Since 2005, HMRC’s annual Measuring tax gaps has measured the difference between the amount of tax that should theoretically be paid to HMRC, and what is actually paid. These complex calculations measure gaps due to eight key areas: criminal attacks, evasion, the hidden economy, avoidance, legal interpretation, non-payment, failure to take reasonable care, and error. The overall tax gap remains at 5.7% this year, and the gap measured by type of tax has been relatively constant since 2011/12. However, HMRC uses the information to inform its operational strategy, to compare itself to other countries and to track its long-term performance. The figures support HMRC policy design by demonstrating the types of tax which are most and least exposed to tax gaps, and the distribution of tax gaps between types of taxpayer.
