Spring Budget 2023: tackling the tax gap

15 March 2023

The government is constantly striving to address and tackle the ‘tax gap’. The ‘tax gap’ is defined by HM Revenue and Customs (HMRC) as ‘the difference between the actual tax collected and the tax that should have been collected’. The Spring Budget’s accompanying document confirmed a range of measures which will be introduced to reduce the ‘tax gap’.

An additional £47.2 million will be invested in helping HMRC to manage tax debts. This will enable HMRC to easily identify those taxpayers who are able to pay their tax debts but actively avoid doing so, but also to recognise those who may be temporarily unable to pay, to ensure they’re provided with the appropriate support.

A range of consultations and calls for evidence are due to be released (on Tax Administration and Maintenance Day), one of which will explore the potential introduction of a new criminal offence for promoters of tax avoidance. This will impact those who haven’t complied with a notice from HMRC to stop promoting a tax avoidance scheme. The government will also consult on speeding up the process of disqualifying directors of companies who are involved in promoting tax avoidance.

As tax fraud is recognised as a large contributor to the ‘tax gap’, the maximum sentences for the worst cases of tax fraud will be doubled from the current seven years to 14 years.

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