HMRC acts to close £35bn tax gap

HM Revenue & Customs (HMRC) has vowed to clamp down on tax avoidance and close a £35 billion tax gap.

The tax gap, what is owed minus what is actually collected, has reduced slightly in 2009/10 to £35 billion, or 7.9% of liabilities compared to 8.1% in 2008/09.

While HMRC said the amount was at the 'lower end of the range' of countries that publish their tax gaps, it said there was 'no room for complacency' when collecting what is owed.

David Gauke (pictured), exchequer secretary to the Treasury, said: 'Although these numbers show continued progress by HMRC in reducing the tax gap, there is no room for complacency. Just in the last few weeks we have challenged offshore tax evaders, closed tax avoidance loopholes and created a new HMRC unit to ensure that the wealthier members of society pay their share.

'We will continue to take action to prevent a minority of rule breakers dodging their responsibility to pay the right tax at the right time.'

In 2010 HMRC was given access to £917 million of funding in the government's Spending Review to tackle the tax gap and raise revenues of £7 billion a year by 2014/15.

Dave Harnett, HMRC permanent secretary for tax, said: 'The tax gap is the result of a wide range of behaviours and the challenges are constantly changing, but these figures show we are continuing to tackle non-compliance. The tax gap has reduced from 8.5% of total liabilities in 2004/05 to 7.9% in 2009/10 and we have almost doubled compliance revenue since 2005 to £14 billion.

'HMRC staff have worked very hard to deliver these figures and we are going to do everything we can to achieve even more.'