David Jetuah, Accountancy Age, Friday 17 September 2010 at 10:09:00

The shortfall between the tax that should be collected and what is actuallypaid is 42bn, HMRevenue & Customs estimates

HMRevenue & Customs has estimated 42bn of tax owed did not come into theUK's coffers in 2008-2009.

The "tax gap" is the shortfall between what HMRC believes should be paid andthe revenues eventually collected. It has increased from 38bn in 2007-2008.

42bn is 9 per cent of the total tax actually paid in 2008-2009, HMRCstressed.

However, the tax agency, which has come under fire recently after the PAYEstorm may find itself in line for more criticism because of the shortfall.

"Estimating the scale of, and trends in, tax gaps is difficult and arelatively untested area of work for governments in the EU and around the world," the taxman said in a report.

"HMRC has developed estimates for tax gaps for the main direct and indirecttaxes that it administers that it believes are the best possible, based on allthe information presently available."

Further reading:

Taxgap data forced out of HMRC