Much has been made of the tax gap of late and never was this made clearer than in the fact that Britain lost almost 8% of its annual revenue because of uncollected taxes, largely due to the ever present tax gap.
For those who haven’t been following the news and the controversy surrounding how taxes have been collected, the tax gap is the difference between what is owed and what has actually been collected. Although last year’s actual tax gap of 7.9% was lower than the previous year’s 8.1% uncollected taxes, that amount is still far too high.
One of the goals of the coalition is to make the process of tax collection much more efficient which they hope to accomplish by simplifying the system. As well, they intend to clamp down on tax evaders. In 2010, government allocated funds to the tune of £917 million to HMRC to be used specifically for tackling the tax gap issue in order to raise revenues. The amount they hope to recover is £7 billion each year through the 2014-15 tax year.
They are also looking at how to make certain the wealthiest citizens pay their fair share. It will be government’s focus to see to it that they tackle rule breakers, albeit a group in the minority, who break the rules in order to dodge paying taxes they rightfully owe. Exchequer Secretary to the Treasury, David Gauke, stated that in recent weeks they have addressed the problem of tax evaders with offshore accounts and have worked towards closing loopholes in tax avoidance.
Although major strides have been made since the 2004/05 tax year, and compliance as almost doubled, there is still a long way to go and that £7bn annually will do much to help offset the UK’s deficit.
