Seasons Greetings

see our Festive opening times

HMRC has massively underestimated tax evasion, experts say

HMRC has massively underestimated tax evasion, experts say

Last year, the Treasury missed out on an estimated £14 billion in lost revenue due to deliberate non-compliance. However, experts say that HMRC’s estimates are way off the mark.

HMRC could, in fact, be losing more than double what it claims.

Despite upping its efforts to tackle error, avoidance and evasion – including a new Fraud Hotline,  HMRC lost £14 billion in the 2017-18 tax year. It said tax evasion and the black economy accounted for £8.5 billion.

Contractor Legal Protection - Just £30.00

But Richard Murphy, a British chartered accountant and political economist, believes HMRC is not telling the full story.

“I would suggest that the amount of tax loss a year is more than double what HMRC is saying,” he said to The Express. 

Negligence costing billions

According to Murphy, the government department is failing to collect tax on a timely basis. It also has no way of checking if subsequent collections are correct. This is because it isn’t carrying out regular enough spot checks.

“When I was working as an accountant full time, every single VAT registered business could expect a visit from a tax inspector about every three years,” he explained. “Now, in effect, that does not happen. I am told that the probability of getting a visit from HMRC is once every 300 years.”

More to be done?

But HMRC said this is not the case and its efforts are paying off. “The UK has one of the lowest levels of unpaid tax anywhere in the democratic world,” a spokesperson responded. “In 2017-18, HMRC collected and protected £30.3 billion of tax that would otherwise have gone unpaid due to evasion and avoidance. This is the equivalent to a quarter of the NHS budget for a year.”

HMRC said it employs 26,000 analysts, compliance officers and fraud investigators to catch out tax evaders and ensure everyone pays their fair share.

“They use cutting-edge technology to zero in on tax cheats and gather material from a wide number of sources, including using its statutory powers, human informants and automatic exchanges with around 200 countries,” the spokesperson said.

Professional Indemnity Insurance - From £144.00