HM Revenue and Customs (HMRC) have published statistics showing the estimated 'tax gap' for...
HM Revenue and Customs (HMRC) have published statistics showing the estimated 'tax gap' for 2024/25. The tax gap is the difference between the amount of tax that should, in theory, be paid to HMRC and the amount actually paid. The statistics indicate that small businesses continue to account for a majority of the tax gap.
HMRC estimate that the tax gap in 2024/25 was £59.2 billion, or 6.4 per cent of the total tax due, an increase from £46.8 billion or 5.3 per cent in 2023/24. The tax gap from small businesses accounted for 62 per cent of the overall tax gap, compared with 60 per cent in the previous year. The tax gap from medium-sized businesses and large businesses accounted for 7 per cent and 12 per cent of the tax gap respectively.
Corporation tax accounted for 35 per cent of the tax gap, with the difference between the amount of Corporation Tax due and the amount paid estimated to be 18.1 per cent. VAT accounted for 20 per cent of the tax gap, with the amount paid estimated to be 6.6 per cent lower than the amount due.
Failure to take reasonable care was the reason for the largest proportion of the tax gap at 35 per cent. Error and evasion accounted for 16 per cent and 12 per cent respectively.
