{"id":14027,"date":"2012-02-07T08:49:44","date_gmt":"2012-02-07T08:49:44","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=14027"},"modified":"2012-02-07T08:49:44","modified_gmt":"2012-02-07T08:49:44","slug":"if-hmrc-bad-debt-is-10-9-billion-their-estimate-of-the-tax-gap-has-to-be-massively-wrong","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2012\/02\/07\/if-hmrc-bad-debt-is-10-9-billion-their-estimate-of-the-tax-gap-has-to-be-massively-wrong\/","title":{"rendered":"If HMRC bad debt is \u00c2\u00a310.9 billion their estimate of the tax gap has to be massively wrong"},"content":{"rendered":"

It's been revealed that the UK's national accounts for 2009-10 include tax bad debt of \u00a310.9 billion<\/a>.<\/p>\n

I found this interesting. That's because, as\u00a0regular\u00a0readers will know, I've been writing about the 'tax gap' since 2006, and pretty much forced this issue onto HMRC's agenda in 2008, as\u00a0government\u00a0papers\u00a0at the time showed. The tax gap is made up of three parts. The first is tax avoidance (\u00a325 billion in my estimate), the second tax evasion (\u00a370 billion in my estimate) and the third tax paid late (\u00a325 million\u00a0according\u00a0to HMRC of which they have said about \u00a34 billion a\u00a0year\u00a0has been written off on average in previous years. This definition of the gap is not mine by the way: HMRC agree with it, except they ignore tax paid late and recovered in their numeric\u00a0calculations\u00a0despite\u00a0including\u00a0it in their definitions<\/a>.<\/p>\n

But if they do include bad debt of \u00a310.9 billion then\u00a0their\u00a0latest estimates of the tax gap<\/a> - supposedly for the same year, 2009-10 are even more wildly inaccurate than we thought,\u00a0because\u00a0they claim that in total the tax gap is just \u00a335 billion that year. That would mean there was just \u00a324 billion of tax avoided and evaded, and yet as I have shown using\u00a0World\u00a0Bank figures for the UK shadow economy<\/a>, it's\u00a0implausible\u00a0that we have a tax evasion gap of less than \u00a370 billion (which so happens to agree with my estimate of the same gap based\u00a0largely\u00a0on VAT data). If the HMRC claim on the total tax gap were right tax evasion would be little more than \u00a320 billion - and that's just 3.6% of total overall tax revenues.<\/p>\n

No country on earth has a tax\u00a0evasion\u00a0rate as low as that. \u00a0Switzerland is supposedly the cleanest domestic economy on earth and has a shadow economy of 8.5%.<\/p>\n

So what this data says is that not only do the\u00a0national\u00a0accounts have some surprises in them, but HMRC are lying about the scale of the tax gap. Sorry to use such language, but on this\u00a0occasion\u00a0it seems appropriate (and they can always sue me if they wish). But I don't think they will. What this data reveals is that not only have they not\u00a0previously\u00a0told the truth on the scale of bad debts HMRC has been suffering, they've also been disguising that data in the figures on the tax gap they have been producing. As I've said all along<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

It’s been revealed that the UK’s national accounts for 2009-10 include tax bad debt of \u00a310.9 billion. I found this interesting. That’s because, as\u00a0regular\u00a0readers will
 Read the full article…<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[107,50],"tags":[],"class_list":["post-14027","post","type-post","status-publish","format-standard","hentry","category-hmrc","category-tax-gap"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/14027","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=14027"}],"version-history":[{"count":0,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/14027\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=14027"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=14027"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=14027"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}