I have an article in Taxation magazine this morning, answering HMRC's criticisms of my work on the tax gap and suggesting why my estimates are bound to be nearer the truth.
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A few questions
While I see your logic in including the tax paid late in the tax gap calculation, the balance could include debts over several years and hence distort the tax gap in terms of it being an annual tax gap figure. Wouldn’t it be better to use the amount written off by HMRC annually as an indication of tax levied but never collected?
On the VAT and other profits calculation, I agree that if VAT is missing, so would other profitability. But often the VAT fraud is used to reduce the price of the good (cash in had building work etc), which means that more demand for those services results. So correct imposition of VAT would reduce demand and so the VAT and tax on profits would be less than the VAT alone implies? It is the same logic why we argue for a VAT cut to boost the economy.
No: it’s the gross gap that has to be collected
I clearly address that point in the article
Re your second point – if the government spent the tax on boosting the economy wouldn’t it have exactly the same effect but legitimately?
Why assume tax paid is lost?