The taxman failed to collect more than 30 billion last year, the equivalent of 1 in every 20 owed.
The figures released by HMRC showed that 32 billion dollars in tax went unpaid in the 2020 -- 21 financial year - 5.1 per cent of the total the taxman is owed. The tax gap, known as HMRC, included money owed by taxpayers who didn't take reasonable care with their affairs, criminal attacks, non-payment and tax evasion.
The largest share of underpaid tax was owed by small businesses, up 500 million from the year before, with 15.6 billion owed. Non-compliance was so serious that 1 in every 5 owed in corporation tax went unpaid.
Criminals accounted for 5.2 billion of the gap, while medium-sized businesses made up 3.9 billion and large businesses accounted for 3.6 billion.
Dawn Register, head of tax dispute resolution at BDO, said that there were problems in paying the right amount of tax across all industries and revenue streams.
The missing 32 billion tax gap would be a welcome boost to the economy, as the Treasury coffers cannot afford the continuation of this level of tax gap. George Turner, executive director of Tax Watch, said the 32 billion figure should be higher as HMRC wound down much of its compliance work during the epidemic. He said that it is important that HMRC are open and transparent about the difficulties they face, so that the public can have confidence that they are being overcome.
Separate figures released yesterday showed that Rishi Sunak s decision to increase national insurance rates for workers in the spring swelled Treasury coffers by 2.4 billion in May. The exchequer took a hit of 11.6 billion in May, up from a take of 11.6 billion in the same month in 2021, and raised 14 billion from the tax in May.
The tax receipts for the past 12 months increased by 16 per cent compared to the year before, from 630 billion to 733 billion.
A senior manager at Blick Rothenberg said that the rising take was due to the decision to freeze numerous tax thresholds, which resulted in people paying more tax bands than the national insurance and income tax thresholds in July. The chancellor announced in September of last year the increase in national insurance, with inflation sitting at just under 3 per cent. By the time we got to the spring statement, it was close to double that and rising sharply.