By Liz Elliott, Director
Let's talk about the tax gap – the difference between what HMRC thinks it should be collecting in tax and what actually rolls into the Treasury's coffers.
According to HMRC's latest figures for the 2023/24 tax year, they collected a whopping £829.2 billion. Sounds impressive, doesn't it? But that still leaves £46.8 billion unpaid. That's 5.3% of all the tax due – up from previous years, and a bit of a wake-up call.
What's even more eyebrow-raising is that HMRC revised last year's figures up too—from a 4.8% gap (£39.8 billion) to 5.6% (£46.4 billion). So yes, they're having a good hard look and realising more needs to be done.
Here's where it gets interesting (or worrying, depending on your perspective):
- Small businesses make up 60% of the tax gap. That's right. It's not all mega-corporations!
- Corporation Tax alone accounts for 40% of the total shortfall.
- And the reasons behind the gap? It's not just out-and-out tax dodging. We're talking about things like failure to take reasonable care (31%), honest mistakes (15%), and evasion (14%).
These figures do show a pattern—one that suggests HMRC will continue to focus its attention on smaller businesses. After all, if that's where most of the gap lies, that's where the spotlight will be shining.
So what's the takeaway here?
While big firms might make the headlines, it's the smaller businesses who are facing the bulk of scrutiny. Now's the time to tighten things up, double-check the details, and make sure you're not caught out by a surprise HMRC enquiry.
If you're a small business owner, it's never been more important to get Tax Fee Protection, because if HMRC does come knocking, to investigate your tax affairs, you'll want experts by your side to fight your corner —and you won't want to be footing the bill for it.
As always, we're here to help.
Liz Elliott
Director, McEwan Wallace