MPs to probe the tax gap

The effectiveness of HMRC’s compliance strategy for VAT is under scrutiny after the Treasury Committee launched an inquiry into the causes of the UK VAT gap.

Committee chair Nicky Morgan said: ‘HMRC collected around £124bn in VAT last year – over a fifth of the UK’s total tax take – and failed to collect around £12.6bn. The reasons for why VAT is so vulnerable are somewhat opaque so the committee will examine how this might be addressed.’

HMRC’s approach to large medium-sized and small businesses will be examined. The committee will also consider how the tax base in the UK is vulnerable to exploitation by entities determined to circumvent VAT rules push boundaries or develop aggressive planning arrangements.

The committee will evaluate the opportunities and challenges for VAT posed by the UK’s exit from the EU and the impact this could have on HMRC’s efforts to...