Tax Rebates & Refunds

HMRC claims ‘tax gap’ is closing

October 29, 2012
Posted in Income Tax — Written by Chris

A recent statement from HM Revenue & Customs has revealed that the ‘tax gap’ closed last year, demonstrating the effect the tax office’s crackdown on tax avoidance has had on the overall figures.

The tax gap is the difference between the amount of tax the department should be collecting and the amount it is actually managing to collect from taxpayers and businesses. HMRC, the department which is also responsible for processing tax rebates, is claiming that in the tax year 2010-2011, the tax gap dropped from 7.1 per cent to 6.7 per cent.

The tax office is claiming that its work to reduce tax fraud, evasion and avoidance is responsible for closing the gap. The chief executive of HMRC, Lin Homer, said:

“Our determination to support the honest majority and to crack down on evasion, avoidance and fraud have kept downward pressure on the tax gap.”

“We are determined to do more and we are devoting increasing resources to pursuing those who do not pay the tax they owe, while making it easier for people and business to comply with their tax obligations.”

However, it has also been reported that overall, the tax gap actually increased slightly in 2010-2011 from £31 billion to £32 billion. This has been attributed to an increase of £1 billion in the value added tax gap, which is believed to have affected the overall figures.

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