ACCA responds to the ‘tax gap’of £35b as reported by HMRC
Association of Chartered Certified Accountants
Chas Roy-Chowdhury, ACCA’s head of taxation, said: “The tax gap – the difference between what tax should be collected and what actually is collected - is not new but it doesn’t mean we need to take it for granted.
While a great deal has been made of tax avoidance by large businesses, much of the tax gap has come from individuals, through uncollected income tax and national insurance, as well as small and medium sized businesses, who accounted for £16.7b of the tax gap, compared to just £8.8b of uncollected tax from large business.
There is a clear indication that SMEs are struggling with what is a very challenging tax system and they need more professional guidance and support in tackling the tax maze. No one should kid themselves that the gap is caused by tax avoidance amongst large businesses based in the UK. This gap is much wider than that.
“Part of the problem is also lack of resources at HMRC. There is a direct link between its resources and how much tax is collected – the more resources available to HMRC, the more it can collect, narrowing this tax gap in the process. It would be a return on investment for the Treasury, but HMRC is facing the same budget cuts as so many other public bodies.”
