PAC calls on government to give 'honest picture' of UK tax gap

20 Oct 2020

The Public Accounts Committee (PAC) has urged the government to give a 'more honest' picture of the likely levels of the UK tax gap.

The tax gap is the gap between the tax that should be paid on the UK's economic activity and the tax that HMRC actually collects. According to the PAC, the gap has a wide range of causes, including deliberate tax evasion and accidental taxpayer error.

HMRC's most recent estimate of the tax gap was £31 billion in 2018/19. The PAC stated that there is a wide range of estimates that render this figure 'less than useful'. The Committee said that HMRC should not be using this number without explaining its limitations.

Additionally, the PAC has accused HMRC of failing to entirely set out the relative size of the tax gap for different sectors of the UK economy.

Commenting on the matter, Meg Hillier, Chair of the PAC, said: 'Best estimates really won't do when you're talking about multi-billions of pounds that could be being collected to support public services.

'We expect HMRC to be doing more to collect the tax owed, whether from individuals or companies. With families and businesses straining every sinew to stay afloat it is just as critical that the government collects tax effectively and efficiently as it is that the government spends money wisely.'