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TECHNOLOGY REPORT

Mind the (tax) gap

eeping the details of new or existing income mated as lost due to ‘moonlighters’ – those who have not
sources from HMRC is not wise. It’s tax eva- fully declared all their income sources.”
sion, is illegal and those that HMRC catch Beyond those numbers Margaret Curran, a technical
With the cost-of-liv- risk ending up paying not just the tax they officer at the Chartered Institute of Taxation, says that
ing crisis placing should have done, but substantial additional more than £9bn relates to “taxpayers not getting things
financial pressures on Kcosts in interest and penalties too. This is right through what HMRC categorises as error or a failure
all of us, many indi- where former Conservative Party chairman Nadhim to take reasonable care” – a function of complexity in the
Zahawi came a cropper. And in very serious cases it could
tax system. To this she adds nearly £5bn linked to crimi-
viduals and busi- land an individual in jail – as jockey Lester Piggott discov- nal activity.
nesses are looking to ered in 1987 after a conviction for failing to declare income It’s clear, then, that as Thornley says, “one of HMRC’s
develop new sources of around £3m. jobs is to try and catch up with both types of these miscre-
of income or maxim- Missing tax ant taxpayers”.
ise the income that Each year, HMRC estimates the difference between Compliance
they already receive. what it thinks it should collect in tax and what it actually To ensure taxpayer observance, HMRC carries out a
manages to collect. Called the ‘tax gap’, the latest esti- wide range of compliance activities. In figures that
Words by mates for 2020-21 put this figure at £32bn. Thornley cites, during 2021-22 HMRC launched 265,000
According to Helen Thornley, a technical officer at the investigations and yielded an extra £30.8bn in tax. “These
Adam Bernstein
Association of Taxation Technicians, the gap comprises figures,” says Thornley, “were lower than usual due to
different factors, from fraud to differences between Covid, which restricted HMRC’s abilities to carry out as
HMRC and taxpayers on how each think that the law much compliance work as it would like to as staff were
operates. Within that figure, she says: “An estimated redirected to other roles.” However, she warns staff are
£1.1bn of lost tax is believed to be due to ‘ghosts’ – people now back in post.
entirely outside the tax system. A further £900m is esti- She explains that in general, HMRC has 12 months

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