How the UK Treasury could be losing four times as much tax as it thinks it fails to collect – that would be £40 billion each year
“The size of the total gap between what taxpayers owe and what they pay was last year estimated by HMRC to be £35m, or 7%, shortfall for 2011/12, but that includes legal and illegal tax dodging, fraud and errors. It said the shadow economy and evasion was costing it £10.5bn.”
BUT:
“The Treasury is losing £40bn a year due to a shadow economy where firms and individuals deliberately hide sales from the taxman, according to a leading tax justice campaigner, Richard Murphy. His findings, if correct, would make the scale of tax evasion from sales going unreported to HMRC four times as big official figures suggest.
The report, published on Monday, has been swiftly rejected by HMRC as “seriously flawed”, although the tax campaigner said it had been peer reviewed by academics and other tax experts.”
See full story here.
As a comparison, note that the Department of Work and Pensions estimates benefit fraud costs £1 billion a year. Putting that in some kind of perspective, the Department expects to spend a total of £148 billion on benefits, including income support, housing benefit, disability and unemployment payments and more. A billion pounds going AWOL isn’t to be sniffed at, but it’s worth pointing out that it’s just 0.7 per cent of total spending on these benefits.
So, why doesn’t the media give 10 times – or even 40 times – as much coverage to tax evasion as benefit fraud?