Tax gap – who’s the target

Key points

• Tax avoidance and evasion are not the main drivers for the tax gap. It is the failure by taxpayers to take reasonable care in recording transactions and preparing tax returns.
• The focus on avoidance by the Labour and the Conservative parties while attention grabbing might mean they will struggle to raise their intended revenues. Tax evasion may be a more viable target.
• The difficulty with the tax gap is measuring it – and tax policy aimed at reducing the tax gap will only work if the data is accurate. But HMRC’s data is inherently uncertain.
• The tax gap may be larger than first appears once offshore matters are taken into account.
• The area where resource would be best placed is small businesses and in particular errors they are making (careless or otherwise).

Following the Conservative government’s announcement of the abolishment of the non-dom regime ...