Why turn a blind eye to the tax gap David and look at benefit fraud instead?

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An article in the Telegraph at the weekend can’t be ignored in the context of the Tax Gap:

The Prime Minister [has] singled out the Work and Pensions secretary for praise. [I]n an article in a Sunday newspaper, Mr Cameron threw his support behind Mr Duncan Smith. Pointing out that welfare and tax credit fraud and error costs the UK £5.2billion, Mr Cameron said: “Many see it as a fact of British life that have no hope of defeating.”

“I passionately disagree. Simply shrugging our shoulders at benefit fraud is a luxury we can no longer afford — which is why Iain Duncan Smith is working on the radical steps we can take to deal with it.”

But his ministers deny there is a tax gap they can do anything about. Even though it is £120 billion or thereabouts.

And that tax gap is increasing, as HMRC’s accounts show, and by much more than the benefit gap is, with HM Revenue & Customs saying:

The economic climate continues to pose a challenge to our business and our work on closing the tax gap. It affects attitudes to compliance. It has led to increased levels of criminality resulting in reduced cash flow to the Exchequer. It contributes to more payments being made late, with existing debts more difficult and costly to collect. We continue to deploy resources across a full range of interventions to disrupt fiscal crime and abuse and to level the playing field and provide assistance to honest businesses and individuals.


increased levels of criminality


resulting in reduced cash flow to the Exchequer

But is David Cameron saying:

Simply shrugging our shoulders at the tax gap is a luxury we can no longer afford

No, he’s not.

So here are my suggestions for the next round of questions to be tabled in Parliament:

  • Why isn’t the Prime Minister giving as much attention to the UK tax gap as he is to benefit fraud when it is clear that the gains to be made in terms of fraud prevented, resources lost and the law upheld are much greater from tackling the tax gap? 
  • The Prime Minister has declared it unacceptable that a blind eye be turned to benefit fraud costing the government £5.2 billion a year and yet tax fraud in the form of tax evasion costs in the estimate of HM Revenue & Customs more than £30 billion a  year and in the estimate of others £70 billion a year. Why is it acceptable to him and his ministers that a blind eye be turned to this bigger issue whilst he focuses our attention on the smaller one?

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