. We've just had a pandemic, where zero help was given to small limited companies, taxes have never been as high since after World War 2 and they wonder why these businesses are hiding earnings or cash.
They need a complete revamp, with a new chief. It's their job to ensure there is no 'tax gap', they choose to pump billions of pounds into ridiculous ideas like MTD ITSA. If it was a dog you'd put it down. Of course people on low earnings will take risks for an extra few pound, its nothing new.

Thanks (4)
avatar
By Twickers Call
21st Jun 2024 11:34

Do not trust HMRC figures. They cannot get anything right. These statements are made by public relation department and they are well paid for their work.

Thanks (4)
avatar
By Mallock
21st Jun 2024 11:39

MTD is never going to solve the problem of the tax gap. Clients who are trying to use cloud software themselves and are intelligent enough to realise they are making a mess of it, come through our doors regularly and in some cases it is a huge job to correct their mess. However there must be many who believe the adverts for Xero and Quickbooks, don't seek help and in Glasgow parlance, their books are complete mince: it's not necessarily the fault of these people because it is so easy to get it massively wrong with these programmes if you don't have some proper understanding of accounting.

We are currently re-educating one client who is finding it hard to understand why all his work suits, shirts, ties, shoes, socks and dry cleaning are not fully deductible. His old "accountant" never mentioned it.

Cash in hand jobs by the trades are an obvious area. How many are offered a discount of 20% if they can pay for their new bathroom/kitchen in cash.

Thanks (5)
Replying to Mallock:
avatar
By Karen whitehead
21st Jun 2024 13:11

absolutely

Thanks (1)
Replying to Mallock:
Pile of Stones
By Beach Accountancy
22nd Jun 2024 07:08

Agree totally, one client on Quickbooks doubled his turnover by raising sales invoices, and then when the cash came in, putting that through as sale receipts.

I am very slowly teaching him double-entry bookkeeping (he's a long-time friend).

At least Xero highlights a one-to-one match to invoices on cash coming in.

Thanks (2)
avatar
By ASF
21st Jun 2024 11:52

Be interesting to see the proportions of taxes PAI|D or DUE for each of the respective groups above, so we can see how out of kilter these figures really are. Also, one probably also has to consider larger companies and wealthier individuals' available resources to mitigate taxes with planning schemes and defending HMRC claims and appeals procedures, which by and large smaller companies and individuals cannot. As someone else said, "headline grabbing". There are lies, damned lies and statistics and we all know HMRC are not above a bit of that, are they!

Thanks (2)
avatar
By Jabba the Hut
21st Jun 2024 12:11

Maybe small business don't pay their tax because, to name but a few, of:

1. A massive rise in the tax rate;
2. Massive increases in NMW;
3. Massive rises in energy costs;
4. Massive rises in Business Rates;
5. Massive rises in Lease costs;
6. Massive rises in interest rates;
7. Massive rises in compliance cots;

TL:DR - they haven't got any money

Then, what about the massive amounts of tax paid by criminals posting fake inflated accounts for barbers, tattoo parlours and nail bars, etc. to launder drug related and other illegal income, as well as enabling modern slavery? Why would HMRC target firms they likely know are paying tax on income far in excess of their true profits?

Thanks (3)
Replying to Jabba the Hut:
avatar
By ASF
21st Jun 2024 12:37

Possibly the Line of Least Resistance? Collect everything that flows in without much effort, don't worry too much about "overpayments" and then whinge and moan in the press about the little guys causing the big gaps. Keeps the costs of collecting the "right amounts" (whatever that may be) down? As we all know, it feels like more politics and optics in this game than substance.

Thanks (1)
avatar
By Mike Warburton
21st Jun 2024 12:41

A sound point about the overstatement of avoidance

It is often claimed that revenue is lost through large multinational companies finding clever ways of getting round the rules. Much of this flows from heavy criticism a few years from the Public Accounts Committee, directed in particular at Amazon. In my view this criticism arose from sloppy analysis by the committee of the way the tax rules work, particularly for UK subsidiaries of offshore quoted companies. I will take Amazon as an example. Most commentators look no further than the corporation tax charge disclosed in the company accounts. In 2018 the Amazon UK Services Ltd accounts disclosed a tax charge of £1 million on profits of £75m. However, note 8 in the accounts shows that this amount was calculated after taking relief of £23 m for share based awards. Amazon has a generous share scheme for UK employees with shares awarded in and by the USA parent company. This, and a rapidly rising share price, meant that the UK employees realised large profits when they exercised their share options, typically three years after they were awarded. These profits were subject to income tax and NIC in the UK through the PAYE system, despite the award being in shares in the US parent company. Under the entirely logical rule introduced by Gordon Brown, companies are, of course, entitled to claim a corporation tax deduction on the amount of this profit. So, although the reduction on corporation tax was £23m, the UK treasury collected about three times that amount in PAYE/NIC over and above the tax on their employees’ wages. Now that the Amazon share price has stabilised the equivalent amounts in the 2022 accounts show that the share-based relief has virtually disappeared leaving a corporation tax charge of £66m on profits of £222m, an effective rate of 30. Strangely the Public Accounts Committee have been silent on this!
Mike

