The Tax Gap is increasing – what does this mean for you?

The Tax Gap is increasing – what does this mean for you?

Thursday, 25 July 2019

HMRC’s latest statistics reveal that taxpayers underpaid £7.4bn in tax last year, up 10% from £6.7bn in 2016/17. This represents 21% of the total UK Tax Gap last year (£35bn), which is an increase from 20% in 2016/17 (£33bn).

The Tax Gap is the difference between the amount of tax that should be collected by HMRC and what is actually collected. These estimates can be a good indicator of where HMRC is likely to focus its future investigations in order to boost its tax take. Of course, being the target of an HMRC investigation can be costly, time consuming and stressful, especially for those people who may not have the resources to meet legal fees that arise.

HMRC has started to move its compliance strategy ‘upstream’ which means using tactics, such as ‘nudge’ letters and targeted campaigns, more often to prevent non-compliance as early as possible.

Many individuals will already have seen this strategy in action. HMRC has mailshotted thousands of people so far this year, asking them about their onshore and offshore tax affairs. These letters often don’t need a response, so it’s important to seek advice before doing so.

HMRC collected an extra £1.64bn through investigations into individuals last year, up from £1.43bn in 2016/17. It will be looking to further improve on this in the next twelve months.

We’ve seen how HMRC’s approach to stamping out tax avoidance has changed almost beyond recognition in the last few years. Investment in technology, more aggressive use of debt collectors and new, more targeted tactics are just some of the most notable developments.

Clients of MHA Larking Gowen are able to protect themselves against the cost of most tax investigations by subscribing to its Tax Enquiry Protection Service.

Need help?

For more information on how we can help, please speak to your usual Larking Gowen contact.

Call 0330 024 0888 or email

Chris Greeves



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