Nicola Kelleher explains the ways by which HMRC can close the tax gap.
The tax gap was estimated at £39.8 billion or 4.8% of tax owed in 2022/23. This gap represents the difference between the amount HMRC is expected to collect and what it actually collects. The National Audit Office (NAO) has recommended improvements for HMRC to reduce the size of the tax gap. So, what could this mean for future compliance activity?
In November 2024, the National Audit Office, the UK’s independent public spending watchdog, produced ‘An Overview of the impact of fraud and error on public funds for the new Parliament 2023/24’.
This report estimates the size of the UK’s tax gap at £39.8 billion for 2022/23 and offers insights to help those who manage and govern public bodies to improve public services.
HMRC’s strategy to close the tax gap and tackle error and fraud has shifted in recent years, moving away from traditional ‘respond’ techniques (e.g. statutory enquiries) and towards ‘promote and prevent’ activity (e.g. one-to-many approaches, also known as nudge letters), which aim to provide a wider solution to a volume problem.
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