HMRC has just gone through the process of announcing that their estimate of the UK tax gap is, as it always has been ever since it has been calculated by them, a sum between £28bn and £35bn. This year it is £33bn. I could have pre-announced that with considerable confidence and saved them all the work, so predictable is this figure.
Does this estimate make sense? The simple answer is no. Despite being advised by the IMF in 2014 to estimate tax gaps on a top-down basis since these were likely to be more reliable HMRC continue to base all their estimates, but that for VAT, on the tax returns they receive. It takes only a moment to realise that much tax evasion might be missed as a result. And they continue to define tax avoidance as the loss to schemes advised under the Disclosure of Tax Avoidance Scheme rules of 2004 and subsequently, which makes no sense when very few notifications now take place under those rules and they never did, in any case, ever include the tax avoidance of most multinational corporations. No wonder the figure for avoidance is so low.
And, as has always been the case, more than a third of the figures that form the basis of the tax gap are ‘illustrative estimates'. Or to put it another way, HMRC make the figures up.
HMRC's tax gap estimation is now a ritual intended to let ministers preen themselves about their success in front of the press. But when missing tax now explains much of the deficit, and people's lives are being made a misery by continuing austerity we deserve better than this. A proper tax gap estimate is the least this country deserves. We are still a long way from getting it.
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What would be your estimate?
I have not done this since 2014 when it was £120bn
But your estimates are of course not making things up at all.
I always explain my workings
They remain estimates but at least I show how I make them
That is very different
Your ‘estimates’ include ‘avoidance’ by companies complying entirely with the current tax laws but using approaches which you simply don’t approve of.
This is not a credible estimate of the tax due to HMRC but which is not collected, as this tax is simply never due in the first place.
You should be more Jones’s that your estimate is of the tax that would be owed if the rules and regulations were how you think they should be, not how they actually are.
You might note that so does HMRC’s estimate include such numbers
In smaller value than I suggest
But the methodology is entirely correct
And nothing I do suggests your last comment is anywhere near the truth
Please, Richard, would have another go, and confront HMRC’s estimate? If you could put together a small team …
It would need funding…
I have developed the methodologies
Why would it need funding? All you do is multiply a few numbers together? How long and how much could that possibly take?
I note Worstall’s trolls are out in force this morning
[…] I mentioned in a blog post last night, the gap is supposedly £33bn. That, however, is hardly surprising. This is the history […]