Gap Strategy

HMRC criticised over £32bn ‘tax gap’ estimate

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HMRC was accused on Thursday of underestimating the tax gap – the difference between the expected income for the exchequer and actual receipts – after official figures showed it was unchanged during the first year of the pandemic.The Revenue said there was a 5.1% shortfall worth £32bn in the 2020-21 financial year, the same as the period before the pandemic took effect.

It said fraud accounted for £2bn of the total – despite widespread concerns that tens of billions of pounds in government pandemic spending was lost to fraud.Richard Murphy, a tax expert, said the assessment of tax losses to the exchequer was “half-hearted” and a more comprehensive review would probably have found losses from the hidden economy were much higher. “The report found there was virtually no money that went missing during the pandemic.

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