Thanks (2)
paddle steamer
By DJKL
21st Jun 2024 13:38

Must admit the more I watch programmes about auction houses like Edinburgh/Yorkshire, and the more gold sovereigns uncovered that people seem to have salted away, the more I wonder re the sources of funds to acquire these in the first place- perhaps that is my natural accountant cynicism.

Still, it must be getting harder to under declare as cash diminishes in use.

Thanks (1)
By Nick Graves
21st Jun 2024 15:01

Is that the true measure of inflation?

A lot of small businesses I have seen seem to have had expenses (especially materials/motoring/insurance) soar, yet they've been unable to increase turnover to compensate and have had to absorb the increases.

A lot more credible than the CPI/RPI nonsense spouted.

Either they're being disingenuous, or I'm the most brilliant economist since Ludwig von Mises. I suspect I know the answer...

Thanks (1)
avatar
By ralan
21st Jun 2024 15:33

Sorry but this is the usual rubbish put out by HMRC.
What have they done about recovering Bounce Back Loans which were given out without any checks been carried out?

Thanks (2)
avatar
By Mr J Andrews
21st Jun 2024 15:44

All this , of course attributed to ''........statistics released by HMRC........''.
Once again, the backbone of our society - small businesses - are under attack from the Revenue with this sweeping statement. It just shows how ignorant this department is, of the rife black economy seen in almost every street in the country.
Of similar comical interest is the fact that criminal activity is now a percentage of HMRC's ''customers '', alleged to have fallen by 6% in in the three years to 2022/23. Does this mean their tax take from this area is slowly drying up - or have they combatted such activities ? Or does it mean that the other 50 or so unknown per cent are not accounted for to avoid buggering up the statistics ? And is the prevalent, increasing, black economy not included as illegal as far as tax law is concerned ?
Read into HMRC statistics what you will. I give up.
The only guaranteed accurate stat. is that every HMRC head honcho will be awarded a gong.

Thanks (1)
Profile
By indomitable
22nd Jun 2024 14:05

"There's lies, damn lies and statistics" - originally attributed to Benjamin Disraeli

Thanks (0)
avatar
By petestar1969
24th Jun 2024 10:15

Its not just the cash in hand merchants evading tax that's the problem. Its cash in hand merchants evading tax and then lying about their income to the benefits people and getting more than they should. A so-called double-whammy.

It doesn't even need to be cash. As an example, I used to have a cleaner visit my house. In an attempt by the agent to stop her fiddling, I was not allowed to pay cash but had to transfer the money to a bank account, so the cleaner gave me her mother's bank account details. I didn't care, just wanted the cleaning done, but obviously the money going to mum was drawn out in cash and given to her daughter and the benefits people never knew about it.

Thanks (0)
avatar
By whitevanman
25th Jun 2024 15:32

Just a couple of alternative thoughts on this subject.
There are 5.5m small businesses underpaying an average £4k each. There are less than 60,000 HMRC employees, not all employed in this area. The average Inspector probably settles 30-50 enquiries (or whatever they now call them) per year. Typically they have enquired into less than 3% of returns each year. To recover the full amount of the "gap" would require about 100,000 Inspectors working in just this 1 area. Probable additional costs around £4 or 5 bn per annum (plus accommodation etc and those lovely pensions).
And there would be no guarantee of collecting the extra £23bn or so (again for many reasons). All in favour?
Following the introduction of Self Assessment (and numerous consequential changes in legislation and practice) the average yield from those enquiries actually taken up in this area of the population, declined significantly (I seem to recall the average falling from around £3,000 to around £250!). A factor in this is the way in which cases are selected. Again there are many ridiculous constraints applied. It is also fair to say that since (say) 2000, the training of staff has fallen along with the overall experience and these factors will again have influenced outcomes.
Finally for the moment, consider the issue of penalties. In the (distant) past, "get it wrong, pay a penalty". Nowadays? "Get it wrong get a suspended penalty".
What is there to "encourage" the poor, confused, businessman to get it right?
I could go on but hopefully, what I have said points to the fact that there are very many more aspects to this complex matter than the simple blame allocation of many posters and certainly more than the politicians seem to realise.

Thanks (0)