UK tax evasion figures almost four times HMRC estimates and rising

The scale of tax evasion in the UK is almost four times HM Revenue and Customs’ (HMRC) estimate and rising, according to a new report for the Public and Commercial Services (PCS) union launched at the Labour Party conference in Manchester.
 
HMRC’s figures are glaringly out of line, according to the research by tax expert, Richard Murphy for the civil servants’ union.
 
The study, titled: ‘The tax gap: tax evasion in 2014 – and what can be done about it’, suggests tax evasion in the UK now equates to £80 billion a year.
 
Mr Murphy argues that the total tax gap – including tax debt (owed tax), avoidance (dodging tax within the law) and evasion (illegal tax avoidance) – is skyrocketing upwards of £119 billion, with the level of tax evasion set to reach £100 billion by 2018/19.
 
The report points to the trend of HMRC simply writing off vast amounts of tax debt as irrecoverable or abandoning the pursuit of it.
 
Mark Serwotka, general secretary of the PCS, said: "While politicians of all parties are falling over each other to claim there is less money around, this important report reveals why and how we can tackle it.

"Collecting even a fraction of these stolen billions would change the debate about public spending overnight and allow much-needed investment in our communities instead of more damaging cuts."
 
The level of staffing cuts within HMRC could explain the rise in tax evasion. In 2005, HMRC had 92,000 staff but by 2016 it is expected to have just 52,000; a 45 per cent reduction in the organisation’s workforce.
 
"To take this issue seriously, and instead of investing heavily in defending its own inadequate tax gap methodology (as it has done over the last few years), it is time for HMRC to sit down and talk about how its estimates can be improved to take into account the very real, and logical, criticisms I make," added Mr Murphy.
 
"We need considerably more investment in HMRC if we are to have the fair and just tax system we need in this country that ensures that everyone pays the right amount of tax, in the right place, at the right rate and at the right time, which should be HMRC’s goal if it is not just to collect tax but play its full part in building a tax system that is the foundation of a fair market economy; where everyone competes on a level playing field as well as a fair society; where the tax system delivers social justice, not least through redistribution of income and wealth."

Date published 24 Sep 2014 | Last updated 24 Sep 2014