UK tax evasion figures four times HMRC estimates and is rising

/ Posted By - Bradleys Accountants / Categories - Advice for Small Businesses

A recent report by Public & Commercial Services (PCS) union launched at the Labour Party conference in Manchester, revealed that tax evasion in the UK is almost four times HMRCs’ estimates and is rising.

In direct contradiction to the taxman’s figures, tax expert – Richard Murphy of Civil Servants Union, says that HMRC’s figures are shockingly out of line and the overall amount has barely reduced since 2008, despite government pledges to clamp it down.

The study authored by Mr Murphy and titled, ‘The tax gap: tax evasion in 2014 – and what can be done about it’, suggests the cost of tax evasion to the UK economy to have spiralled to more than £82 billion last year.

Mr Murphy, in his report, reappraised the UK tax system and argued that the total tax gap – including tax debt (owed tax), avoidance (dodging tax within the law) and evasion (illegal tax avoidance) – is skyrocketing upwards of £119 billion, and if left unchecked is set to rise to £100 billion by 2018/19.

The report indicates that the amount of outstanding debt has fallen in recent years but the growing trend of HMRC writing off debts as irrecoverable has led to an increase in evasion. In 2013/14 the estimate of tax debt was £18.2bn.

One thing that could explain the rise in tax evasion could be the level of staffing cuts to HMRC. In 2005, the department had 92,000 staff. It has now less than 62,000 and by 2016 it is expected to have around 52,000. To further its cause, HMRC has announced that in June, 2015 a further 23 offices would close.


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    Mark Serwotka, general secretary of the PCS, said:

    “While politicians of all parties are falling over each other to claim there is less money around, this important report reveals why and how we can tackle it.

    “Collecting even a fraction of these stolen billions would change the debate about public spending overnight and allow much-needed investment in our communities instead of more damaging cuts.”

    Commenting in the report, Richard Murphy said:

    “To take this issue seriously, and instead of investing heavily in defending its own inadequate tax gap methodology (as it has done over the last few years), it is time for HMRC to sit down and talk about how its estimates can be improved to take into account the very real, and logical, criticisms I make.

    “We need considerably more investment in HMRC if we are to have the fair and just tax system we need in this country that ensures that everyone pays the right amount of tax, in the right place, at the right rate and at the right time, which should be HMRC’s goal if it is to not just to collect tax but play its full part in building a tax system that is the foundation of a fair market economy where everyone competes on a level playing field as a well as a fair society where the tax system delivers social justice, not least through redistribution of income and wealth.”

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