Tax shortfall reaches £42 billion according to HMRC


About £42 billion of tax went uncollected in the last financial year, according to a report by HM Revenue and Customs (HMRC).

The shortfall included £15.2 billion in uncollected VAT and £6 billion in income tax, which the Revenue attributed to problems with the PAYE system used by employers to collect income tax from workers on behalf of the government.

The complex system was recently blamed for the Revenue’s failure to collect almost £2.2 billion from over two million people between 2007 and 2009. Those affected are currently receiving letters detailing their underpayment and being requested to pay the shortfall in full or in instalments through their monthly wages.

The latest HMRC report highlighted a selection of key factors that led to the £42 billion deficit, such as the deliberate evasion of payment by some taxpayers, and the failure to declare income from a second job, known as ‘moonlighting’, by others.

Leader of the Public and Commercial Services union Mark Serwotka said: “What is clear is that insufficient resources are being dedicated to collecting tax, including that which is being avoided or evaded, largely by very wealthy individuals and organisations. In the five years since HMRC was formed, 30,000 jobs have been cut, the majority of which were directly responsible for tax collection”.

He continued: “Starting to collect these massive sums lost to our economy every year would be a major contribution to the alternative to the government’s devastating plans to cut public spending”.

John Whiting of the Chartered Institute if taxation (CIOT) said: “The Revenue is making progress and UK tax authorities are doing quite well compared to other countries”.

However, he conceded that “there is more to be done, especially in deciding if the estimates of how much VAT should be collected are right in the first place”.