Uncollected tax for the last financial year has risen to an estimated £42bn according to HMRC. This is £2bn more than early estimates suggested which means HMRC failed to bring in 9% of potential taxes. The largest area of loss was in VAT were 16% of potential taxes remained uncollected. The second largest shortfall, amounting to £6bn of income tax, was caused by inaccurate self-assessment returns.
Despite all this HMRC believe they are making progress and said they are doing well compared to some other countries. They also admitted that the uncollected tax was probably caused by the complexity of the PAYE income tax system and about 1.4 million people will be asked to pay extra income to account for some of the loss.
HMRC have tried to recoup losses over the past 3 years by staging high profile campaigns designed to flush out unpaid income tax from various groups such as doctors, dentists and people with foreign bank accounts.
The Public and Commercial Services union (PCS) argued that the overall tax-gap was nearer £130bn each year.
“What is clear is that insufficient resources are being dedicated to collecting tax, including that which is being avoided or evaded, largely by very wealthy individuals and organisations,” said the PCS leader Mark Serwotka .
“In the five years since HMRC was formed, 30,000 jobs have been cut, the majority of which were directly responsible for tax collection.
“Starting to collect these massive sums lost to our economy every year would be a major contribution to the alternative to the government’s devastating plans to cut public spending,” he added
