More could be done to reduce the tax gap, says the NAO

HMRC’s work to improve taxpayers’ compliance with the tax system has achieved high rates of return according to a report from the National Audit Office (NAO). But the department could do more to help taxpayers pay the correct tax.

HMRC estimates the tax gap – the difference between the amount of tax the government is owed and the amount HMRC collects – has reduced from its recent peak level of 7.2% of theoretical tax owed in 2013-14 to 4.7% in 2018-19 (£31bn) though there is scope to bear down further on non-compliant taxpayers. The tax gap is affected by several factors including HMRC’s activity economic conditions and changes in tax policy.

The NAO report notes that the tax gap is affected by several factors including HMRC’s activity economic conditions and changes in tax policy. Its size is difficult to estimate...