I note from the Sunday Times (behind a paywall, so no link) that:
Kathyryn McKerrow from HMRC’s Business Customer Unit conceded that the Revenue was under pressure to close the “tax gap” — the difference between the tax raised and what is thought to be owed.
Until I began work on this issue the tax gap was an almost unknown subject in the UK.
If that work has helped create this change I’ll keep at it.
There’s a long way to go.
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Is there any global initiatives that address the global tax gap issue?
In US, according to IRS, the tax gap estimate is close to $400B per annum.
Does anyone estimate the global tax gap?
Are you really saying that before you came along, HMRC were not under pressure to close “the difference between the tax raised and what is thought to be owed?”
I kind of thought that was their function?
Or maybe their function is to close the gap between what’s paid and what’s actually owed, which calculation is laid out according to the law, including incentives, and therefore is a matter for parliament?
@Troy
Before this line of argument developed I say HMRC tried to collect without knowing what they were missing
Knowing what they are missing has changed the debate
There are posters about the tax gap all over HMRC right now. There has to be reason for that, They weren’t there a while ago
And look at parliamentary debate and it’s hard to deny the evidence that I do seem to have influenced this debate
So yes – I do claim some credit
“In US, according to IRS, the tax gap estimate is close to $400B per annum.”
Bin, Could you please provide the source for this, thank you?
Richard, the UK economy is about 20 times smaller than the US, so all things equal the UK tax gap should be around $20 billion, or £13 billion.
Your estimate is about 10 times higher than that. What do you think explains this apparent mismatch. The UK is not Argentina or Nigeria when it comes to tax evasion!
@Jason
I estimate a shadow economy of between 13% and 14% for the UK
So do the World Bank
The US is, if I recall correctly as big
It follows that the US underestimates the total gap – as do HMRC
And yes – 13% is low in world scales
So the answer is – my estimate is entirely reasonable and consistent with reliable objective evidence
“It follows that the US underestimates the total gap – as do HMRC”
So, the highyly sophisticated tax agency of the world’s most advanced economy, with unlimited analytical, administrative and legal resources and with full access to the Federal Government’s output and revenue collection figures, puts out an estimate of $400 billion for the “tax gap”.
A one-man foreign outfit, based overseas and with no or limited knowledge of the US economic, fiscal and legal environment believes this estimate is wrong.
Now, who should we believe?