With the government and HMRC currently making the fight against tax avoidance a priority, seen through the tightening of policy relating to public sector contractors as well as the implementation of a general anti-avoidance rule, the latest figures on the UK’s ‘tax gap’ have given them a further opportunity to back their cause.
HMRC estimated the tax gap at £32bn for 2010/11, around 6.7% of the total tax due. This figure is slightly higher than the £31bn gap 2009/10, although this was a higher rate of 7.1%. Tax avoidance was said to contribute to £5bn, with evasion, criminal attacks, the hidden economy and error some of the other sources.
The Exchequer Secretary, David Gauke, said that these figures show the “vast majority” of people and businesses pay the tax they owe on time. He confirmed the government and HMRC’s commitment to reduce the gap saying;
“[We] will continue to work together to make it harder for individuals and businesses not to pay the taxes that are due. We are determined to reduce the tax gap and have made £917 million available to help HMRC tackle avoidance and evasion.”
Lin Homer, HMRC’s Chief Executive, echoed this message, stating that they are determined to support the “honest majority” by cracking down on tax evasion, avoidance and fraud in order to reduce the tax gap. As mentioned by David Gauke, the additional revenue HMRC have been given in the last few years to help specifically tackle tax avoidance has helped them pursue those who do not pay the tax they owe.
ICS work with a team of experts in employment and tax law to ensure our services are fully compliant with existing IR35 legislation and the latest government regulations, such as the AWR. You can contact us now for a tailored proposal based on your individual circumstances as a contractor.