22/01/2018
Mind the (tax) gap!
With the 31 January deadline for submitting online self assessment tax returns for 2016/17 looming large, it is an appropriate time to consider the ‘tax gap’ – the difference between the amount of tax that HM Revenue & Customs should in theory collect and the amount that it actually does rake in.
According to HMRC figures, the tax gap for 2015/16 is estimated at £34 billiion, which is 6% of total tax liabilities. Around 20% is down to taxpayers filing income tax self assessment.
Taxpayers who have yet to complete their self assessment return should bear in mind that one of the reasons HMRC measures the tax gap is to help it “understand how non-compliance occurs and how it can be addressed”.
Some taxpayers make simple errors in calculating the tax that they owe, despite their best efforts, while others “don’t take enough care”.
Legal interpretation, evasion, avoidance and criminal attacks on the tax system also contribute and the impossibility of collecting outstanding tax from businesses that become insolvent is one of the reasons why it is impossible for HMRC to collect every penny of tax owed.
An analysis by the Institute of Fiscal Studies of data from a decade of HMRC’s random audit programme shed more light on tax gap issues by revealing that
- 36% of SA taxpayers have some under-reporting on their returns … and this rises to 60% among the self-employed
- most under-payments are less than £1,000 … but less than 4% of taxpayers owe more than £10,000 and account for more than 50% of the self assessment tax gap
- HMRC audits can recover significant revenue, but the self-employed tend to revert to under-reporting within a few years
- 40% of men are likely to under-report, as opposed to 27% of women
- in hospitality and transport, more than 50% of total tax owed was not reported
CPA provides Business Owners and Credit Managers with all that is needed to work effectively; credit information – debt recovery and credit protection. Our aim is to develop these services still further to meet changing market needs.
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
Keep up to date with the latest news by following us on social media:-
Watch the video to find out how CPA can help you!
Read our blog – Debt collection agency
Read our Cash Flow Advice
Read about our overdue account recovery service
Read our blog – What is credit management?
Read our blog -What is a credit management company?
Read our blog -Credit Management that works!
Read our blog – How to select a debt collection agency
click to see read about our successes
Please call us on 0330 053 9263 to discuss how CPA can help your cashflow. Alternatively, either email us or use our contact form.