The shock size of the gap means the government lost out on £3billion MORE in owed taxes in 2011/12 than it did in 2009/10 – damning figures have revealed.
Tax avoidance soars to £35billion under David Cameron despite coalition promise of crackdown
Tax avoidance has soared under David Cameron, damning figures revealed yesterday.
The money owed to the Treasury – dubbed by officials as the “tax gap” – has grown to an eye-watering £35billion, HM Revenue and Customs has admitted.
It is made up of avoidance schemes, illegal tax dodging and mistaken underpayments.
The government defines it as “the difference between the amount of tax that should, in theory, be collected by HMRC, against what is actually collected”.
The shock size of the gap means the government lost out on £3billion MORE in owed taxes in 2011/12 than it did in 2009/10 - before the Coalition took office promising to crack down on tax avoidance.
It also comes after public outrage at alleged avoidance by Google, Facebook and comedian Jimmy Carr.
In May MPs earlier accused internet giant Google of “doing evil” by avoiding British taxes.
Starbucks was also slammed last year after it emerged it had paid no UK corporation tax in the previous three years.
In January last year stand-up Jimmy Carr admitted to a “terrible error of judgement” after it emerged he used the K2 scheme which enabled members to pay income tax rates as low as 1%.
The Commons spending watchdog will grill officials from HMRC in the coming weeks over its failure to fill the tax gap.
Ahead of the hearing Margaret Hodge, the chairman of the Public Accounts Committee, said: “I don’t think they are assertive or aggressive enough.
“I am really disappointed that, despite all the public concern expressed by hardworking people who do pay their taxes, there has not been greater success.
“There is scepticism about how they calculate the tax gap anyway, it is a conservative estimate.
“Only this week we had the news about Facebook and others.
“Whilst I recognise that we have to take action internationally, it doesn’t excuse HMRC not defending the taxpayers’ interest or their failure to make a noticeable dent in the figures.”
The value of the tax gap has increased from £32billion in 2009-10 to £35 billion in 2011-12.
But HMRC defended its record – and said the percentage tax gap had actually fallen very slightly from 7.3% to 7% over the same period.
Tory Exchequer Secretary David Gauke added: “These figures show the tax gap is continuing to fall. The vast majority of businesses and individuals pay the taxes they owe.
“But where they don’t it is for HMRC to challenge non-compliance fiercely, protecting money that would otherwise be lost.”
But Shabana Mahmood, Labour’s shadow exchequer secretary, said: “At a time when millions are struggling with the rising cost of living and the deficit is high, it’s even more vital that everyone pays their fair share of tax.
“But these figures show the government is failing to tackle tax avoidance and evasion with the value of the tax gap now up to £35 billion.
“And David Cameron is so out of touch that he’s just given a £3billion tax cut to people on over £150,000, while falling real wages mean ordinary working people are on average £1500 a year worse off.”