Tax gap fell to an all time low of 6% in 2015-16

01 November 2017

The difference between the tax due and that collected by HMRC - known as the ‘tax gap’ - fell to a record low of 6% in 2015-2016, official statistics reveal.

The UK is a world leader on tax compliance, with one of the lowest tax gaps in the world and sets an international example on tax transparency, being the only country to measure and publish tax gaps every year covering both direct and indirect taxes.

If the tax gap had remained at the 2005 to 2006 level of 7.9%, it would have grown to £46 billion and the country would have been nearly £12 billion a year poorer.

The tax gap fall follows the introduction of 75 measures over the last seven years to reduce tax avoidance, evasion and non-compliance, including:

  • Cracking down on avoidance by multinationals to ensure companies pay the right amount of tax under UK law
  • Introducing tough new criminal offences that make it easier to prosecute both evaders and companies that fail to prevent evasion, as well as significantly increasing penalties
  • Introducing a new penalty for those who enable the use of tax avoidance schemes that are later defeated by HMRC
  • Investing £800 million in HMRC’s compliance operations, which are expected to bring in an additional £7.2 billion in tax by 2020-21.

Since 2010, HMRC has secured almost £160 billion in additional tax revenue as a result of actions to tackle tax evasion, tax avoidance, and non-compliance, including £2.8 billion from offshore tax evaders, through action both at home and abroad.

HMRC’s Measuring Tax Gaps 2017 and methodological annex documents are published here.